Discover more from The Lunacian
Sky Mavis Raises $150M Led By Binance, Funds to be Restored on the Ronin Bridge
Update on July 17th -
In April 2022, Sky Mavis announced a $150M round, which was committed by a tight knit group of investors, within one week of the Ronin Security Breach. The security breach was unexpected and as part of our crisis response, we immediately put together a round that ensured access to funds that might be needed to reimburse all users and to continue building. As we learned more about the hack and what was required to make all users whole, Sky Mavis and Axie Infinity were able to refill the bridge and reimburse the funds with the company’s own balance sheet.
Because of our strong financial position and crisis response, we were able to scale back the round significantly. In the end, we only raised $11M, rather than the $150M that was originally allocated.
We are incredibly grateful to our investors for stepping in at an unprecedented moment and offering their support, and wanted to honor the terms originally offered. At the same time, we are proud of our resilience and financial strength that enabled us to make all users whole with internal funds.
Today we announced a 150 million USD funding round led by Binance with participation from Animoca Brands, a16z, Dialectic, and Paradigm.
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.
The Ronin Network bridge will open once it has undergone a security upgrade and several audits, which can take several weeks.
Sky Mavis is in the process of implementing rigorous internal security measures to prevent future attacks.
To our community, partners, and friends,
The last 8 days have been the hardest stretch of our four-year journey. Thank you for your bravery, kindness, prayers, and words of support. You’ve been a constant source of energy and inspiration for us as we’ve worked tirelessly to resolve the Ronin breach.
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.
On March 23, Sky Mavis’ Ronin validator nodes and Axie DAO validator nodes were compromised resulting in 173,600 Ethereum and 25.5 million USDC drained from the Ronin bridge. The attack was socially engineered, and a thorough investigation is ongoing. We take full responsibility for the breach. The root cause of the breach was the small validator set which made it much easier to compromise the network.
While racing for mainstream adoption, we made some trade-offs that ended up leaving us vulnerable to this sort of attack. It’s a lesson that we’ve learned the hard way. A lesson that will guide how we build Ronin out moving forward. We’re confident that we will come out stronger and wiser from this.
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.
The new round, combined with Sky Mavis and Axie balance sheet funds, will ensure that all users are reimbursed. The Ronin Network bridge will open once it has undergone a security upgrade and several audits, which can take several weeks. In the meantime, Binance is supporting the Ronin Network by providing ETH withdrawals and deposits for Axie Infinity users, allowing most of them to operate freely.
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. 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.
“In order for the global ecosystem to continue thriving and maturing, it is imperative that we work together, especially when it comes to security, which is our strong suit,” said Binance CEO “CZ” (Changpeng Zhao). “We have seen the tremendous work and growth of the Sky Mavis team since working together on the Axie Infinity project on Binance Launchpad. We strongly believe Sky Mavis will bring a lot of value and growth for the larger industry and we believe it’s necessary to support them as they work hard to resolve the recent incident.”
“CZ” Changpeng Zhao, CEO, Binance
“Sky Mavis is committed to reimbursing all of our users' lost funds and implementing rigorous internal security measures to prevent future attacks. With the support of Binance and other industry leaders, we will be able to quickly expand the validator set from five to 21 validators to ensure the security of the Ronin network. While we address this issue, we are also focusing on the future, starting with tomorrow’s launch of Axie Infinity: Origin. We are also thrilled to collaborate with Binance NFT on future projects.”
Trung Nguyen, CEO, Sky Mavis.
Despite this recent setback, Axie and Ronin maintain a dominant position in the NFT gaming space and our community is unmatched:
Axie has processed 10x more all-time volume than the 2nd largest NFT game.
Ronin has processed 3x more NFT trading volume than all other chains, barring Ethereum.
There are 2.6 M unique addresses that own Axies. This is 4x more than the next largest NFT project (NBA Top Shot) by holders.
The Ronin wallet has been downloaded 3 million times, serving as a boarding pass and on-boarding portal into Web3 for millions of people.
With 2.2 million monthly active players, Axie is the most played NFT game of all time.
We will continue building together with this community. This is a journey that will be measured in decades. Onward!
Disclaimer: Please note that anything written in this document should not be taken as financial advice. Axie is a bleeding-edge game that's incorporating unfinished, risky, and highly experimental technology. Development priorities, roadmap, and features are subject to radical overhaul based on research, traction, feedback from the community, and a myriad of other factors.