Axie Infinity, Ronin, and (de)centralization

You might have read in the newspaper lately that $615 million in cryptocurrency was stolen, and that it was related to the popular mobile game Axie Infinity. Beyond these facts, I think it has been a little murky in the coverage just what happened and how it happened to what players. Broadly, "decentralization" is a hot buzzword and while this heist is in the news it might provide a good idea to examine what sort of decentralization existed around Axie Infinity (or not) and whether it provided any real value (or not).

Axie Infinity is a Pokemon-like game that rewards players with cryptocurrency and then the Pokemon-like creatures themselves are non-fungible tokens (NFTs). It is published by a company called Sky Mavis, and this company in turn created a blockchain network called Ronin to handle the activity generated by the game. Ronin is an example of what is called an L2 network, a blockchain network intended to handle the traffic volume of some particular constituency in some specific way. Usually the goal of these L2 networks is greater efficiency and lower cost - perhaps the end user has heard of the Ethereum blockchain and wants to hold Ether for their efforts, yet it would be prohibitively expensive to send all the transactions generated by the game (which lives in regular old-school centralized web infrastructure) directly to the Ethereum blockchain. The L2 network, in our example the Ronin Network, processes the transactions from the game and then sends the information in a condensed form to the Ethereum blockchain via a smart contract called a bridge.

In the recent heist, the cryptocurrency was actually stolen from the Ronin Network via this bridge. Some of the small failures around why this was possible are notable: while Ethereum has a battle-tested global network with multitudes of nodes, the Ronin Network had only 9 nodes with 4 of the 9 operated by Sky Mavis itself. (There is an interesting digression here about how decentralization is in practice quite easy to fake.) Worse, it appears that corners were cut in developing Ronin, as the exploit involved a "gas-free RPC node" they had been using to work on development issues. I don't have space here to unpack that phrase, but I am guessing that readers who recognize these words don't think they are good cybersecurity practice.

To zoom out and see the big picture, Sky Mavis was in a good position to drape themselves in the decentralized cache of the Ethereum blockchain and they did, but maybe this was a little disingenuous. Much of the real action was on the Ronin Network, which in turn had some of the decentralized smell on it, but then in the end it was maybe a bit too much of a Sky Mavis -first jam to really deserve that word. Sky Mavis being able to make a bad decision behind close doors and lose your money is not what decentralization in crypto is supposed to be about.

So... there was an appealing looking decentralized cargo cult but maybe not meaningful decentralization of the full stack... and it went bad in ways true decentralization is supposed to prevent...

Axie Infinity and the Ronin Network hack

There is much to be learned from the recent hack and theft of cryptocurrency from related to Axie Infinity and the Ronin Network, including some standard cyber security lessons about social engineering, distinctions about (de)centralization and what is a layer 1 v. layer 2 network, as well as an imminent experiment in anti money laundering practices around crypto.

Open banking in your day-to-day and API security trends

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API -centric trends and the FHIR standard in healthcare

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How the Fed's policy tools work and the danger of the present moment

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API -centric trends in information technology

ALERT: THURSDAY MINI-SERIES EVENT! On Thursdays for the next 3 weeks I will be posting a series of videos discussing a number of API (application programmer interface) - centric trends, specifically open banking, the FHIR standard in healthcare, and the NEF (network exposure function) idea attached to the move to 5g in telecom. In addition to discussing the details for each I will talk about how the business backdrop is about access to developers and the tension between established companies and younger, app-driven would-be-disruptors in verticals that happen to also share name suffices like fintech and insurtech.

I will also talk about how you can use private computation, like Capnion's Ghost PII API, to provide a much higher level of data privacy in these settings especially in cases where you want to consume data from multiple sources.

Litecoin and privacy as market differentiator

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Legal liability faced by cybersecurity executives and Uber's 2016 data breach

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The Apache Log4j 2 vulnerability and why such things are important

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The (Alleged) Insider Threat at Ubiquiti

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Crypto prices and the journey into the mainstream...

In this ~7 minute video, I take last nights steep drop in the price of cryptocurrency, like Bitcoin and Ethereum, as a view to arguing that the journey to mainstream acceptance plays a key role in price movements both up and down. I specifically discuss the role of the new tax laws in the infrastructure bill, what the new provisions are, and why people are a little irked by them.

Robinhood's Data Breach

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Issues with facial recognition and Clearview AI

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