There is no boring ay in the cryptocurrency industry. Some titles are best avoided, although external circumstances may force the situation a bit. The Ronin Network, known for powering Axie Infinity, among other projects, suffered from a $620 million hack.
A Rough Day For Ronin
It is not abnormal to see hacks or thefts in the crypto industry. Unfortunately, that situation will not change overnight either. The technology used by projects, companies, and protocols is only as secure as the people who build it. Anything humans make is subject to flaws, exploits, and loopholes, including blockchain networks.
While Poly Network was considered the most “affected” network regarding hacking, it has now lost the crown. Instead, it belongs to the Ronin Network, where theft of over $620 million has gone unnoticed for six whole days. It is a problematic endeavor that highlights the seeming disinterest in properly monitoring a network and how users behave. Of course, decentralization removes oversight from the equation, but six days is an unacceptably long time.
Interestingly, the Ronin Network tea only “noticed” the issue after some people complained. The Ronin Bridge lets users convert to and from Ethereum and is very successful. A theft of hundreds of millions of dollars should never go unnoticed, yet it did in this case. Ronin Network is now associated with the biggest hack in the crypto industry to date. Not something to be proud of whatsoever.
Ronin primarily gained momentum due to Axie Infinity, the popular play-to-earn game. Ronin serves as a sidechain to Ethereum to introduce fast and cheap transactions, yet it is not trustless nor decentralized. Instead, the network relies on validators – nine in total – to achieve consensus. A weakness waiting to be exploited, as one needs consensus from five validators to process transactions. Four of the nine nods are operated by the same entity.
Laundering Funds Remains Tough
Draining ET and USDC from the Ronin Bridge contract is a lucrative endeavor but also tricky. The USDC were swapped for Ether, which is the logical choice. Some of the funds ended up on FTX and Crypto.com, although the remaining funds have yet to move. The transparent nature of blockchain transactions makes it easy to link the attacker’s address to any attempt to launder funds. It is unclear where things will go from here.
Those who expect the Ronin team to recover the money themselves may want to think again. The team showed incompetence in noticing the strange activity and provided a meek response once users started complaining. Moreover, the lack of decentralization makes this network one users may want to avoid. There will be a change to ensure more validators need to approve transactions, but no plan on decentralizing the network as it should be.
It is crucial to note that this incident does not directly affect Axie Infinity users. Funds were stolen from the Ronin Bridge and nowhere else. Even so, the game will always be associated with this hack, potentially damaging its reputation.
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