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Sky Mavis raises $150M, funds to be restored on the Ronin Bridge
- 5350-uiop-1130 5y agoI think this is almost certainly an inside job. You don't just lose $325 million and not find out about it for a week. That's naive.
- PragmaticPulp 5y agoThat’s less than 1/4 of the stolen funds. Is everyone getting a 1/4 haircut on their money? Or are they going to try to continue operating as if nothing has happened and hope that no more than 1/4 of users withdraw their money? I wonder how much they had to give up to take that much investment money that wouldn’t even get them back to being whole.
- mcintyre1994 5y ago> The new round, combined with Sky Mavis and Axie balance sheet funds, will ensure that all users are reimbursed. It sounds like they're putting in a bunch of their own money as well to reimburse people. I guess we'll only find out when they actually do that though if they are doing a full reimbursement.
- boeingUH60 5y agoFrom the post; "The round combined with Sky Mavis balance sheet funds, will be used to ensure that all users affected by the Ronin Validator Hack will be reimbursed. "
- lupire 5y ago"reimbursed" does not mean 100%.
- willcipriano 5y agoreimburse rē″ĭm-bûrs′ transitive verb To repay (money spent); refund. To pay back or compensate (another party) for money spent or losses incurred. To replace in a treasury or purse, as an equivalent for what has been taken, lost, or expended; to refund; to pay back; to restore. Its unclear if it does according to this definition. I could see it either way.
- gilleain 5y agoYes, a 'reimbursement' is a direction of a payment (in my understanding). A payment can be in full, or partial so yes you can have a partial reimbursement.
- duxup 5y ago> Sky Mavis is committed to reimbursing all of our users' lost funds Maybe they turn around and don’t do it but that sounds like all.
- h2odragon 5y agoall users get some refund, or all users get all funds refunded? ambiguity like that doesn't come cheap or easy
- duxup 5y agoI don’t that sentence is that confusing.
- somebodythere 5y agoIt's definitely written in a way that all users could be partially refunded, and still be truthful. It's quite likely that Sky Mavis doesn't manage to come up with the money to make all their users whole, and as such it would be risky to promise to fully reimburse all users.
- FatalLogic 5y ago>all users get some refund, or all users get all funds refunded? ambiguity like that doesn't come cheap or easy No, it's unambiguous. "All of our users' lost funds" doesn't imply "But not all of the funds". Nor can it mean "But not all of the users". The meaning of their statement is clear, unless they're going ridiculous and disputing definitions, such as: What are "funds", or Who is a "user" But whether it's possible for them to honor that promise? Seems doubtful. I find it very hard to believe that they can promptly conjure up over half a billion dollars to refund their users. Firstly because I'd ask: what were they doing with that excess capital before? edit: Although "committed to" does not mean "anytime soon"! Perhaps they plan to issue a token of some kind, and pray they can keep going and gradually make the users whole?
- lupire 5y agoAs long as insiders control 75% of the coins over time, through their fees or through the control, they can reimburse users fully (minus fees paid to Sky Mavis). Remember, if you scam or charge $700M from your casino game users, you can accept $625M lost to theft and still make a profit. But the announcement says "if this isn't enough to stabilize the coin, we'll take a treasury vote" presumably either to raise more funds or to default on their (non-legal) obligations to users. Code is law. Radical decentralization. Users should not expect to get any money back from Sky Mavis (or any other cryptocurrency system). That's what they signed up for.
- dannyw 5y ago> The 56,000 ETH compromised from the Axie DAO treasury will remain undercollateralized as Sky Mavis works with law enforcement to recover the funds. If the funds are not fully recovered within two years, the Axie DAO will vote on next steps for the treasury. This sounds like fraud.
- lupire 5y agoIt's not fraud if they got robbed, unless going forward they claim to be fully collateralize. Obviously their legal creditors in the real financial system (not the suckers buying coins) would prefer repayment to default, so it's in their interest to negotiate a new collateralization agreement to extract more money from "game" players (speculators) before shutting down and writing off the loss.
- dannyw 5y agoIn Australia, it is illegal for businesses to trade while insolvent. If they allow deposits of new ETH, that creates a very real scenario of new suckers losing money.
- boeingUH60 5y ago> If they allow deposits of new ETH, that creates a very real scenario of new suckers losing money. Not surprising, the whole Axie Infinity game is a house of cards. Not exactly a Ponzi, but something very close.
- danamit 5y agoThat's every cards game tho. My issue with Axie is its not decentralized, you can't even use a Ronin wallet without connecting it to their website first.
- rchaud 5y agoAxie's based in Vietnam, so would this fall under their local laws?
- duxup 5y ago> Sky Mavis will increase the validator group to 21 validators within the next three months, which will be a split between various stakeholders including partners, community members, and long-term allies. What is a validator?
- londons_explore 5y agoThe old fashioned word would be "server".
- NhanH 5y agoA blockchain node for that block chain
- Daviey 5y agoThe blockchain network nodes that assure a transaction by rolling the transactions into a block, transactions are an interaction the contract (code), which is executed by the validators.
- caoilte 5y agoThink of it like a "voter" in elections on any decision about the network. Once you control the majority of these validators you can do absolutely anything you want with the money the network controls.
- pavlov 5y agoIt’s when you control a database but you set up a little shell game to pretend it’s decentralized and out of your control. Typical use cases include scamming retail investors and evading taxes.
- ta3411 5y agoSame question for me honestly. Is a validator literally just a computer running their blockchain application and validation code? So instead of having a centralized db, Axie (and other blockchain tech) farms out this work and storage out to 9 computers?
- contravariant 5y agoDoes anyone have an article on this that require a little less background knowledge? The more I dig up about what Axie Infinity is, this hack and the (apparently) ETH backed currency it uses the more questions I have.
- deleted 5y ago[deleted]
- ufo 5y agoAxie infinity is a pokemon-like game where you collect creatures and use them in turn based battles. It is one of the most popular of these blockchain games, and like most of them it operates as sort of a pyramid/ponzi. Winning battles with your axies rewards blockchain tokens which can be used to breed more axies which may be sold for real money to new players who are joining the game. There is also a lending system where the rich axie holders can lease axies to people in developing countries that can't afford to buy them outright, in exchange for a cut of the rewards. As usual, the whole thing doesn't make a lot of economic sense, so don't try to look for some economic justification that isn't there. As for the hack, originally all the transactions and axie trading happened directly on ETH blockchain but that was too expensive because each ETH transaction is dozens of dollars. So Sky Mavis created a side chain for the game. You can deposit your ETH in the Sky Mavis account / smart contract. Then you can trade axies with other players using this account balance. Later, redeem the account balance for real eth to cash out. What the hackers did was steal the private keys for the sky mavis account and ran away with all the funds. We don't know if it was an external hacker or an inside job. Basically it's similar to the various cryptocurrency exchange hacks such as MtGox, Bitfinex, etc.
- contravariant 5y agoSounds like they were operating as a kind of central bank using a gold standard and somebody ran away with part of the gold? If so then I at least vaguely understand what happened. But it has to be crypto-woo that makes people think this is somehow a better thing to invest time and money in that just regular in-game money because as a way of investing money it makes 0 sense. Guess it'll be a fun wakeup call for people that securities backed by goods are very different from the actual goods.
- perlgeek 5y agoWow, asking institutional investors to hand over some cash to cover the cost of bad security -- that's ballsy.
- duxup 5y agoThey’re the best folks to ask, they don’t want to see their investment vanish.
- londons_explore 5y agoYou're reading it wrong... > The 56,000 ETH compromised from the Axie DAO treasury will remain undercollateralized The investors are handing over cash to invest in the company. The currency will run without backing from now on. That means any big users trying to withdraw at the same time won't be able to. And if that happens, the investors money won't be used to fill the gap.
- thebean11 5y agoI don't get how they can openly operate like that. Won't this cause an instant "bank run" and stop any sane person from moving ETH in the opposite direction?
- AustinDev 5y agoExcept that's the trick the bridge has been closed since the hack so there is no bank to run to...
- thebean11 5y agoSo the plan is to just shut down the service? I don't understand.
- ohgodplsno 5y agoNah, the plan is that users have been suckered in a game where they either accept their massive loss, or are forced to stay for years and slowly claw back their Eth while Sky Grifters and Griftance continue printing money
- dboreham 5y agoIs there a detailed technical description of this attack somewhere? The "official" page is very light on details (they got 5 validator private keys, no biggie, but something..something...rpc whitelist and oh wow now they got all the money). Since 4 of the 5 compromised keys were under the control of one organization, it seems reasonable to wonder about an inside job.
- caoilte 5y agoI can't recommend "web3 is going great" highly enough for creating digestible explanations. There's good commentary on Axie Infinity (the Sky Mavis game which got hacked) and links to more detailed explanations here. https://web3isgoinggreat.com/?id=2022-03-29-0 https://web3isgoinggreat.com/?id=2022-03-29-0 (particularly by Molly White the owner of the web3isgoinggreat https://blog.mollywhite.net/axie-hack/ https://blog.mollywhite.net/axie-hack/ )
- dboreham 5y agoHmm...thanks, but reading those I don't see any more details. There is some good background information on side chains and bridges but I'm already familiar with the security risks in the typical trusted bridge design. For clarity: I'm interested in answers to questions such as : how exactly did the attacker gain control of 5 validator private keys? The validators were running a vulnerable version of the Linux kernel, and the private keys were sitting in the filesystem, for example, could be an answer. And: what exactly is the mumble about RPC about? Did they build some sort of master key into the bridge contract, then left that key sitting on a machine with no root password?
- phphphphp 5y agoValid questions but they’re answers we will likely never know, because either the hack was an inside job and disclosure is bad for them or because they’re too incompetent to ever identify the real cause. Disclosure beyond “we were hacked” is not common in web3.
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- blamazon 5y ago>"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." I'll have 6 grams of whatever they're smoking, please.
- pwdisswordfish9 5y agoI'll have 6 kilograms. Single serving.
- tmp_anon_22 5y ago"Recent events" if this is a reference to sanctions against Russia for their invasion of Ukraine I'm speechless.
- blamazon 5y agoI interpreted 'recent events' as referring to them losing 650 million and then winning 150 million.
- deleted 5y ago[deleted]
- lelag 5y agoParaphrasing something I read elsewhere but is so true: defi systems have a natural bug bounty program where the payout for a critical is the entirety of the funds under management.
- SkyMarshal 5y agoFwiw that's not a new concept, it applies to cryptocurrency in general, not just DeFi, and people have been saying it since the early days. And of course it's true - finality and no clawbacks in decentralized systems means once it's stolen, it's stolen for good.
- VectorLock 5y ago>no clawbacks Except when there are, like the Ethereum fork to recover the DAO hack.
- spelunker 5y agotoo big to fail strikes again!
- SkyMarshal 5y agoHaha, yeah I probably should have qualified that with "ostensibly no clawbacks".
- Nextgrid 5y agoI don't understand the entire premise of these "play to earn" games. Where is the money supposed to be coming from? In the real world, jobs pay money because the work is valued by someone who's happy to pay for it (and presumably would earn more from that output than what they're paying for it). If there was a cheaper/free way to get that output, they'd use that or get taken over by someone else who does. In a game, what's the valuable output/resource being produced? The only potential thing I can see is for it is advertising, but there's a reason these services that paid you to browse/install a toolbar that would constantly display ads died out. It's ripe for fraud and even besides the fraud, that kind of advertising rarely converts and is thus worth nothing or less than the overheads of running such a platform. If advertising was a viable way to fund games, we'd already have that instead of lootboxes & microtransactions - and no blockchain required. So far all the "play to earn" things I've seen are Ponzi schemes - which actually applies to the majority of crypto and all of "web3".
- pavlov 5y agoYes, they're Ponzis. You're eighteen years old and see a Twitch streamer talking about how he's making $4000 / day by earning $SCAM tokens on this game. It doesn't look like a very interesting game, but you're good at games, why shouldn't you do this too? To start earning by playing, just one small step: you first need to buy a character. They cost about $500 but of course it's a great investment. The only way to buy the character is with the $SCAM tokens, so first you just need to convert your $500, credit cards accepted... And that is the real-world cashflow that pays the Twitch streamer and the company and the VCs. The tokens you earn in the game are only worth something as long as there's a steady stream of hopeful players bringing real money into the system.
- AustinDev 5y agoIn addition to this the vast majority of the people 'farming' games like axie are in poor countries particularly in south east asia. Just like how WoW offshored gold farming to china. Axie and similar play to earn games basically allow relatively wealthy western players to offshore the grinding to people in poor countries.
- clpm4j 5y ago"We are pleased to reveal that we have raised a $150 million USD funding round led by the world’s largest crypto exchange Binance, with participation from Animoca Brands, a16z, Dialectic, Paradigm and Accel. The round will be used to reimburse user funds affected by the Ronin Validator Hack." This immediately paints an image of a massive bonfire of cash in my brain.
- michaelgrosner2 5y agoMaybe this is off topic to your comment but every time I see a16z mentioned anywhere near crypto I have to laugh because I remember how big of a deal the "It's Time To Build" essay was only 2 years ago. Instead of building anything of actual use, they pour money into Ponzi schemes.
- SkyMarshal 5y agoKeep in mind A16Z Crypto is not the same fund as A16Z.
- qeternity 5y agoNot sure what you mean by this, they are most definitely A16Z... It's also not as if there is one A16Z fund...they have many many funds.
- kingcharles 5y agoIt's Dumpster fires all the way down!
- calibas 5y agoSeems like "robbing Peter to pay Paul".
- riffic 5y agofyi Mavis Beacon was a fictional character, not a real person. Good typing software though. The story of Renee L'Esperance, the model who was chosen to portray Mavis, is interesting: https://sea.mashable.com/social-good/17831/she-taught-a-generation-to-type-but-who-is-the-real-mavis-beacon https://sea.mashable.com/social-good/17831/she-taught-a-gene...
- tootie 5y agoI've worked in tech for over 20 years and I can't understand a word of this post except "$150M".
- kingcharles 5y agoI find that with a lot of posts recently. I consider myself a smart, switched-on person and yet I'll read an entire article and not understand a word of it.
- mrguyorama 5y agoThere is a lot of money in the blockchain space to be made by making things sound more confusing than they are.
- deleted 5y ago[deleted]
- yumraj 5y agoWas that real money raised or funny, AKA crypto, money?