Sky Mavis

Mystery of the whale wallet holding 50% of Axie Infinity’s SLP supply

Contrary to the obvious explanation, this massive whale wallet is not owned by Axie Infinity or the company behind it, Sky Mavis.

For nearly a year now, a mysterious Axie Infinity wallet has been quietly amassing billions of Smooth Love Potion (SLP), the in-game cryptocurrency powering one of the industry’s most popular play-to-earn (P2E) crypto games.

On Wednesday, the anonymous whale wallet now holds a little over 22 billion SLP — more than 50% of the total circulating supply of the token.

The problem? No one knows who it belongs to and what their intentions are.

The wallet in question was brought to Cointelegraph’s attention by Axie Infinity player and tech co-founder Michael Benko, who first caught wind of this mysterious wallet on Aug. 25.

Should we be worried?

Benko told Cointelegraph he became concerned about the wallet given the amount of SLP it had gathered in a relatively short amount of time, which could potentially wreak havoc on the game’s ecosystem.

“The significance of a wallet holding so much SLP, if it’s an individual person, gives that person a huge amount of control over an economy, especially in an economy where it’s so hard to mint a token.”

Launched in 2021, Axie Infinity is a blockchain-based game in which players purchase NFTs of cartoon creatures that they breed and fight against other players in turn-based gameplay.

SLP is earned by players for completing daily quests, battling other players in the “Arena” mode or playing against AI in the “Adventure” mode. The SLP can be used for breeding Axies, crafting in-game runes and charms (power-ups), and can be sold on exchanges.

Benko noted that according to the latest season update, an average Axie Infinity player can generate between 10 to 70 SLP per day, depending on how good they are at the game:

“So it is a concern, if someone’s sitting there with 22 billion SLP […] they could really keep the price flat or keep the price down when it actually should, by natural market conditions, be going up.”

The cryptocurrency is currently priced at $0.004, down 99% from an all-time high of $0.40 on July 13, 2021, according to CoinGecko.

Who owns it?

Theories explaining the existence of the wallet have only led to dead-ends so far.

Benko initially theorized that the wallet was “some system Axie Infinity had to automatically distribute SLP to players who earned it.”

However, Sky Mavis co-founder and chief operating officer Aleksander Larson told Cointelegraph that neither Sky Mavis nor Axie Infinity hold any of the game’s cryptocurrency, stating:

“All tokens in existence have been created by players.”

Yield Guild Games co-founder Gabby Dizon — one of the major decentralized autonomous organizations (DAOs) for players of Axie — said YGG didn’t own the wallet and suggested it could be a wallet used by an exchange to hold liquidity.

“Don’t think this is ours as we typically use all of our minted SLP for breeding,” said Dizon, adding that “the most likely explanation is that an exchange is holding it for their liquidity.”

Benko, however, noted that while many SLP transactions saw Binance as a sender or recipient of many transactions, upon looking at the transactions, he doesn’t believe that it is a wallet owned by the crypto exchange:

“Binance seems to have an official wallet [already] and this doesn’t seem to be that wallet.”

Cointelegraph reached out to Binance for comment but has not received a response at the time of writing.

If you have any theories on who is behind the wallet contact felixng at cointelegraph.com

Battle-hardened Ronin bridge to Axie reopens following $600M hack

The Ronin bridge tied to Axie Infinity is back up with a new design after Sky Mavis introduced a circuit breaker system and daily withdrawal limits.

Sky Mavis, developers of the popular play-to-earn (P2E) nonfungible token (NFT) game Axie Infinity have announced that the Ronin bridge is back online three months after it was hacked for more than $600 million.

The Ronin bridge is an Ethereum sidechain built for Axie Infinity, and it enables users to transfer assets between the sidechain and the Ethereum mainnet.

On March 29, 173,600 Ether (ETH) and 25.5 million USD Coin (USDC) was drained from the bridge after hackers managed to gain access to private validator keys. The hack was worth more than $620 million at the time.

According to the Tuesday announcement from the Sky Mavis team, the Ronin bridge is back online after three audits (one internal, two external), a new design and full compensation of users’ stolen assets:

“All wETH and USDC owned by Ronin Network users is now fully backed 1:1 by ETH and USDC on Ethereum, as promised. All users’ have been made whole.”

In total, Sky Mavis has now reimbursed 117,600 ETH and 25.5 million USDC by providing the ETH liquidity to back users’ Wrapped ETH (wETH) on the Ronin network.

In April, around 46,000 of that ETH had already been compensated after Binance provided a bridge to its exchange so that users could swap out wETH for ETH. Liquidity was sourced from the Axie Infinity balance and founders’ funds to support the move. Binance also led a $150 million funding round to help Sky Mavis repay Axie Infinity users.

The remaining 56,000 of the total stolen ETH belongs to the Axie DAO Treasury and will remain uncollateralized as Sky Mavis “works with law enforcement to recover the funds.”

good job.

— CZ Binance (@cz_binance) June 28, 2022

As part of the revamped bridge design, Sky Mavis has updated the smart contract software to enable validators to set daily withdrawal limits, with the initial amount set at $50 million at this stage. The team also introduced a circuit breaker system that breaks down the monetary value of withdrawals into three tiers.

Tier 1 is for withdrawals less than $1 million and requires 70% of validators to sign off, and tier 2 is for amounts greater than $1 million and requires 90% of validator signatures. Tier 3 is for withdrawals greater than $10 million and requires a 90% validator sign-off, a small transaction fee and a seven-day review process:

“The new bridge design includes a circuit-breaker system as a contingency plan which increases the security of the bridge by halting large suspicious withdrawals.”

Sky Mavis admitted in a postmortem report in late April that its lack of decentralization had made the Ronin bridge vulnerable to the hack. At the time, it had just nine validator nodes, with employees having access to four of them.

After promptly raising the number of node to 11, Sky Mavis outlined intentions to raise the count to 21 within three months of the postmortem, with the long-term goal of surpassing 100 total nodes.

The team did not provide an update on how many validators nodes the Ronin network now has in the latest announcement, however.

Axie Infinity has seen its monthly NFT sales volume tank dramatically in 2022, with data from CryptoSlam showing that the game went from generating $126.4 million in January to just $2.8 million in June.