Stolen 600 million six hundred days later, Ronin makes a comeback

Written by: Joyce, BlockBeats

Edited by: Jack, BlockBeats

The long-awaited "bull return" signal in the crypto community has persisted for more than two months, and the narrative of the blockchain gaming sector has once again attracted the attention of investors. The gaming public chain Immutable X, which hosts hundreds of games, has seen its token IMX rise nearly 300% over the past two months. Meanwhile, Ronin, with a market cap of less than 1/5 of Immutable's, has also achieved a 340% increase in the same period.

When mentioning Ronin, most people's memories linger on the leading blockchain game Axie Infinity, which created the GameFi boom during the last bull market. Two years later, Axie Infinity is still alive, and so is Ronin.

Ronin's Revival

Axie Infinity from 2020 to 2021 was nothing short of remarkable. Monthly revenues reached $300 million, daily revenue once surpassed that of Honor of Kings, and it spawned large gaming guilds like YGG. The success of Axie Infinity attracted a large number of gaming enthusiasts and developers to the Web3 gaming space, shaping today's GameFi sector.

However, like most explosive projects in the crypto industry, Axie Infinity could not escape the curse of the boom-and-bust cycle. After reaching 28 million daily active users in November 2021, the inflated game assets raised the new user entry barrier to an unsustainable level. With no new entrants, the internal economy of the game could not sustain itself due to demand mechanisms and inflation models. By the end of the year, as the crypto market gradually turned bearish, Axie Infinity fell into a "death spiral," with its market cap plummeting from $10 billion to $3 billion, evaporating nearly 70% in two months.

According to data released by Nansen, in November, the number of active addresses on Ronin exceeded 460,000, a month-on-month increase of 368%, the largest increase among all Ethereum sidechains. After experiencing a bull-bear cycle, the wandering Ronin is still here.

$600 Million Stolen

For Sky Mavis, the development team behind Axie Infinity, the impact of the "great crash" was particularly painful, as just a few months prior, they had launched their ambitious "Great Voyage Plan"—the Ronin Network.

Ronin is an Ethereum sidechain initially created for the Axie Infinity community. During the period from 2020 to 2021, the influx of players into Axie Infinity made Ethereum's slow settlement and high gas costs a major headache for the team. Sky Mavis urgently needed a reliable, fast, and low-cost network to ensure the continued development of Axie. After their partner Loom decided to stop customizing L2 networks for consumer applications, the Ronin network was developed independently by Sky Mavis.

With their own application chain, Sky Mavis was able to design the chain's functions and features according to their ideas and the needs of the game and its community. Axie no longer needed to compete for on-chain space and gas with other DeFi projects. In addition to faster speeds and lower costs, Axie players on the Ronin network also gained their own game DEX and wallet, eliminating the need to leave the ecosystem for transactions. The Ronin network officially launched in February 2021, and by November, the number of daily active addresses on the chain had surpassed 1 million.

The most attractive new feature for players was the staking economy that came with the Ronin network. Ronin set up a separate AXS staking pool for users to stake AXS and earn rewards. Six months after the network launched, the total amount staked in AXS exceeded 20 million, nearly 30% of the circulating supply.

However, even though Ronin's achievements proved Sky Mavis's vision that "games need independent networks," by the end of 2021, this ambitious "Ronin Network" still could not reverse the downward trend of Axie Infinity amid the broader bearish trend in the crypto market. To make matters worse, a theft incident occurred early the following year.

In March 2022, the Ronin network's cross-chain bridge was hacked, resulting in the theft of 173,600 ETH and 25.5 million USDC. For several days after the incident, the entire community could only watch helplessly as hackers transferred and liquidated assets worth approximately $600 million, leaving the team nearly powerless to respond.

Two weeks after the incident, Sky Mavis announced it had accepted $150 million in financing led by Binance, with participation from Animoca Brands and a16z. According to the plan, this round of financing would be used alongside Sky Mavis's existing funds to compensate all users affected by the attack. However, in reality, Sky Mavis only raised $11 million in this round of financing. Shortly after leading the investment, Binance withdrew, with its spokesperson stating that Sky Mavis had been able to stabilize the recovery of funds since April and could cover the stolen users' funds without Binance's investment.

"$600 million stolen" seems to have become the last memory left by Sky Mavis and the Ronin network before fading from public view.

A Stitch in Time Saves Nine

Binance's withdrawal was seen as a signal that Sky Mavis was no longer favored, with its valuation dropping from $3 billion to $1.9 billion. Under the shadow of "serious security risks," the price of the RON token further declined, and the network's TVL halved within a month. In pursuit of speed and cost, Sky Mavis ultimately faced the consequences of the "impossible triangle" in the crypto space.

But Ronin did not die. To regain the trust of the community, Sky Mavis has been strengthening the network's security since the theft incident.

In April 2022, Ronin announced the addition of five new validator nodes: Nansen, Delphi Digital, Stable Node, Animoca Brands, and Dialectic. Animoca Brands had recognized and invested in Axie Infinity early on and has since steadfastly supported Ronin.

Just two days after Ronin announced the theft, news broke that Animoca was discussing compensation plans with the Sky Mavis team. Animoca later participated in the $150 million financing led by Binance and issued a statement in support of Sky Mavis, stating, "We firmly believe that the kingdom of Axie Infinity will not only continue to exist but will thrive."

In July 2022, Ronin added four more validator nodes, all of which were early supporters of Axie Infinity. This included the Web3 gaming guild YGG, whose DAO owns over 26,000 Axies and 235 pieces of Axie Land. YGG founder Gabby is an early player of Axie Infinity and met Sky Mavis founder Jihoz in 2018. Gabby founded YGG in 2020, and by March 2022, among the 27,000 scholars in Southeast Asia, India, and Latin America, 20,000 were Axie Infinity players.

Left: Sky Mavis co-founder Jihoz, Left: YGG co-founder Gabby Dizon

Six months after the theft, at the end of September 2022, Ronin announced that Google Cloud had become its 18th validator node. Google Cloud has deep technical expertise in blockchain infrastructure and running validators and has been a strategic cloud provider for Sky Mavis since 2020. Its executive Ruma Balasubramanian views Sky Mavis as "a powerful example of how cloud technology enables innovation and value creation in blockchain for individuals."

The DPoS mechanism upgraded in March 2023 marked a small milestone in Ronin's security plan. After transitioning from a PoA mechanism to a DPoS mechanism, RON holders can delegate their stakes to selected validators, who will validate transactions, generate blocks, and earn rewards. The representatives they vote for will also share in the rewards. According to Ronin's explanation, those holding 250,000 RON can become validators and produce blocks. Currently, Ronin has 22 validator nodes.

Most people took notice of Ronin again when its founder Jihoz announced in November that the daily active addresses for the chain game Pixels had surpassed 100,000. Meanwhile, Ronin's trading volume quadrupled over the past three months, with daily active addresses on the Ronin chain growing from less than 20,000 at the beginning of October to nearly 150,000 today.

More Than Just Enthusiasts

In March of this year, Ronin welcomed a number of game studios, including Directive Games and Tribes Studio. Why did they choose to join the Ronin ecosystem? For Web3 game developers, the answer is quite simple. Developing games is not an easy task; it requires a significant investment of time and financial resources, along with continuous trial and error and growth. In the Web3 gaming space, Sky Mavis has become a model and spiritual leader for many game development teams. Their passion, persistence, professionalism, and deep understanding of Web3 games have become key factors in attracting quality Web3 game development teams to Ronin.

From Axie to Ronin

Sky Mavis founders Aleksander Larsen and Nguyễn Thành Trung met in the community of the OG blockchain game CryptoKitties, where Larsen was a community moderator. Trung admired Larsen's contributions to the CryptoKitties community and invited him to help create Axies, which was then just an NFT series.

The Axies NFT was pre-sold in 2018, attracting a group of fans, including Jihoz Zirlin. Jihoz Zirlin had known Larsen since their time in the CryptoKitties community. So, Larsen suggested Trung hire Jihoz, saying, "This guy is really enthusiastic; he talks to everyone and is perfect for community operations." Two months later, Jihoz joined the Sky Mavis team.

In October 2018, Sky Mavis released the first version of Axie Infinity. The rapidly growing user base and wealth effect concealed significant risks. Larsen recalled in an interview, "We did not anticipate it would become so big and grow so fast. We realized that we could easily lose control of the game's narrative."

After the glory faded, Sky Mavis was left with hundreds of millions in revenue and an unfinished story. The future of Ronin was laid out before them, and the initial attempts made for Axie Infinity transformed into a consideration of using it to serve the entire Web3 gaming ecosystem.

In the second half of 2021, Sky Mavis began to develop a new version of Axie Infinity called Origins. In this new version, players would receive a starter pack containing three free non-NFT Axies, shifting the game's focus from "Play to Earn" to "Play and Own." With the community support accumulated during the Classic period, Origins replaced Classic and maintained Axie's popularity for nearly a year.

On September 6, 2023, Yield Guild Games concluded the first Axie Infinity Superquests event on the Ronin network. The project's initial goal was to have 2,000 participants, but it ultimately attracted 4,322 participants. Additionally, 1,023 participants earned in-game rewards and soulbound achievements on the Ronin network. Various data indicate that the Axie Infinity player community remains active. The trading volume of Axie Infinity grew by 144% in the past month, approaching $90 million, and UAW increased by 92.3%.

In September 2022, when both TVL and token prices showed no signs of recovery, Ronin meticulously planned a three-day AxieCon event in Barcelona, attended by over 2,000 participants, in an attempt to send positive signals to the outside world. During this period, the community heard various speeches covering a range of topics, with speakers from the Sky Mavis team and some community members.

From Ronin founders to the Axie Infinity development team, and to gaming guilds like YGG and Sura Gaming, as well as investors like a16z, stakeholders of Sky Mavis gathered to discuss the mission, vision, and product roadmap of Ronin. Sky Mavis viewed AxieCon as "an opportunity to meet past, present, and future allies in the community."

In Jihoz's introduction, Ronin is actively building scalable solutions that have been tested in real-world scenarios and is exploring various zero-knowledge solutions to increase transaction bandwidth, minimizing the interaction costs for developers and gamers. In addition to technical efforts, Sky Mavis co-founder Aleksander shared the standards for an ideal game studio, including the need for an experienced founding team, products that cover mobile gaming, and the absence of unreleased tokens, emphasizing the studio's growth mindset.

A Bi-Directional Ecosystem

In March of this year, Sky Mavis "showcased" Ronin at the GDC (Game Developers Conference) in Los Angeles, launching Axie Infinity's Ronin "signature," hoping that game studios could leverage everything they had created for Axie Infinity. Understanding games and deepening operations are the advantages Ronin believes it has over other Web3 games.

2023 Los Angeles GDC venue

Game studios are also willing to invest. During 2022, Ronin spoke with over 200 game studios. Kathleen Osgood stated in an interview, "Our strategy is not to get more people to join Ronin, but to find the right people to build a new paradigm for Web3 games." Ultimately, Ronin selected six.

The connection between Tribes Studio, which aims to create immersive social MMO products, and Ronin can be traced back to July 2022, when its CEO Glenn Mcguire first contacted Sky Mavis's business director Kathleen Osgood.

Tribes Studio was founded by a former executive from King and Scopely. Before launching the MMO, Tribes planned to create a community participation platform that harnesses community power to drive game development. This aligns perfectly with Ronin's preference for community operations. In the following months, Tribes Studio reached out to other partners, and after considering the tech stack, community culture, and collaboration models, Tribes Studio chose Ronin at the GDC venue. After reaching a partnership, Tribes Studio immediately received comprehensive support from Ronin, ranging from technical guidance to marketing strategies.

The Korean game studio Anipang, which launched Bali Games, has previously developed and operated well-known IPs like Disney Pop and Snoopy Puzzle, achieving over $1.8 billion in revenue and over 130 million downloads. In its collaboration with Ronin, Bali Games valued the IP potential of Axie Infinity and hoped to bring the Axie series into the Korean market, which is a perfect fit for Ronin, already established in Southeast Asia and looking to expand its territory. Ronin also customized a market strategy for Bali Games, "so they won't encounter the mistakes we made."

Directive Games was also one of the first five game studios to join Ronin. They are launching a shooting game called The Machines Arena, and the game's Chief Product Officer Kent Byers mentioned in an interview that he has great respect for the Sky Mavis team.

In the eyes of other game development teams, the rapid development of Axie Infinity was unexpected. It brought many new users to Web3 and put Sky Mavis in the spotlight. When setbacks occurred, doubts arose. Under pressure, Sky Mavis did not give up but continued to build the ecosystem. This passion and dedication for Web3 games also influenced other game development teams.

Moreover, Ronin's ability to maintain continuous updates relies on the support of its community. Although the collapse of Axie Infinity is an undeniable fact, it has cultivated a loyal community, with enough inclusive gamers believing in and supporting the team. This resilient and solid relationship also attracts developers, as "being continuously liked by players" is a goal every game pursues.

In addition to a sincere attitude, Ronin also possesses sufficient professionalism. The time from concept to launch for a game often spans years. For Web3 game developers, collaborating with Ronin, which focuses on gaming, is more straightforward and direct compared to traditional public chains with broader use cases. Kent Byers stated that Directive Games and Ronin had communicated long before establishing a partnership, and initially, Ronin raised many questions about the game team. "After increasing communication, we found that we had a lot of common ground, and we began to gain their affirmation."

"Ronin is a great home for us, and we want to be a part of it." In March 2023, at the GDC in Los Angeles, Directive Games and Ronin completed their partnership.

The Ronin Effect

With the entry of the first batch of game studios, Ronin transitioned from being merely the "Axie Infinity chain" to a more mature new phase: an infrastructure for a broader range of blockchain games. In this role, Ronin began to reap its rewards. Footprint data shows that Ronin's daily active addresses are close to 150,000, a tenfold increase over the past two months; the number of on-chain transactions has surpassed 300,000, reaching a new high for the year.

Pixel Fruits

At the end of October, the previously Polygon-based metaverse game Pixels officially launched on Ronin. Prior to this, Pixels had over 1.5 million monthly transactions and more than 5,000 daily active players, making it the most popular Web3 game on Polygon.

Pixels founder Luke Barwikowski stated on Twitter, "Migrating to the Ronin Network is not just about acquiring users. Sky Mavis is the only team in Web3 that has truly addressed and solved many of the economic and scalability pitfalls encountered by all Web3 games. This guidance is invaluable."

The most direct data comparison is that, one month after migrating to Ronin, Pixels' daily active player count fluctuated around 100,000, a figure 20 times higher than during its time on Polygon. According to OpenSea data, the floor price of Pixels Farm Land NFTs increased by 600% over two months.

Left: New player count for Pixels; Right: Daily active player count for Pixels

Purple represents Polygon, Green represents Ronin

From wallet payments to token trading, the player experience in Pixels reflects the effects of the updates achieved through Ronin's infrastructure.

First is the wallet; players can use the Ronin wallet as a Chrome browser extension to purchase in-game tokens directly with fiat currency. The mobile version of the Ronin wallet was launched back in 2021. After integrating Binance Pay on December 2 of this year, users can deposit directly through Binance on the Ronin wallet mobile app without scanning or copying wallet addresses.

Ronin also considered the liquidity needs of gamers and launched the DEX platform Katana in 2021, which saw its locked value exceed $1 billion during the peak of Axie Infinity. This year, the new staking incentive program launched in January led to a more than 300% increase in RON within a month, with Ronin's TVL rising from $40 million to $77 million, and the game tokens SLP and AXS of Axie Infinity also nearly doubled.

Additionally, in May of this year, Ronin launched its first NFT marketplace, Mavis Market. The Genkai series of NFT products developed by YGG founder OWL became the first minting factory on Mavis Market, with 3,000 Cyber Kongz Genkai NFTs priced at 0.25 ETH selling out in less than an hour. During the minting period, Ronin processed 1,500 successful transactions within three minutes, and daily active addresses nearly doubled within three days.

Ronin shared this achievement in its newsletter, stating, "Ronin is the best place to launch various game-centric NFT collectibles." The successful minting of Genkai represents Ronin's opening of its boundaries to the Web3 native community beyond Axie Infinity.

After officially launching on Ronin, Pixels opened the minting of Pixels Pets NFTs, and Mavis Market simultaneously launched this batch of NFTs. Currently, the RON/BERRY trading pair has also appeared on Katana. As of December 12, the number of BERRY holders has exceeded 100,000.

Data shows that in November, Pixels performed the best in terms of traffic growth among blockchain games, with over 3 million visits that month, while popular blockchain games like Big Time and Shrapnel had visits of no more than 500,000 during the same period. Among Pixels players, those from Indonesia and the Philippines accounted for 51%, making Southeast Asia the "home base" for Ronin and Axie Infinity.

Communication Matrix

Sky Mavis's Director of Business Development Kathleen Osgood mentioned in an interview that the Ronin ecosystem has a wealth of community capital. Therefore, the team has always taken a more strategic approach to promote ecosystem games to the broader Web3 audience, leveraging this community capital to bring Web3 users to the games. "Sky Mavis has over 2,500 creators who are passionate about conveying the community culture and atmosphere of the Ronin ecosystem to the outside world. Now, Ronin has a community, a growth stack, and all the tools and platforms."

With over three years of community operation experience from Axie Infinity, the Ronin community has established a systematic game promotion pathway. Axie Infinity set up a column for game update dynamics, publishing a total of six articles in November. Whenever new features or seasonal events are launched, creators from the Axie Infinity vertical community on YouTube update related interpretations and strategies, allowing players wanting to learn about new developments to obtain information directly from the community. The smooth communication channels significantly stabilize old players and reduce player attrition.

The atmosphere on Twitter is even more lively, with independent players posting game shares, secondary art creations, and other personalized content. Recently, many players in the community have checked in on an Axie model launched by Axie Infinity. In addition to independent players, guilds and KOLs frequently holding seasonal events and live shares on Twitter also provide momentum for maintaining community enthusiasm. The Axie Infinity official account is also very active in community interactions; a detail is that founder Jihoz follows many active gamers with fewer than 1,000 fans.

After Pixels' DAU surpassed 100,000, founder Luke stated in an interview that Pixels did not make significant changes after migrating to Ronin, so "the initial surge of new users is almost entirely attributed to Ronin."

The community strength accumulated during the Axie Infinity period has given Ronin a large player community. As of the time of writing, Axie Infinity's Discord community has 610,000 members, with nearly 40,000 online members, while the AAA-level blockchain game Big Time, which attracted community attention this year due to its significant increase, has 30,000 online members on Discord. Considering the stark contrast in community attention between the two this year, it is evident that Axie Infinity has cultivated a loyal community.

With Ronin's continuous careful operation, these players often participate in the Ronin ecosystem as creators. On social media, many players from the Axie Infinity community have formed a promotional matrix for Pixels.

YouTube creator Elijah MT8 has been posting videos about Axie Infinity since January 2021. Over the past two years, Elijah MT8 has released over 200 videos, all centered around Axie Infinity, accumulating over 130,000 subscribers. Elijah MT8 describes himself on his homepage as an "Axie Infinity Top 10 player." Since November, Elijah MT8's videos have begun to feature content about Pixels, covering everything from beginner guides to advanced strategies and the guild section updated two weeks ago. Many Axie Infinity creators like Elijah MT8 are active on YouTube and Twitter, with many recently promoting Pixels.

Founded in 2021, the Web3 game social platform Tribally's community tool website Axie.tech is an official community partner of Axie Infinity. On October 23 of this year, Tribally announced its partnership with Pixels, and subsequently, Axie.tech initiated a "Pixels party" on Twitter, which can be understood as a "team-building" event for Axie Infinity community players within the Pixels game. This marked the first time a non-Axie series game appeared in Axie.tech's tweets.

These promotional activities occurred just a week after Pixels officially migrated to Ronin. On November 26, the Axie community also held a Pixels x Axie art challenge, where players could win prizes by creating artworks that blended elements from both.

Leveraging Axie's community resources to boost Pixels is something that both the player community and the game team are driving. Jihoz, one of Ronin's founders and responsible for growth, is also a founder of Axie Infinity. Jihoz has mentioned Pixels multiple times on Twitter, sharing its growth data and even stating, "Pixels has the feel of Axie Infinity." Pixels has also responded to Jihoz's enthusiasm in the game, with players discovering an NPC named "Jihoz" appearing on the Pixels map. This little Easter egg received positive feedback from players, with comments like, "Simple idea, but very cool."

Ronin views its collaborative efforts with Pixels as a "homework" to showcase to the community. Ronin refers to such achievements as the "Ronin Effect." The four-year experience of building and operating Axie still serves as the foundation for Ronin's Web3 gaming ecosystem. "We know how to connect games with their first super fans. We did it once with Axie and again with Pixels.xyz."

After a month of rapid development, the founder of Pixels proposed a new vision: "Axie has proven that Web3 games can reach 1 million DAU—the real question is how Web3 games can break through to 10 million DAU. That's another scale that needs to penetrate audiences that have yet to be reached." Whether Ronin can achieve such a breakthrough remains to be seen, but it is certain that more games are being attracted to the Ronin ecosystem.

On November 8, the PC trading card game (TCG) Zoids Wild Arena, originally launched on Polygon, migrated to the Ronin ecosystem. The studio behind it, the Korean game production company ACT Games, also plans to migrate all its games to Ronin next year. The official Twitter account of Axie Infinity also retweeted the migration information.

On December 5, Sky Mavis announced a partnership with Singaporean game developer Foonie Magus, with the card duel blockchain game Apeiron set to migrate to the Ronin network, and Mavis Market will also launch its NFT series. Foonie Magus CEO Frank Cheng stated that they chose Ronin because of its "game-centric vision and strong support for selected projects," adding that "Sky Mavis has shown a profound understanding of the needs of on-chain game developers."

A week after the announcement of Apeiron's migration to Ronin, its UAW showed significant improvement.

Additionally, there have been rumors that The Sandbox, a popular sandbox blockchain game with a market cap higher than Axie Infinity, may also migrate to Ronin. The community discovered that a wallet with a Ronin domain address from Seb.ron had deployed SAND tokens and conducted multiple transactions on the Ronin testnet. However, The Sandbox has not directly responded to this rumor. Its CEO Sebastian Borget tweeted on the 12th about a recently popular statue model in the Axie Infinity community, captioning it, "Say hello to the limited edition mysterious statue from Axie Infinity, the latest addition to The Sandbox's Paris office collection."

New Cycle, New Imagination

On December 6, the DeFi protocol Impossible Finance announced that it would deploy a Launchpad based on the Ronin network, enabling game studios on Ronin to launch their own ERC-20 tokens. The liquidity of RON and AXS is likely to be directly tied to the future game tokens on Ronin. Additionally, Ronin has recently integrated Binance Pay to enhance the liquidity depth of AXS and SLP.

For Ronin, relying solely on the resources accumulated from Axie is insufficient to support an attractive Web3 gaming ecosystem. From building infrastructure to planning community activities and deploying the Launchpad, Ronin aims to be a comprehensive Web3 gaming chain. However, there are more seasoned and larger competitors in this field, such as Immutable X, the first L2 protocol on Ethereum focused on NFT+ blockchain games, which boasts strong infrastructure capabilities and will see over 200 Web3 games launched on Immutable in 2024. Additionally, Treasure DAO built on Arbitrum and the game-specific chain Oasys are continuously improving their developer ecosystems, attracting experienced game studios.

It is undeniable that the impressive results Ronin has delivered recently are largely due to the overall recovery of the blockchain gaming sector. How strong Ronin's own driving force is remains uncertain. Currently, in the eyes of the community, Ronin's advantages seem to be merely a "story." Ronin has built the leading blockchain game that once defined the concept of GameFi, returned all user funds after the $600 million theft, and survived into the second bull market.

For investors, the focus is more on how much appreciation potential Ronin can bring to its related asset targets. On one hand, Ronin's TVL is already four times that of Immutable X, and its on-chain transaction volume far exceeds that of the latter, yet its market cap is currently only 1/5 of Immutable X's. In the short term, Ronin's growth momentum is likely to continue. However, how far Ronin's story can support it in fierce competition remains to be seen, and the market is watching—will the next Axie Infinity and Pixels emerge on Ronin?