Axie Infinity, the famous play to earn game’s approximately $600 million hacks of its software, is likely to shift Venture Capitalists’ responsibilities and attitude toward crypto investment, according to Yat Siu, co-founder of Animoca Brands.
The impact of the security breach
As per Bloomberg News, the security breach by the hackers allowed them to steal 25.5 million USDC tokens and 173,600 Ether exposing the vulnerability between the so-called bridges that used different blockchains to swap digital tokens between them. Sky Mavis, the developer of Axie Infinity, has Animoca, who has a range of business-related to non-fungible tokens, as one of its investors.
In an interview at the NFT LA conference, Siu said that it was shameful for the Sky Mavis breach to happen, but they will be more careful now.
The attack on March 23 by hackers was targeted at the Ronin Bridge, which was adopted to help accelerate transactions in the Axie Infinity network and reduce costs.
As per Siu, Animoca is consulting the Sky Mavis team on reimbursing and compensating players who lost funds in the breach but declined to comment on how this was to be done. Sky Mavis informed Bloomberg that they are fully committed to reimbursing the players.
According to Siu, Venture capital firms investing in crypto need to be prepared to help portfolio companies if there is a hack. Also, closely auditing codes and security protocols before investing will have greater importance. VC firms can take the services of blockchain-focused companies such as CertiK to assess security.
Animoca had recently received a large infusion of venture capital funds in January, and it raised $359 million from investors, including the Winklevoss twins and George Soros. As Bloomberg News reported in February, it is also on the verge of adding KKR & Co as an investor.
As per Siu, “crypto-native” VC Companies who have built their operations around knowing the crypto industry have the advantage to provide support on security issues to portfolio companies.
Firms like Andreessen Horowitz have taken this approach as more crypto deal-making growth has eclipsed many other sectors.
The role of Venture capital firms in crypto has raised concern from digital assets supporters that they wield too much control over the industry. This issue was seen in the ApeCoin project, where significant investors such as Animoca and Andreessen Horowitz received a large number of non-majority tokens that has voting power on how the project is managed.
Siu said investors should be cautious of projects with VC firms having a majority share of tokens, which means that one is buying in the VC and not the company.
