Discover more from Silvermint
Cointelegraph: Top 7 Crypto Collapses of 2022
Spectacular collapses and a harsh bear market marked 2022 for crypto in the headlines, but neither of these things are, per se, negative. As we’ve written many times, this Darwinian market squeeze is pushing out the weak and the dishonest, which is good. Even better, it’s putting pressure on our peers to rise up and adopt more open and ethical self-imposed standards, like this creed which sets Silvermint ahead of our competitors.
Cointelegraph has pulled together a list of the 7 biggest crypto collapses of 2022, from TerraUSD/Luna and Three Arrows to Celsius and, of course, FTX. The end of the of year marks a good time to reflect on these and to challenge ourselves, as an industry, to do better in 2023.
Axie Infinity’s Ronin Bridge hacked
In March of this year, Ronin, the blockchain network that runs the popular nonfungible token (NFT) crypto game Axie Infinity, was hacked for $625 million. The hacker took 173,600 Ether and 25.5 million USD Coin from the Ronin bridge in two transactions.
When the Lazarus Group started its attack, five of the nine private keys for the Ronin Network’s cross-chain bridge were hacked. With this vote, they authorized two withdrawals totaling $25.5 million in USDC and 173,600 ETH.
According to the Ronin group, Axie Infinity’s issues began in November 2021, when its user base had expanded to an untenable size. Consequently, the corporation’s safety rules had to be relaxed to fulfill client demand. After the initial phase of fast development was completed, the firm reduced its safety procedures.
— Messari (@MessariCrypto) August 30, 2022
The main difficulty was a lack of a suitably decentralized network created by game developer Sky Mavis. The hacker acquired access to the private keys of five of Sky Mavis’ Ronin Chain’s nine validator nodes, enabling them to compromise the network. When the hackers gained control of five nodes, they essentially controlled over half of the network and were free to accept or deny whatever transactions they wanted. They obtained ETH and USDC via falsifying withdrawals.
The crime occurred on March 23, but it was only noticed on March 29, when a user reported being unable to withdraw 5,000 ETH from the Ronin bridge ATM. In the aftermath of the attack, Axie Infinity developers raised $150 million to reimburse the affected users.
On May 7, when over $2 billion in TerraUSD (UST) was unstaked (removed from the Anchor Protocol), hundreds of millions of United States dollars were quickly liquidated. It’s unclear if this was a deliberate attack on the Terra blockchain or a response to rising interest rates. Because of the enormous outflow of cash, the price of UST fell from $1 to $0.91. As a result, market players started trading $0.90 in UST for $1 in LUNA.
Read the full account and butcher’s bill here.