Crypto Gaming’s Biggest Success Story Scammed Out Of $600 Million?

As the Axie Infinity mania has spread in the Philippines, there has been a significant increase in fraud concerns.

Detractors warn that the game is a “house of cards,” with some comparing it to a fraud scheme fueled by anticipation and conjecture.

READ MORE: Axie Infinity craze explodes in Philippines? 

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The NFT-based online video game developed by Vietnamese company Sky Mavis is well-known for its in-game economy, which is built on Ethereum-based currency.

Axie Infinity, which operates on the P2E (play to earn) financial model, has emerged as the greatest winner in the world of blockchain games in recent months. According to Sky Mavis, approximately 35% of Axie Infinity traffic, as well as the largest proportion of its 2.5 million daily active users, originates in the Philippines, where a high level of English proficiency, a strong gaming culture, and widespread smartphone use have all contributed to the site’s popularity.

In Axie Infinity, players engage in battles with colorful blob-like Axies, and are primarily rewarded with “Smooth Love Potion” (SLPs), which may be traded for cryptocurrency or cash, or reinvested into the game’s virtual realm Lunacia. It is a non-fungible token (NFT), which means that it is unique and has a specific set of skills and features. They are stored on the blockchain, which is a digital record that cannot be modified, just like NFT pieces of art. Axies can be purchased, sold, or rented to other players. Owners can also breed them in order to produce young Axies that are more valuable. At the height of the game’s popularity last year, a beginner squad of Axies might cost hundreds of dollars, making it out of reach for many ambitious players in developing nations.

The cheapest Axies cost $37 each, bringing the total cost of a basic squad to $111. Players who spend more money, on the other hand, receive better Axies, giving them a higher chance of winning battles and earning SLPs and, in some cases, the game’s second crypto asset, AXS. Guilds and “scholarships,” which are profit-sharing arrangements in which participants are charged a percentage of their revenue, have been established by those with the financial means to field more profitable Axie teams. According to reports, the owners’ cut might be as high as 30%. Its supporters and inventors hail it as a watershed moment in the growth of the internet.

As the number of daily active players increased in 2021, the price of Axies and SLPs increased as well, creating concerns about the game’s long-term viability. When Axie Infinity revealed that it will migrate the primary network from Ethereum to its own sidechain dubbed Ronin, the market reacted negatively. The transfer of its primary network would result in the team having complete control over the data in the chain, resulting in the entire system being increasingly centralised, which would be contrary to the decentralised nature of the blockchain. Sky Mavis generates income from the game mostly through breeding and marketplace fees, while Axie Infinity has produced more than $1.2 billion in revenue to far.

It has also gained the support of wealthy investors, notably US billionaire Mark Cuban. However, some gaming industry observers believe the company’s economic model is unsustainable, citing the necessity for fresh players to keep money flowing in.Jonathan Teplitsky, CEO of blockchain developer Horizen Labs, cautioned that most play-to-earn games were a “house of cards” that were fueled by “hype and price speculation.”Axie Infinity, an NFT battler in the manner of Pokémon, was one of the largest “success” stories in the world of cryptocurrency gaming. Currently, it is believed to be responsible for one of the largest robberies in the history of technology.

The gaming-focused blockchain network, Ronin Network, revealed earlier today that a hacker was able to “drain” around $600 million worth of cryptocurrency from the network using an Axie Infinity flaw. from the Ronin bridge in two transactions, which we found earlier today. The suspected perpetrator used compromised private keys to order the fraudulent withdrawals, according to the police. You might wonder how. In the words of Ronin, “the attacker discovered a backdoor through our gas-free RPC node, which they exploited in order to obtain the signature for the Axie DAO validator.” For the most part, the Ronin “side-chain” for games like Axie Infinity employs “9 validator nodes” to prevent fraudulent transactions from taking place.

Due to the huge demand from new Axie players, Ronin granted special capabilities to Sky Mavis, the business that created the game, in November, allowing it to sign transactions on its behalf. Axie Infinity, which was first released in 2018, has seen an explosion in popularity in some corners of the internet thanks to the emergence of NFTs and market speculation surrounding blockchain games and the metaverse. Axie Infinity, which is part creature collectathon, half deck-building war game, attracted 1.8 million daily players last year and just passed the $4 billion mark in total NFT sales for the first time. It appears to have paid a price for its explosive expansion, taking shortcuts on security in order to serve new customers as quickly as possible. In his article, Ronin states that “the Axie DAO allowedlisted Sky Mavis to sign numerous transactions in its name.” This ended in December 2021, although access to the allowlist was not withdrawn at that time.

The attackers were able to get the signature from the Axie DAO validator once they gained access to the Sky Mavis systems through the use of the gas-free RPC. As part of its ongoing investigation into the attack, Ronin has reportedly locked down accounts, making it impossible for users to withdraw their assets, even as the price of RON, the network’s native token, has reportedly fallen by more than 25 percent. It’s strange how crypto currency networks, which are lauded for their security and decentralization, are continually targeted for theft. Last August, a hacker gained access to the Poly Network and made off with more than $600 million. Much of the money was eventually recovered. In January, hackers gained access to Crypto.com’s network and withdrew more than $30 million in what the business first described as a “low-key event.” The majority of that money has also been refunded. Whatever happens in the wake of the latest huge crypto breach is still to be determined.

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