#1: The Largest Hack in Crypto History
Right on the cusp of releasing the playable alpha of Axie Infinity: Origin, Sky Mavis became aware of a hack that drained its Ronin validator nodes of 173.6k of Ethereum and 25.5 million USDC — worth $625M. The hack was discovered 6 days late when an attempt to withdraw 5k Ethereum from the Ronin bridge failed. The size of the theft (in fiat terms) makes this the largest single cryptocurrency hack in history, and the attack underscored some of the security compromises that were made in order to enable faster and larger scale. In short, Sky Mavis was progressively decentralizing its validator nodes but controlled 4 of them, with only 5 out of 9 total nodes being required for full network control. A backdoor left behind from a scaling compromise with Axie DAO back in December provided the required private key to the fifth node. So, yes, the network was not nearly decentralized enough, and the security of Sky Mavis’ controlled nodes was too lax, but there also was a lack of proper security monitoring to detect the compromise and move quickly. The oddest twist is that someone noticed the hack when it happened and tried to short AXS but got liquidated out of their position before anyone even noticed.
While all the network tokens (AXS, SLP, and RON) are deemed safe, the impact to users is already being felt as the Ronin bridge and Katana DEX have both been halted to prevent any further exploitation. Sky Mavis has said they are “committed to ensuring that all of the drained funds are recovered or reimbursed,” but they do not currently have a concrete plan announced. Currently most of the stolen funds are in the hacker’s wallet, but some of it was sent to large exchanges like Crypto.com and FTX. Naturally, Sky Mavis is currently engaging with security experts like Chainalysis and Crowdstrike for forensics, and they are cooperating with law enforcement on the investigation.
While there’s never a good time to get hacked, the timing probably couldn’t be worse for Sky Mavis given the launch of Axie Infinity: Origin is imminent and designed to help pull the game economy out of its tailspin. We respect how transparent Sky Mavis leadership has been about the incident, as well as their focus on continued building. The security and decentralization lessons from this attack will likely resonate with other networks and teams looking to scale and bridge Layer 2s and sidechains, and we’ll likely see more rigor around the idea of progressive decentralization inside and outside of gaming. As for Sky Mavis, we don’t expect this hack to have an enormous impact on what happens with Axie Infinity, but it certainly puts pressure and uncertainty around how Ronin will be viewed and accepted by other developers.
If you want to learn more about the hack, we recommend listening to the latest Metacast by Naavik roundtable episode and keep an eye on the upcoming Crypto Corner episode, too.
#2: Gala Games x The Walking Dead NFTs
It’s no secret that NFT games haven’t hit mainstream appeal, but Gala Games is trying to help change that with the marketing campaign for “The Walking Dead” VOX NFTs. With over $2 million in the marketing budget, the campaign reached out beyond the typical crypto websites. Not only were there billboards in Times Square, but a trailer ran during a recent episode of the show. The NFTs (called “VOX Boxes”) are purchased blind, and the content of the boxes will be revealed on April 7th. The NFTs will have utility in both the Voxverse (being developed with game design legend Will Wright) and The Walking Dead: Empires (developed by social/mobile industry vets Ember Entertainment). The marketing campaign was notable not only for its use of legacy media but also its web3 community engagement tactics, which included whitelist contests on various social media sites, secret email lists, Discord channels, and “which vox are you?” quizzes. The Gala community also received a Gala Founder Node whitelist pre-sale.
All 8,888 boxes managed to sell out quickly on the GALA shop at the GALA token equivalent of 0.888 ETH (~3k USD). That being said, the NFTs are of course being traded on secondary markets like OpenSea, which has already seen a trading volume of 907.11 ETH and average price of 0.9489 ETH. Inside each box is a fully unique NFT based on either a character or a Walker. With about half the boxes containing Walkers it will be interesting to see what the reactions to box openings will be come April 7th. Unfortunately, to open the boxes owners will need to pay gas fees for the minting transactions. This wasn’t the first VOX release for Gala as they have collections for two other games: Town Star and Mirandus (both usable in Town Star and Voxverse). While Voxverse itself isn’t out yet, the future cross-game utility increases the interactive and composable possibilities here. It remains to be seen if AMC will be able to onboard mainstream fans into VOX and The Sandbox, but it’s great to see the experimentation with such a large, notable brand.
- Sky Mavis detailed the launch week schedule and release details for Axie Infinity: Origin’s soft launch on April 7th. It was delayed due to the security breach. Link
- Sky Mavis also announced upcoming changes to how the Ronin network will function, which will be more security-conscious and provide more utility to its RON token.
- Pegaxy is moving away from pure luck with the release of Stats-based Racing and Genetic Breeding. Link
- Splinterlands hit the “two billion games played” milestone near its one year anniversary on March 25th. The team followed the news up by partnering with Crypto.com to launch a trading pair between its SPS governance token and USDT. Link
- Guild of Guardians, one of the more well known upcoming Immutable X games, launched its closed alpha. Link
- Blockchain Brawlers, a wrestling themed game on WAX, launched on March 30th. Day 1 Unique Active Wallets were approximately 1k, and the NFT floor price is over $1k. Link
- Following the closure of F1 Delta Time, Animoca Brands’ other licensed motorsport game, MotoGP Ignition, launched its marketplace. Link
- DeFi game Aavegotchi launched its new Gotchiverse on March 31st along with Gotchi Lending. Link
- Heroes of Mavia launched “soft-staking” for its Land NFTs. Link
- Nine Chronicles, a blockchain-based RPG, released its 2022 roadmap along with details on community voting. Link
- Popular but short-lived game Sunflower Farmers announced its relaunch as Sunflower Land, which is occurring on April 7th. Link
- MOBOX announced its upcoming MOMOverse metaverse hub. Link
- Delphi Digital co-led a $6 million round of financing into Crypto Raiders alongside DeFinance Capital. Link
- F2P NFT-based card game, Cross the Ages, raised a $12 million seed round from Animoca Brands, Ubisoft, Polygon, and Sebastian Borget, a co-founder of The Sandbox. Link
- Taiwan-based Red Door Digital raised a $5 million seed round from M6, Shima Capital, Maven Capital, Cryptology Asset Group, and LucidBlue Ventures. Link
- OP3N partnered with the Avalanche Foundation to launch a $100 million web3-focused Culture Catalyst fund. Link
- Gaming metaverse platform Ultiverse followed up its $4.5 million seed round from Binance Labs with another $5 million. Link
- LayerZero Labs, the developers of a multi-chain smart contract connection protocol, raised a $135 million Series A+ round led by Sequoia Capital, Andreessen Horowitz, and FTX Ventures. Link
- Yield Guild Games is expanding into Japan with the help of several partner companies and individuals. Link
- Heroes of Mavia helped pilot the new web3 economy validation and health monitoring service offered by economy simulation developer Machinations. Link
- Ancient8, a Vietnamese guild, launched its community rewards system, Bamboo Points. Link
- Com2Us released its C2X Station app (Google Play and Apple App Store) and Chrome extension, which includes a wallet. Link
- OpenSea will soon include Solana NFTs with Nyan Heroes being one of the first collections. Link
- Binance added Axie Infinity’s AXS token to its auto-invest feature. Link
- Gamestop launched the beta of its NFT marketplace on Loopring, a zkRollup-based L2. Link
- H3RO3S is partnering with Blockpass to provide an integrated KYC solution. Link
Notable Market Moves
- Most of the crypto market saw a sharp rise on Sunday, March 27th that ultimately dropped back down sharply on Thursday, March 31st.
- Out of the top 10 gaming related tokens, STEPN — the gamified lifestyle app where players can earn from walking and running — saw by far the biggest gain this week, jumping up 3 spots from 10th to 7th. The continued upward movement was due to hints of a partnership with a major sportswear brand, which was teased in an interview and on social media.
- AXS would potentially be up alongside the Origin alpha release (which got delayed) had the recent hack not happened. While AXS was untouched in the hack, it’s unsurprising to see the token price down; however, perhaps it’s surprising AXS isn’t down more.
- The rise for all tokens on the 27th also intersected with the Gala “The Walking Dead” VOX release (see Top News above) as the sale was priced in Gala but pegged to ETH leading to some price fluctuation.
- WAX managed to hold on to some of the price increase thanks to the release of Blockchain Brawlers bringing some attention back to the network.
- As always, who knows what will happen over the next week, but all of the building going on points to clear long-term growth and inevitable churn in the top 10 list.
Content Worth Consuming
- Started From The Bottom - from nobody to unicorn in 3 years (Dune Analytics) - "I think there is an interesting lesson to be learned from this: both disregard and embrace VC pushback. Keep your conviction and don’t get discouraged from a 100 investor no’s, but also take pushback seriously, and rigorously assess your beliefs. We essentially disregarded all market size concerns and stuck to our first principles conviction that crypto is a more meaningful financial infrastructure where there will be plenty of builders to serve. On the other hand we also took pushback to heart and adjusted our plans accordingly, embracing the openness of crypto data instead of working against it by selling closed dashboards." Link
- Crypto Raiders: Creating an Anti-Fragile Game Economy with Skill-Based Gamplay (The Delphi Podcast) - "We sit down with Nicholas Kneuper (CEO) and Nat Elison (DeFi and Tokenomics Advisor) of Crypto Raiders, an NFT-based dungeon crawler game on Polygon. We dive into earning passive income with MOBS, $RAIDER and $AURUM tokenomics, composability between Polygon games, and much more." Link Bonus takeaways tweets
- How to Create a Winning In-Game Economy With Machinations (Mobile GameDev Playbook) - "In this episode of the Mobile GameDev Playbook, we’re looking at the tools available on the market to build a thriving free-to-play game economy. Our host, Jon Jordan, is joined by GameRefinery’s Erno Kiiski, Machinations CEO & Co-Founder, Mihai Gheza and Sales Director of Machinations, Matthew Morris.” Link
- Examination of web 3 gaming 'guilds': how they work and how they should work (Evolution of Web3 & NFT Gaming) - "Currently a majority of guilds, in particular smaller guilds, are focused on yield maximisation. This could be seen as a ‘threat’ to games with any investment-based earning component. However, it’s unfair for game developers to ‘blame’ any guilds for the way they operate. The nature of any open economy is that you will have different participants in the ecosystem, each with their own goals and business models." Link
- Financial Infrastructures for Crypto Games (Kydo’s Research Log) - “The old monetization model is unsustainable. Gold farmers continuously move from one game to another, creating false prosperities and leaving behind turmoils. Even with the Ronin chain and a new Axie game, RON price has been halved and SLP is not seeing any upward momentum. Scholars had to leave this overcultivated land and migrate to other chains like Avax and Polygon. Pegaxy, which almost took over the Philippine market with 50k DAU, also failed to sustain itself. VIS (Pegaxy’s token) entered into hyperinflation as more players joined, and the price bottomed again in two weeks. Some large guilds also decided to liquidate their Pegaxy NFTs.” Link
- Getting Gamers to Embrace NFTs is Not Impossible (The Defiant) - “amers have a healthy skepticism about using NFTs and other digital assets as speculative earning opportunities. If blockchain game developers want in on a market of over 3B gamers worldwide, they should emphasize how blockchain technology and NFTs can solve existing problems instead of highlighting their money-making potential.” Link
- Games should promote “play and earn” instead of “play to earn” (GamesBeat) - “It is incumbent on the gaming industry to find a way to implement this new wrinkle, a wrinkle not likely to go away, in a manner that is not only fundamentally ethical, but also heightens gameplay instead of distracting from it. The genie is now out of the bottle when it comes to the new economics of gaming backed by virtual goods, in-game tokens, and NFTs, and the industry needs to develop a plan to make sure this new dynamic isn’t overrun by scammers.” Link
- Why scarcity land-based games will fail (@paytkaleiwahea Twitter thread) - “My first point is that limiting a canvas in which creators can paint on doesn't reward creativity, it rewards being first...aka investors. What I have learned is that investors does not equal creators or builds.” Link
- Taking advantage of DeFi Kingdoms Crystalvale launch (@milesdeutscher Twitter thread) - “The best part is that the DFK chain burns $JEWEL. This means as more people play Crystalvale, the more deflation the token will experience. This is in addition to validators needing to lock $JEWEL. DFK is essentially its own L1.” Link
- Web3 developments in Korea (@kyuclee Twitter thread) - “This will happen again in #Web3 gaming. The many Korean companies are off to a competition again, and they will all grow as a huge industry. The landscape will shake again and new leaders will be defined. @C2X_WORLD will be on top of this trend and bring it globally.” Link