Four years after a hack that caused losses of $625 million, Ronin, a crypto asset network specializing in video games such as Axie Infinity, completed its transition to Ethereum as its second layer (L2) network on May 12th. According to a statement from the Ronin team, all user assets were automatically migrated without any action required on the user’s part.
Sky Mavis, the studio behind Axie Infinity, created Ronin as a sidechain in 2021 (side chain) of Ethereum. I became a ronin with this An independent network connected to Ethereum via a bridge and operating in parallelHowever, you are responsible for your own security.
The decision, they explained, was economic rather than ideological. Because in 2021, Ethereum fees made it impossible to move low-value assets within video games, and Ronin solved that problem with its unique low fees. This cost assumed an autonomous security model with significant vulnerabilities, as demonstrated in 2022.
Why did Ronin decide to move to Ethereum?
To operate as an independent chain, Ronin needed to continually issue RON tokens to fund its own network of validators (nodes that validate and approve each transaction). According to a statement from Sky Mavis, this dynamic has resulted in an annual inflation rate of over 20% for the token. When moving to L2, Ronin delegates security to Ethereum and eliminates structure costs.
With the migration, Ronin now runs on top of the OP Stack. OP Stack is an infrastructure developed by Optimism (an organization focused on scaling Ethereum) and is used in over 50 Layer 2 networks.
Unlike sidechains, L2 processes transactions outside of Ethereum. However, it exposes logs to that base layerinherits security from Ethereum without paying fees. To reduce the cost of publishing these records, Ronin has incorporated EigenDA, an external data availability system that compresses and distributes information before sending it to Ethereum, keeping fees low for users.
The most direct impact of abandoning the independent chain model is on the RON token. According to a statement from Sky Mavis, before the transition, Ronin was issuing 45 million RON annually in compensation to validators who protect the network. The more tokens are issued, the more the value of existing tokens is diluted, leading to inflation. Delegating that functionality to Ethereum eliminates that cost.
According to Ronin’s announcement, The annual issuance of RON tokens has decreased from 45 million to 5 million, and the inflation rate has decreased from 20% to approximately 1.2%.
New revenue and compensation model
Resources previously absorbed by payments to validators Now redirected to Ronin’s Treasure via three sources: Profits from sequencers (components that order and process transactions before publishing them on Ethereum), the network’s NFT marketplace fees increased from 0.5% to 1.25%, and 90 million RON set aside for staking.
The Ronin team also proof of distribution (Proof of Distribution), a system that distributes RON rewards to developers based on their activity on the network. The statement itself warns that the system’s indicators were chosen because they are “correlated with the price of RON”, without elaborating on independent impact criteria for users.
A hack that showed breaking point
This move ends a cycle that began in March 2022, when Ronin suffered the largest theft in crypto history. As reported by attacker CriptoNoticias: Sky Mavis validation node and Axie DAO validation node were compromised They tampered with Ronin Bridge withdrawals and stole 173,600 ETH and over 25 million USD (equivalent to over 625 million USD at the time of the attack).
The entry vector was an access configuration that Sky Mavis granted Axie DAO several months ago to manage transactions during periods of high demand. That permit was never revoked. the attacker took advantage of it To obtain an Axie DAO validator signature Control of 5 of the 9 validators required to approve a withdrawal is completed via a remote access node.
This episode exposed the structural risks of the sovereign sidechain model that Ronin just abandoned. By concentrating security on a small set of proprietary validators, we became vulnerable to coordinated attacks. By inheriting the security of Ethereum, that vector will disappear.
(Tag translation) Blockchain
