Axie 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, a

Axie 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.