Axie Hacked – The Current State of Axie Infinity

Axie Infinity

The blockchain-based game Axie Infinity has seen rapid growth since its creation, but a recent hack might stall its progress. On top of its existing in-game economic problems (which were largely characterized by runaway inflation), this recent hack will likely make for a turbulent course as its developer—Sky Mavis—does its best to move forward.

What does the current scenario look like? Is there any chance of a legal battle? And will Axie Infinity be able to survive the aftermath? Let’s find out.

The Current Scenario

Recently, the Ronin network in which Axie Infinity is based was hacked, costing users $625 million. These users were players in their game, in which players could purchase axolotls as NFTs and battle against other players, much like in Pokémon. Tokens called SLPs and AXS are used to breed new axie NFTs, and those tokens could then be sold for cryptocurrency. Essentially, it’s a “play-to-earn” game.

Sky Mavis’s attempts to progressively decentralize their network led to a number of vulnerabilities, one of which being an insufficient number of validators. This vulnerability exposed them to hackers, resulting in the lost cryptocurrency funds.

Sky Mavis has taken full responsibility for the breach in their security, and they’re currently working to increase the number of validators on their network. In addition, they are replenishing the lost funds to their users.

Axie Infinity Was Already Struggling

This isn’t where their troubles began, of course. Given the fact that players could breed more axies without some way of removing resources from the game, it tanked the value of their tokens, leading to runaway inflation. Sky Mavis had been planning to implement ways to curb this problem, such as by implementing more intrinsic rewards (rather than the promise of monetary payment) to incentivize gameplay.

As it was, however, its in-game economy wasn’t sustainable, and the hack has only exacerbated the game developer’s problems.

Has Sky Mavis Opened Themselves Up to Liability?

One question that may come up is that of whether Sky Mavis has opened themselves up to liability. After all, they were aware that there would be vulnerabilities in their network as they continued their growth, so would that make them legally responsible for their players’ losses?

In short, the answer to that is yes. However, it doesn’t seem likely that they’ll have to face a lawsuit. Given that they are already taking action to increase security and replenish players’ funds, it’s unlikely that anyone will take any legal action. If anyone were to file a lawsuit, they wouldn’t be likely to demand any actions beyond what Sky Mavis is already taking.

Also, there’s the matter of jurisdiction. Sky Mavis is based in Vietnam, while the bulk of their player base is in the Philippines. The difference in jurisdictions would make a lawsuit more difficult, and thus disincentivize any hostile actions on the players’ part.

Is Axie Infinity Doomed?

While the current events may have caused a great deal of disruption for Sky Mavis, it’s not likely to spell the end of Axie Infinity. It does, however, coincide with changes the developer was already implementing. Future versions of the game will likely have less in the way of extrinsic motivators as they follow a more “free-to-play” model, all while the Ronin network becomes (potentially) more secure.

That said, another event like a major hack could be bad news for the company. While Sky Mavis stands a decent chance of recovery from its current state, an additional attack or continued losses could lead to a slow, grinding end for Axie Infinity. It really depends on how much turbulence they can weather in the coming months.

Related Posts
  • Cryptocurrency: Navigating the Legal Landscape Read More
  • The Latest on SEC vs. Ripple – Is the End Near? Read More
  • Smart Contracts – A Legal Approach and Challenges Read More