Blockchain Monthly Highlights: $625 Million Hack Hits Game, Biden Eyes Crypto Strategy
A major hack of play-to-earn blockchain game Axie Infinity shows the market's continued vulnerability. In the US, President Joe Biden signed a crypto-related executive order.
This past month, an attack of unprecedented magnitude showcased the weaknesses still present in the blockchain-based gaming market.
In another historic event, the White House announced it wants to know more about cryptocurrencies, and in order to do so it will leverage its expertise alongside various government agencies.
Here the Investing News Network (INN) offers a recap of what to know about the blockchain business and cryptocurrencies in the month of March.
Historic hack on blockchain game deals devastating blow
Vietnam's Sky Mavis, the developer of the play-to-earn blockchain game Axie Infinity, was the victim of a $625 million hack involving a combination of USD Coin and ethereum.
The attack was directed at the Ronin Network, which was developed by Sky Mavis and allows Axie Infinity players to conduct crypto transactions, acting as a bridge between the game and the ethereum blockchain.
A post from Ronin Network confirms the attack was directed at Sky Mavis, the maker of the game.
The hack took place on March 23, but the developers only became aware of it on March 29.
“The fact that nobody notices for six days screams aloud that some structure should be in place to watch illicit transfers,” Wilfred Daye, head of Securitize Capital, told Bloomberg.
The breach seems to have been traced back to a sidestep Sky Mavis took in order to accommodate the growing popularity of the game. In a report, Ars Technica explains:
While Axie Infinity originally ran directly on the Ethereum blockchain, the high transaction costs and slow transaction speeds on that network quickly became untenable as the game grew. To get around those fees, Sky Mavis in 2020 started to use a sidechain — a parallel private blockchain running on top of Ethereum that could bypass the need to pay Ethereum "gas" for each and every transaction.
In a breakdown of what experts think the hacker will be able to do with the takings, CoinDesk quotes Adrian Hetman, a DeFi expert at Immunefi. “Laundering $600 million, I don’t think it’s possible,” he said.
Biden signs intriguing executive order
At the start of March, US President Joe Biden signed a new executive order focused on tasking federal agencies with reviewing the risks and benefits of cryptocurrencies in order to better lay out a strategy around digital coins.
Among the priorities for Biden, consumer protection is top of mind. The cryptocurrency market has been ripe for scams and other pitfalls for investors looking to get involved.
The order states that it will focus on the following areas:
- Protect US Consumers, Investors, and Businesses
- Protect US and Global Financial Stability and Mitigate Systemic Risk
- Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets
- Promote US Leadership in Technology and Economic Competitiveness to Reinforce US Leadership in the Global Financial System
- Promote Equitable Access to Safe and Affordable Financial Services
- Support Technological Advances and Ensure Responsible Development and Use of Digital Assets
- Explore a US Central Bank Digital Currency (CBDC)
Alongside these directives, the executive order is asking the US Department of the Treasury to build up policy recommendations for the White House to unite on. According to a report from Bloomberg, the Biden administration appears to be split on how to best approach cryptocurrency policy.
Around the INN homepage
- VIDEO — Cormac Kinney: Diamond Prices Rising, New Tech to Open Market for Investors: Cormac Kinney, founder and CEO of Diamond Standard, sat down with INN to discuss recent trends and changes in the diamond industry. He discussed his firm's interesting marriage of blockchain technology with the diamond space. The firm is offering physical diamond products backed by digital tokens. "The breakthrough is that using optimization and automated market making and radical transparency, we can prove that (any) two physical coins are equal," Kinney explained.
- Why are Big Banks Making Metaverse Deals?: After a recent string of partnerships between big-brand banks and metaverse companies, INN took a closer look at what this could mean moving forward. Two banks with recent deals seem excited about the potential ahead, but still expressed conservative views about the total takeover of the metaverse in daily life.
- 5 Ways to Invest in the Accelerating Bitcoin Market: INN offered new investors a breakdown of just how to approach the fast-paced bitcoin market.
From around the web
- CBC shared comments from Conservative party leader candidate Pierre Poilievre, who supports a decentralized economy in Canada. Poilievre emphasized the lack of control for digital coin solutions and shared his hopes for citizens in the long run. "Government is ruining the Canadian dollar, so Canadians should have the freedom to use other money, such as bitcoin," the candidate said.
- Motherboard interviewed Exploration Laboratories, an asteroid-mining company planning to launch a collection of NFTs in order to fund its future business endeavors. “We have an opportunity to create some awesome artwork with really talented artists and share that vision for what that's going to be," Chief Engineer Miguel Pascual said. "But really, we just hope to be, you know, inspirational the same way SpaceX has been."
- GamesBeat broke down a US$5 million raise by Singapore-based video game developer Red Door Digital to create blockchain games that fix the issues players are currently experiencing. “Web 3 gaming has set in motion a paradigm shift for the industry, but so far studios have not delivered titles that are all that fun to play. Red Door Digital will be using this funding to plug that gap,” Joseph Derflinger, CEO of the game maker, said.
One last thought...
Beyond the Axie Infinity incident, this year has already been packed with hacks and attacks on cryptocurrency opportunities, and they can teach investors a variety of lessons.
Another recent attack came from hackers who stole US$50 million from Cashio, a self-described algorithmic stablecoin found in the public blockchain Solana.
In a surprising turn of events, the hackers announced they would be refunding victims of their attack.
“The intention was only to take money from those who do not need it, not from those who do. Will be using the ETH gains to return more funds to those affected, even some accounts more than (US$)100k,” the group said, according to a report from Motherboard.
Does the act by these hackers mimick the tales of Robin Hood? It remains to be seen, but one thing’s for sure — we haven’t seen the last of these blockchain hacks.
Don’t forget to follow us @INN_Technology for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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