Ronin Network, Axie Infinity’s crypto gaming platform, announced on Tuesday in a blog post published by the Ronin Network's official Substack, that more than $625 million in USDC and ether (ETH) had been hacked from their network last week, making it the largest reported crypto hack till date.
Ronin Network, a blockchain network, is an Ethereum sidechain built specifically for Axie Infinity. Axie Infinity is a popular crypto game that rewards its players with crypto tokens.
The blog clarified that the hack exploited the Ronin Network validator nodes for Sky Mavis, the producers of the popular Axie Infinity game, and the Axie DAO.
The losses totaled 173,600 ether and 25.5 million USDC, which is valued at over $625 million, as per the blog.
The blog stated that the hacker used hacked private keys in order to forge fake withdrawals.
As per data from Etherscan, the Ethereum address used by the Ronin attacker is a new one and was created one week ago after receiving ETH from the Binance exchange. The attacker's address retains the majority of the funds.
After the attack, both the Ronin Bridge and the Katana automated market maker (AMM) have been suspended pending the outcome of the investigation.
The price of RON, the Ronin network's native token, has fallen by 21 per cent as of 13:00 IST, CoinMarketCap data showed.
Experts blamed the fact that only five validator nodes had to be commandeered out of the nine validator nodes to complete the hack.
On this subject, Flora Li, Head of Huobi Research Institute, commented, “This hack reflects the continuing challenges that blockchains and operators face in balancing user experience and security. Axie Infinity exploded in popularity and saw a rapid influx in users on the Ronin blockchain. They took shortcuts to relieve network bottlenecks, cutting down the number of nodes that needed to be validated for transactions to just five of nine nodes, making it easier for hackers to exploit,”
“While Sky Mavis has pledged to raise the number of required nodes to eight, it still doesn’t solve the fundamental problem of how proof-of-stake blockchains can keep transactions fast, user-friendly, and energy-efficient without compromising security,” she further added.
In response to the hack, the Ronin blockchain network has increased the validator threshold from five to eight.
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