Party continues after $625 million stolen

From the current point of view, this is a typical technology industry Party.

The Axie Infinity party at the Pattern Bar in downtown Los Angeles looked lively on the surface, but it was already undercurrent.

Earlier in the day, Axie Infinity announced that its Crypto network Ronin Network had been hacked to steal $625 million. Even with the size of the Crypto hacking attack now, the number is still staggering. The developer of Ronin Network is Sky Mavis, the parent company of Axie Infinity.

To make matters worse, March 29, the day the hack was announced, was supposed to be a big day for the company to hold a party.

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Axie Infinity co-founder Jeff Jiho Zirlin speaks at this NFT LA global event

Axie Infinity’s 31-year-old co-founder Jeff “The Jiho” Zirlin delivered the keynote address at the inaugural NFT LA event, held at the LA Live Convention Center in Los Angeles. Axie Infinity gamers and investors flock to the event from all over the world. (In P2E games, the boundaries between players and investors are actually blurred, because in the process of playing, you can earn a lot of money)

However, 30 minutes before Zirlin took the stage, his company blogged about the hack to the world.

Zirlin announced to the crowd in his keynote: “We found that 173,000 ether and approximately $25 million in USDC have been stolen from the Ronin network.” At the time, the screen above his head read, NFT Alliance: Status and Outlook.

So a few hours later, everyone in the Pattern Bar had a question in their minds: Will Zirlin still be there?

When Zirlin entered the room around 6 p.m. wearing a snug black Axie Infinity hoodie, the crowd jumped into excitement.

“Jiho is here” – said one Axie fan, who was present with Axie-shaped lollipops in their hands.

bad times

Zirlin’s mood was significantly lower. In an interview with CNN, he said that he first learned about the hacking attack at 2 a.m. that day and has not slept since then.

“Today is a tough day, and hacking is something we don’t want to go through as we evolve,” Zirlin said. “It’s really been pretty bad.”

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Axie Infinity co-founder Jeff “The Jiho” Zirlin (center) greets Albert “Aruchan” Takagi (left) at the Axie Infinity NFT Los Angeles party

At the party, Axie gamers gather for nachos and free margaritas. Even though the hacking incident cast a shadow over the whole party, it did not affect the excitement.

When asked if they were worried about their investments, these players all said they were confident.

“I’m an optimist,” said Chris, who didn’t want to give his last name, carelessly.

Vince Zolezzi said he believes Axie will be able to bounce back, and he told us that a quarter of his portfolio is in the Ronin network. “They must be able to get the money back, or they must have bought the corresponding insurance. I’m not too worried personally, everything will be fine, I’m confident.”

The company did not directly respond to CNN’s questions about whether the hacked assets were insured.

Many people have mentioned that hacking in the Crypto space is very common and that every hacking is an expensive but necessary lesson. They both believe the funds will eventually be recovered.

But the atmosphere of joy has been shattered by unease.

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People attend the Axie Infinity meetup in Los Angeles, California

Standing on the outer ring of the bar with a drink in hand, Brad Wenum, who entered the Crypto space in 2014, lost some early money in the hack — Crypto, which was worth around $500 at the time, is now worth almost $1 million. Wenum called Axie’s hack “eye-opening” and said it made him question the big players in the Crypto space, which disrupt the distributed nature of the system that attracted them in the first place. “I’m even starting to wonder if I’m even involved,” Wenum said.

Omar, a doorman at the Pattern Bar, said he was initially surprised by the dreary attitude of some partygoers until he learned about the hacking. “When I knew what was going on, I thought, if I were, I’d be angry too, very angry!”

Outside the party, Axie’s competitors are smoking cigarettes and gloating.

“Good news for us, although it’s going to sound scary,” said Wesley Peeters, chief technology officer at Pixie Interactive, whose P2E game is about to debut. “It’s a great opportunity for us.”

After our first conversation, Zirlin, co-founder of Axie Infinity, approached me and explained why he was going to the party when the company was in crisis.

“I promised them to go because they came from all over the world, so I had to go,” Zirlin said.

hacking incident

The hack happened on March 23, a week before Zirlin got the news.

According to the company, Axie itself wasn’t stolen, but the cross-chain bridge, which lets you convert game-specific tokens into ethereum and then into cash, was. In a blog about hacking, software engineer Molly White likens the Axie Infinity Token to chips in a casino. They can be used for cash transactions, but not if the casino’s safe is ransacked.

Now, transactions on the Ronin platform are currently frozen due to a hack.

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A poster of Axie Infinity hangs on the wall at a party in Los Angeles, California

When asked by CNN when users will be able to transfer their Axie to Ethereum again, Zirlin didn’t give an exact time, saying “it’s going to wait until we get everything right.”

When asked if he thought the hack might have been an insider, Zirlin didn’t hesitate to give us a no, with no additional details. He also declined to say why the company did not discover the attack until six days later.

Can the company guarantee that users will not be affected? Hearing the question, Zirlin paused and looked away.

“No one in the crypto space can make any promises,” said Zirlin, who founded the company in 2018, “but we’ll try to figure out a way to fix it.”

Shortly after his first interview, Zirlin asked CNN if his answers could be reviewed by his PR team before publication, but CNN declined the request because the interview was already on the record.

Crypto Pokémon

Fans of Axie Infinity like to compare it to Pokémon. Just like in Pokémon games, you can collect digital pets (Axies) in Axie Infinity, and then bring these pets to fight with other players’ Axies.

But Axie Infinity takes it to a new level, the P2E mechanism. The more you play Axie Infinity, the more money you can earn from it. This money comes from people’s game start-up funds (you need to buy or rent three Axies to start the game) and goes to pay those who get token rewards in the game.

According to The Information, Axie Infinity’s staggering growth has earned its parent company Sky Mavis a $3 billion valuation, with blue-chip Crypto venture firm a16z investing $152 million in it.

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Bobby Kunta attended the party and helped promote Nonfungible Events, a Party-to-Earn Crypto company that will host the Axie Infinity tournament in Las Vegas in May.

Today, Axie Infinity fans are looking forward to the upcoming “Axie Infinity: Origin”. In this new version of the game, players will be able to purchase collectible skins for their Axie. Currently, Axie Infinity’s subreddit and Discord are full of questions about its release date, which has been pushed back due to the hack.

As with other P2E games, it’s hard to tell whether people play such a game out of genuine love or to make money. So it’s not clear if people are so excited about the Origin release, because they really want to play the game, or because they want to monetize it. According to this logic, if Origin fires, then players will pay for in-game items to experience the game or level up, not to make money, just like countless players in non-Crypto games such as Fortnite. do that.

At the Pattern Bar party, some chatted that they would love to play Origins, while others were talking about how its launch will keep the game economy going.

But even if Sky Mavis and Axie Infinity recover from the hack and successfully launch Origins, the question remains, where does the resulting money end up going?

“Digital Serfdom”

Axie Infinity was already controversial before this hack.

For Axie Infinity’s business model, some see it as an opportunity for players in developing countries, while others criticize it harshly for being exploitative.

The game has proven to be hugely popular in the Philippines, and a complex network has formed between players and regulators.

Axie Infinity requires players to hold three Axies before they can start a game, and the fee, which at one point ran into the hundreds of dollars, has recently dropped back to around $60. The game allows users to rent out their Axies in the form of “scholarships”, where “scholarship winners” can borrow Axies from “managers” and then pay themselves a fair share of the game’s revenue. The share ratio is decided jointly by the manager and the scholarship recipient, usually 50 to 50.

In the NFT boom in 2021, the Philippines has earned or high income from this game, and even some players have quit their jobs directly. But with the NFT craze over, the once staggering benefits of the P2E economy are now less than the Philippine minimum wage, according to research firm Naavik.

The prosperity of Axies in the Philippines has led to the rise of the guild industry, who have collected thousands of Axies to rent to novice players in the Philippines.

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On the right is Alfonso Maputol, who came from Singapore for the event

“We have 3,000 players in our guild, playing multiple games,” said Alfonso Maputol, CEO of Play It Forward, a guild whose scholarship recipients are almost all from the Philippines and typically play six to seven days a week. Maputol, who flew in from Singapore for Axie Infinity’s offline event, said he had fired some people because they didn’t have enough time to play.

“If you don’t play, we may cancel your winnings,” said Maputol, who told CNN he doesn’t play the game personally.

Well-known Crypto critic and programmer Stephen Diehl likens Axie Infinity’s business model to “digital serfdom.” Zirlin declined to comment, saying the statement was clearly innuendo.

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People playing Axie Infinity on their phones in Malabon, Philippines

“It takes me 20 to 30 minutes to respond to it,” Zirlin explained.

Axie holders often point to the Philippines as a case in point that the game is not just a fun app or a good investment product, but a moral act of kindness.

One Axie stake holder compared the game to a Ponzi scheme.

“[Axie Infinity] has one of the highest positive externalities of any Ponzi scheme in the world,” Justin Seeley said in the lobby of the NFT LA meetup. Seeley invested thousands of dollars in Axie Infinity, a game that, in his words, shifted wealth “from first-world speculators to third-world players.” Seeley clarified that his definition of a “Crypto Ponzi scheme” differs from the traditional definition.

“It’s a good Ponzi scheme that can bring growth,” he said.

Kalie Moore, a spokeswoman for Axie Infinity, dismissed claims of a Ponzi scheme, saying that the development of the game economy “does not depend on new users compensating early players” and that “as long as players are interested in creating new Axies, the game economy can be It works, but eventually, some players keep their Axie as a pet, as a collection, or use it to play other games in the Axie universe.”

Moore said that Axie Infinity’s upcoming update to Origin will “improve the long-term sustainability of the game” by increasing the amount people spend on fun and personal levels.

What’s unclear is when Axie Infinity users in the Philippines or anywhere else will be able to cash out their earnings.

undiminished confidence

At sunset, Japanese Axie Infinity influencer Albert “Aruchan” Takagi hosted Axie Infinity’s bingo card delivery on the DJ booth.

There were people waiting to grab Axie and Axie T-shirts. A Crypto company that claims to be the first “party and earn” platform has organized a trip to the upcoming Axie Championship in Las Vegas. A blond man picks up discarded bingo cards around a bar table in order to find winning cards.

After the event, Axie Infinity fans flocked to Zirlin, trying to find out some gossip about the hack, as they heard a huge amount was stolen.

Asked later that night if the hacking would make him worry about Axie Infinity’s future, Zirlin hesitated before replying: “I wouldn’t worry about it, I have a lot of confidence in us, despite what we suffered yesterday. A very serious blow.”

“But going through this event I believe our community will become more united.”

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/party-continues-after-625-million-stolen/
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