Axie Infinity studio pledges to reimburse users for hack
Sky Mavis has raised $150 million, which it's adding on to its existing balance sheet to pay back users who lost hundreds of millions in a hack of the validator used in its blockchain game.
Eight days ago, over $625 million worth of ether and USDC was stolen in an exploit of the Ronin sidechain used for the popular play-to-earn game Axie Infinity. Now the game’s studio, Sky Mavis, is trying to pay its users back.
Sky Mavis announced Wednesday that it has raised over $150 million in funding, which will be added on to the company’s existing balance sheet to reimburse users for the entire $625 million lost. Binance led the fundraising, its first investment in Sky Mavis. Existing backers a16z, Animoca Brands, Paradigm and Accel also invested in the round.
“All users affected by the Ronin Validator Hack will be reimbursed,” the company said. “While racing for mainstream adoption, we made some trade-offs that ended up leaving us vulnerable to this sort of attack. It’s a lesson we’ve learned the hard way.”
The hackers were able to siphon funds from the Ethereum sidechain when a person was able to compromise a majority of a small number of Sky Mavis’ Ronin validator nodes and Axie DAO validator nodes, Sky Mavis said. The company considered the hack “socially engineered" and is continuing to investigate. The company also said it was working with law enforcement to recover funds.
In the meantime, the gaming studio will increase the number of validators from five to 21 over the next quarter. Binance will also provide Ronin users liquidity so that they can withdraw and deposit ether.
Axie Infinity has about 2.2 million monthly active players. Many of the most committed players rely on the game for significant income and may have been severely impacted by the hack. The game is particularly popular in the Philippines, where users account for about 35% of global traffic. Many there have turned playing the game into a full-time job, and speculators have long feared that a hack could be economically destabilizing to millions of people.
But Sky Mavis still sees play-to-earn as a net good. “We believe that Axie will go down in history as the first game to imbue players with true digital property rights and recent events have only strengthened this conviction,” the company said.
Protocol link: https://www.protocol.com/bulletins/axie-infinity-sky-mavis-reimbursement