The past week was eventful for the Axie team and users on the Ronin blockchain (an EVM compatible side chain that supports the Axie ecosystem). It seems a hacker was able to exploit the bridge and drain its ETH/USDC reserves valued at $625M. The exploit was not caught until 6 days later when someone tried to bridge ETH from Ronin back to the ETH network.Vitalik has talked many times about the risks of interoperability of separate chains and the risks posed by the bridges. In this case, when a user transfers over USDC/ETH to Ronin, the bridge stores the original ERC-20 tokens that everyone uses on Ethereum and 1-1 issues synthetic that can be used on Ronin (very oversimplified). In this case, the bridge was hacked and the original tokens were stolen. So when a user tried to convert their “Ronin” ETH back to the “Ethereum” ETH, they were unable to since there was no liquidity left.The crypto detectives are working with law enforcement to track down the hacker but little is known and we have yet to receive official updates on next steps.Word of caution when bridging non-native tokens across crypto, this wasn’t the first exploit and will likely not be the last.
