$625.5 Million Stolen From Axie Infinity’s Ronin Network

Key Insights:

• The $650 million stolen funds include 173.6k ETH and 25.5 million USDC.
• Katana DEX and Ronin Bridge were disabled as soon as the hack was detected.
• This exploit marks the biggest hack in the history of crypto exceeding the Mt.Gox $450M hack.

While the world was witnessing the momentum of crypto adoption getting stronger by the day, the fear of most pessimists turned into reality. The risks accompanying DeFi have been cited as a reason against using crypto for ages.

Today those risks became real when Axie Infinity’s Ronin’s Network suffered the biggest hack in the history of crypto.

$625.5 Million Stolen

In a blog post, the Ronin Network explained the events that led to the unfortunate incident in which 173,600 ETH and 25.5 million USDC, combined worth over $625.5 million, were stolen by a hacker.

The Ronin Network explained that Sky Mavis’ Ronin chain, which currently consists of 9 validator nodes, was compromised of 4 of its nodes.

As the hacker gained access to the private keys of these validators, it still needed one more key in order to execute the transaction since the Ronin Network uses 5 out of 9 validator signatures to recognize a deposit or withdrawal event.

The access to a fifth signature came from a third-party validator run by Axie DAO, the use of which was discontinued in December last year, but the allowlist access was not revoked. 

As soon as the hacker gained access to this, they forged fake withdrawals in which the aforementioned amount of ETH and USDC were stolen.

At the moment, the Ronin Network is preparing safeguards to prevent future attacks and also finding ways to find the hacker(s).

Going forward, the validator threshold will be set at eight instead of five, and the network is also migrating its nodes, separating it from its old infrastructure.

The network also disabled Katana DEX to prevent deposits to Ronin Network. Adding to the same, the blog stated,

“We have temporarily paused the Ronin Bridge to ensure no further attack vectors remain open. Binance has also disabled their bridge to/from Ronin to err on the side of caution. The bridge will be opened up at a later date once we are certain no funds can be drained.“

Biggest Hack Ever

Up until now, the largest hack/exploit that the world of crypto has witnessed was the Mt.Gox hack of 2014, which was worth over $450 million back then. In the hack, about 850k BTC (worth over $40 billion today) went missing or were stolen.

However, that changed today after this hack, which going forward, will be a very effective fuel for anti-crypto individuals’ fire. 

This also came at a time when crypto successfully gained the world’s attention thanks to the recent market-wide rally in which Axie Infinity too witnessed a significant rise.

The GameFi token AXS was up by almost 58% four days ago before falling by 9% to trade at $65.1 at the time of writing. 

But going back to the hack, only time will tell if this $625.5 million will ever be returned to the users.