At 1 a.m. on March 29, Jiho Zirlin, a co-founder of the Vietnamese crypto gaming company Sky Mavis, received a text from his fellow co-founder Aleksander Larsen. Zirlin, who is also the company’s head of growth, was in Los Angeles at the time, winding down for the night at his Airbnb. He was scheduled to give the opening talk at the NFT LA conference the following morning, where he planned to extol the virtues of Sky Mavis’ flagship game, Axie Infinity. 

Seeing Larsen’s name pop up on his phone so late at night took Zirlin by surprise. The two jumped on a call, and Larsen told Zirlin to check the Sky Mavis team’s Discord. There, he learned the news: Axie Infinity had been hacked. 

In the chat, Zirlin saw an internal incident report prepared by the company’s CTO that day, detailing what had happened and what was known so far. On March 23, the hackers had made off with $620 million worth of cryptocurrency – the biggest heist in crypto history. Sky Mavis hadn’t noticed the money missing until six days after it was taken.

“This was our worst nightmare scenario,” Zirlin told Rest of World. He didn’t get any sleep that night. “I almost wanted to yell and almost wanted to cry.” 

Even so, he decided to go ahead with his talk the next morning. At 8:29 a.m. on March 29, a few hours after the team had convened on Discord, Sky Mavis published a newsletter post breaking the news of the hack to its community. At 9:30 a.m., Zirlin took the stage.

He put on a brave face during the talk, and at a pre-scheduled meetup with Axie Infinity enthusiasts later that night. 

“Coming here, actually, I felt a little bit nervous,” he told the crowd at the fan event. “But I knew there would be people here from all over the world that came to hang out with the Axie community, came to see me, and I felt like it was really important. And the love and the energy I see in this room tonight, I know that Axie is going to be ok.”

It was a nerve-wracking time. “For maybe two or three days, I felt really, really bad. Like, ‘What’s going to happen?’ kind of uncertain about the future,” Zirlin recalled. But while people were “apprehensive,” he mostly encountered solidarity at the conference. “The community seemed more worried about me than they did about themselves,” he claimed. 

Before the hack, Axie Infinity had cemented its position as the poster-child for the booming crypto-gaming industry. The game, in which players raise and battle cute-looking digital monsters called Axies, uses a “play-to-earn” model, in which players are rewarded for their efforts with cryptocurrency tokens, which they can then exchange for real money. By the summer of 2021, some players in low- and middle-income countries were earning so much playing Axie that they gave up their jobs to invest more time into the game. In the Philippines, where the game was particularly popular, some players reported making as much as $2,000 a month. “Axie pays better, and it’s more safe to stay at home,” one player told Rest of World at the time. An influx of gamers led to massive revenue for the company, which then led to investor interest — in August, Bloomberg called the confluence of attention around the game an “Axie frenzy.”  

Big-name venture capital firms, including Andreessen Horowitz and Paradigm, collectively plowed more than $150 million into Sky Mavis, reportedly valuing the company at around $3 billion in October 2021. 

When Rest of World first spoke to Sky Mavis’ co-founders at the beginning of 2022, they characterized their exponential rise in 2021 as part of a long-term vision for the ascendancy of Web3.  They had introduced millions of people to crypto through their game. With plans to launch a free mobile version and development underway on another Axie Infinity release, the sky seemed to be the limit for Sky Mavis and its flagship product. 

But even then, cracks were emerging. By late March, the game’s daily active users had dropped to just under 1.5 million from a high of 2.7 million in late 2021. The value of the main in-game currency had fallen from about $0.40 to $0.02. 

Meanwhile, questions arose around the sustainability of crypto gaming as an industry. The broader cryptocurrency market was crashing; the value of blockchain products like nonfungible tokens (NFTs) was falling off a cliff. Observers likened it to just another crypto hustle, rewarding early adopters and burning latecomers. 

Then, just as the Sky Mavis team was trying to convince players and investors that they were in it for the long-term and not just another byproduct of the crypto craze, came the hack. 

Rest of World set out to understand how Axie Infinity rose out of a previously largely unknown developer in Vietnam to have a stratospheric rise and precipitous fall – and where the company and its players go from here. Amid a broader crash in the NFT market and constant reminders of crypto’s volatility, does Axie Infinity represent the future of gaming, or is it a remnant of a fleeting fad? 

In May, Zirlin spoke proudly about how his company had “weathered a lot of different storms” since its founding in 2017 and insisted it was in it for the long haul. He put a positive slant on the recent chaos. “These are the times we like,” he said of Axie Infinity’s bad patch, “because it’s thinning out the herd.”

Photography by Yen Duong for Rest of World

Aleksander Larsen is a gamer down to the bone. At the age of 17, he was a competitive Warcraft III and Dota gamer, even representing his home country of Norway in international tournaments. In 2017, he started playing a game called CryptoKitties, a pioneering blockchain game in which users could buy, collect, breed, and sell virtual cats. 

At the time, CryptoKitties was a viral phenomenon — breathless reports from outlets like The Verge, Motherboard, and Bloomberg told unbelievable stories of players making tens and hundreds of thousands of dollars selling digital cats. 

While on medical leave from his job as an executive security officer for the Norwegian government after surgery on his shoulder, Larsen got really into it. “I had an insane amount of time available, which was really fortuitous,” he told Rest of World. The experience made him realize he wanted to switch career paths into the gaming industry.

Larsen ended up becoming a community moderator for CryptoKitties. At one point, he had to reprimand a user who was programmatically breeding Kitties and constantly spamming the game’s Discord. “If you don’t behave, I’m going to ban your ass,” Larsen recalled telling the user. Rather than being put out, the spammer in question, a Vietnamese user called Nguyễn Thành Trung, appreciated Larsen’s directness. 

A few weeks later, Trung got in touch with Larsen. “I’m making this game,” Larsen recalled him messaging. “Maybe you want to take part in it?” Trung invited Larsen to relocate from Norway to Vietnam. 

Larsen, who had switched jobs and was working as a community manager for a different blockchain game at the time, thought Trung was “crazy” — the two didn’t know each other, and he wasn’t about to relocate to the other side of the planet. But Larsen offered to help, and in January 2018 he began to give Trung advice on business, community building, and game development as he got started. 

Sky Mavis was founded in 2017, with plans to sell the first Axie characters – digital pets that are also NFTs, essentially like one-off digital gaming cards – before releasing the first version of the game they could be used in.

Over the weeks and months that followed, Larsen watched as the pre-sale of the first Axies attracted significant interest from the burgeoning crypto-gaming community. As more Axies were put up for sale, he noticed another gamer he knew from the CryptoKitties community join the Axie universe: Jiho Zirlin.

Zirlin bought his first three Axies in March 2018. “I thought they were beautiful and cute,” he said. He was also fascinated by the fact they were NFTs, which appealed to his inner collector. And he was excited by the promise of getting to use them in a game. Larsen suggested that Trung hire Zirlin – “because this guy is really hyper, he’s going to chat with everyone, he’s going to be a perfect fit to build the community.” Two months after purchasing his Axies, Zirlin relocated from his home in Chinatown, New York City to Ho Chi Minh City to join the Sky Mavis team. “I changed my entire life,” he said.

Larsen eventually came onboard as operating officer the same month, becoming a co-founder alongside Trung, Zirlin, CTO Andy Ho, and art director Tu Doan. 

The game they were building was fairly straightforward. A bit like Pokémon,  Axies were designed to be lovable monsters you trained and battled against other players’ Axies. But there was a key difference: in traditional games, ownership of the game remains with the developers, no matter how much feedback or investment — of time or money — a user has put in. With Axie, players would own their Axie characters and other future assets earned in-game. They would share in the game’s success — and be incentivized to spread the word. 

That October, Sky Mavis shipped the first version of the game, which let Axie owners fight one another; it soon evolved into a more developed card-battle system. The current version of Axie Infinity was launched just over a year later. More dynamic than the original edition, the new game would eventually allow players to earn a crypto token based on the Ethereum blockchain called Smooth Love Potion (SLP), by taking their Axies on adventures or fighting other Axies. SLP can be used in-game to “breed” Axies. The more SLP you earned, the more Axies you could generate, which in turn could go on to earn more SLP, and so on. SLP could also be traded on cryptocurrency exchanges for real money – just like exchanging bitcoin for dollars.

Sky Mavis also launched another token, Axie Infinity Shards (AXS), which would later allow voting rights to stakeholders and will eventually provide control over Axie’s community treasury. AXS is a governance token, with only 31% of a finite number currently released.

Users could only play one team of three Axies at a time, seemingly setting a natural limit to how quickly the economy could grow. But players realized they could lend their spare Axies out, and fast-track other people into the game — for a share in the rewards they earned. Lenders came to be known as “managers” and the lendees were called “scholars.”

“Fifty percent of our users have never used crypto or blockchain before.”

The game started evolving in ways the founders claim they had never envisioned. “So, we were actually considering shutting that down,” Larsen said, “because we knew that the system would be hard-pressed to handle the generation of SLP from all of these users.” Instead, Sky Mavis decided to wait and see what happened: “And then the genie was out of the bottle.” 

Lots of people, many with little experience of crypto, started flooding into the game, despite the technical hurdles of downloading digital wallets, acquiring cryptocurrency, and buying Axie characters. “Fifty percent of our users have never used crypto or blockchain before,” Zirlin told Rest of World earlier this year.

Teams of players, known as “guilds,” emerged to capitalize on so many people wanting to play Axie but lacking the funds, experience, or know-how. The Filipino-led Yield Games Guild (YGG), pioneered a model to attract players: the guild would buy Axies and lend them out to people to play with – keeping 10% of the SLP they earned for itself, giving 20% to independent managers who guided the scholars, and leaving 70% for the scholars. 

“Axie as a game itself was not very big until YGG came around,” Yat Siu, angel investor and co-founder of VC firm Animoca Brands, which led a seed funding round into Axie in late 2019, told Rest of World. YGG built “an entirely new business on top of the ownership of Axies, without really needing to seek permission from Axie Infinity or Sky Mavis itself.”

As YGG and other guilds onboarded more players, the value of the in-game currency started to rise and the game strained under the influx of activity. In early 2021, the company’s servers buckled under the rush of new players. Transactions on Ethereum were too slow and expensive for the game, and it could take a long time to breed, buy, and sell Axies. Eventually,  Sky Mavis built a new sidechain forked from Ethereum, named Ronin, that it launched in February 2021.

With the quicker, more efficient Ronin in place, Axie really took off. Growth was soon near exponential, with SLP’s value peaking at around $0.40 per token. “We always had dreams of hitting massive scale,” Zirlin told Rest of World. Even so, the success of the game took the founders aback.


By the summer of 2021, some players in developing countries such as the  Philippines, Vietnam, and Venezuela found that they could earn more with Axie than their day jobs. “Play-to-earn” had become a key part of the marketing of Axie Infinity. 

In interviews, Larsen was hailing Axie as not only the future of gaming, but potentially of work and money itself. 

Before Axie Infinity, Juan Samitier, a 22-year-old graduate accounting from Argentina, had experience in crypto — but not crypto gaming. “[Play-to-earn] was a completely new world for me,” he told Rest of World. In June 2021, he paid $1,500 for “two good teams” of Axies. After learning how breeding Axies worked, he invested another $3,000 to buy more of the creatures. 

His family and friends thought he was “crazy,” he said. “They treated me as a maniac who was buying little monsters.” His initial investment was about the equivalent of a middle-class Argentine’s salary for a year. But just two months later, people were asking him how they could get involved. 

Samitier wasn’t interested in playing the game itself, only in the income it earned him. He ended up lending his Axies to about 50 players, mostly from the Philippines, Venezuela, and Argentina, whom he found on Axie Infinity’s Discord channels. Some of them, he said, were older and new to crypto —  “50-something moms,” Samitier said, who were trying to support their families. Others were students.

“I started playing it, because, financially, it was a good income for the time you put in, especially given the [economic] situation in Argentina,” said Santiago Saavedra, 21, from Buenos Aires, who became one of Samitier’s “scholars” and played for up to six hours a day. “I really enjoyed playing it a lot,” he said. “I didn’t do it exclusively to make money, but to have fun.”

At one point, Samitier’s scholars were earning roughly the equivalent of a decently-paid administrative position in Argentina. In return, Samitier took 70% of his scholars’ SLP revenues. “That was considered low,” he said. While he paid his scholars the same percentage, “some people would give less to the Filipinos” compared to people from other countries, he added. At one point, he was raking in $700 a month per scholar. 

But in late 2021, Samitier suspected the bubble would burst and warned his scholars to be prudent by diversifying their crypto holdings and cashing out. 

By the end of 2021, the value of SLP was in steep decline as demand for Axies began to wane. Although with 50 scholars, Samitier was still earning between $2,000 and $3,000 a month, that was much less than he had previously brought in.

“It was really a hard blow,” Saavedra said of the collapse in SLP’s value. “It was a huge plunge from one day to the next day. But personally, since I didn’t depend on Axie, I didn’t have to go out and look for a job.”

By this January, Samitier said his scholars from Argentina began quitting the game because it was no longer worth their time. In February and March, most of the players from Venezuela and the Philippines quit too. Interest from new scholars collapsed. Samitier decided to sell most of his Axie teams and only keep a handful of scholars.

“It’s my fault. I hate myself, and also hate Sky Mavis.”

Other players and managers were less savvy. One manager from Vietnam, who spoke on condition of anonymity because he didn’t want friends and family to realize he had lost everything on a game, recounted a horror story. 

Before discovering Axie, the manager owned a small wedding photography business with about five employees, until the coronavirus pandemic brought work to a standstill. He started playing Axie Infinity in July 2021, near SLP’s peak, and joined six Axie teams. “Seeing a good income, I started giving opportunities to nearly 50 unemployed people,” he explained. He took out a bank loan to invest in the game. “I thought that maybe I would give up on wedding photography and devote myself to Axie.”

When the market started to decline, he trusted Sky Mavis to turn things around. Now, he said, he doesn’t have the money to pay the bank debt and stands to lose his family’s house. “My wife cried a lot. I feel sorry for my wife and children. They are very small,” he said. “It’s my fault. I hate myself, and also hate Sky Mavis.”

Will Robinson, an expert in the dynamics of tokens within digital economies, told Rest of World that when the value of crypto game tokens like SLP goes down for whatever reason, it tends to do so quickly. As soon as the curve of growth inverts and fewer people want Axies, Axies lose value. As a result, slightly fewer people want them, so players and managers make slightly less money. Then, even fewer people want them, and so the value of Axies starts to unwind at the same speed it wound up. 

“It’s actually faster to unwind because there was a bottleneck on growth, which is the amount of Axies that could be physically produced by the protocol,” Robinson explained. “But there was no bottleneck for how quickly people could leave.” (Robinson has some interest in a fund that has invested in Axie.) 

Robinson doesn’t think there is much Sky Mavis could have done to prevent the drop in token value. “I think the only approach they could have taken was to do a lot of education,” he said. “Except we didn’t know what was fucking going on!” 

“It had to happen eventually, because of the way they had set up their game economics.”

Molly White, a software engineer and creator of the ironically-titled website Web3 Is Going Just Great, which provides a running commentary on the latest crypto and blockchain-related scandals and collapses, said SLP’s death spiral came as no surprise. “It had to happen eventually, because of the way they had set up their game economics. It was just a matter of ‘when’ not ‘if’,” she said. 

White said the game had essentially no real economic inflow aside from new players joining — the very factor that has led some crypto critics to denounce Axie’s model. As soon as the supply of Axies was even slightly higher than demand, it was inevitable that the whole economy would crash, though it may not have seemed obvious at the time. 

“The economics of these games are extremely difficult to fine-tune,” White said, noting that the in-game economies of traditional non-crypto games are already very complicated. By adding a layer where tokens can be exchanged for real money, it becomes “exponentially more difficult.”

For players who had fallen in love with Axie Infinity’s rewards system, the honeymoon was over by early 2022. But the company seemed to be weathering the changes. In February 2022, Axie reportedly became the first NFT series to top $4 billion in sales. And in spite of a decline in players, average daily users was holding at about 1.5 million in late March 2022, according to data from Sky Mavis — significantly higher than it had been around a year earlier. Meanwhile, the value of SLP seemed to be holding steady at $0.02 – a huge drop from the peak of $0.40, but not wildly off its valuation of around $0.06 a year earlier. 

In interviews with Rest of World earlier this year, Sky Mavis’ co-founders argued that it was working hard to make Axie Infinity’s economy sustainable. With new developments in the pipeline, including the free Axie Infinity Origin version of the game, in which players are given a starter pack of three free non-NFT Axies that they can use to get familiar with the gameplay, they felt the future might still be bright. “Once we get the game to be more developed, I have faith that the economy will also stabilize,” Larsen said.

Then, in the early hours of March 29, Zirlin got the text from Larsen. Everything was about to get even worse.


In the newsletter post Sky Mavis published on March 29, the company revealed that Ronin Bridge, the access point for liquidity between Ethereum and the Ronin sidechain, had been hacked. Hackers had stolen an eye-watering $620 million in Ether and USD Coin, a digital stablecoin pegged to the U.S. dollar. By dollar value, it was the biggest-ever crypto breach. The post also revealed that the hack had taken place on  March 23, 2022, six days earlier. 

Sky Mavis’ post claimed that the team had only discovered it when a user reported being unable to withdraw a large sum of their crypto funds from the Ronin Bridge. “We didn’t have a proper tracking system for monitoring large outflows from the bridge, which is why the breach wasn’t discovered immediately,” a later post explained.

“That’s just an insane amount of money to lose track of,” White told Rest of World. How could any company — blockchain or otherwise — fail to notice more than half a billion dollars missing, for almost an entire week?

Once the hack was discovered, the Ronin Bridge was paused, meaning that no one could withdraw or deposit funds. Players across the Axie community worried whether the SLP still showing in their wallets was worth anything, and if they’d ever be able to retrieve money from the game. 

“Now the reputation of Web3 — like, it’s just been hacked.”

Beryl Li, YGG’s co-founder in charge of finance and strategy, first heard about the hack via Twitter. She watched the news catch like “wildfire” on her feed. She was shocked: the game that had made YGG its fortunes had suffered a potentially existential-level hack. She had confidence in Axie Infinity, but was concerned for what this could mean for the industry at large. “I feared more for the industry,” she said. “We’re trying to actually get more people from non-Web3 into this, right? And now the reputation of Web3 — like, it’s just been hacked.”

Ronin remained down while the team investigated the hack with the help of experts from cybersecurity companies CrowdStrike and Chainalysis. Ronin’s proof-of-stake system of validation included nine trusted validators — four of the nine validators belonged to Sky Mavis, with five needed to recognize and approve a “deposit event” or a “withdrawal event.” According to a post-mortem, all four of Sky Mavis’ validators were compromised, as well as a third-party validator run by the Axie DAO (a decentralized autonomous organization run by the Axie Infinity community). It turned out that a single Sky Mavis employee, who no longer works for the company, had been compromised in a spear phishing attack. According to the company, the attackers leveraged the employee’s access levels to compromise the validators. In April, the FBI and other U.S. authorities connected the hack to Lazarus Group and APT38, two hacking rings associated with North Korea. 

Since the hack, Sky Mavis has been busy overhauling Ronin and adding more validators. In the meantime, it has conducted security audits and plans to reopen the Ronin Bridge by the end of June. 

That doesn’t mean the game’s tokens have been worthless for the past two months. Four days after Sky Mavis’ post, major cryptocurrency exchange Binance resumed withdrawals for the game’s two tokens, AXS and SLP, serving as a de facto bridge while Ronin is down. Sky Mavis also raised $150 million in support funding from Andreessen Horowitz, Dialectic, Paradigm, and Animoca to guarantee users’ funds. 

The support funding — and the vote of confidence it represented — seemed to reassure many of the players, managers, and guilds Rest of World spoke to that Axie Infinity would not collapse. One manager from the Philippines told Rest of World that while everyone in the community was disappointed by the hack, he was comforted by the company’s response. “I was still confident about how they’re doing damage control,” he said. 

For YGG’s Li, it always seemed unlikely that the Web3 ecosystem would let its prime figurehead go under. “Of course, we were nervous, like, ‘What’s gonna happen?’” she said. “But I feel like, actually, [Axie] is too big to fail.”


In recent months, Axie Infinity’s marketing has begun pivoting away from using “play-to-earn” to describe the game dynamics to ”play and earn.” It’s a subtle change, but one that signals Sky Mavis’ desire to position Axie Infinity as a game people enjoy playing for fun as much as a way of making money – and, perhaps, to temper players’ expectations around their investments.  

“There’s been this understanding that we need to shift the terminology to make sure that people have reasonable expectations of what these digital economies are about,” Zirlin told Rest of World in February. He called the transition between the models an “industry-wide shift.” 

With the addition of new features and the free Axie Infinity Origin version, the aim is to make the game more compelling on its own terms, and not just a revenue-generating play. Because if the game isn’t fun, then “the economy isn’t going to work,” Zirlin said. “If we only have people that are coming in expecting to earn money, then it’s not a sustainable system and the economy is going to collapse.” 

At the time, Larsen suggested that Sky Mavis should have been more cautious about leaning into the play-to-earn narrative. “Once you hit that ceiling” — where the amount of value being taken out of the game exceeds the amount going in — “it’s difficult to get back to an equilibrium,“ he told Rest of World. “There has to be more substance to the underlying Axie game and to the platform,” he said. “The long-term goal of Axie is basically to make an underlying game which people love.” 

There’s some evidence to suggest that the new approach is working. Speaking in late April, Li claimed that YGG’s number of scholars playing Axie is still growing, and currently numbers around 30,000. Her mostly Filipino scholars are now earning around $20 a month, considerably less than they earned last summer. 

“In the past, it was so apparent that people were playing because they were earning so much money,” she said. The fact they are still playing suggests the game’s appeal is not just about money. 

Not everyone agrees with her. Most of the players and managers Rest of World spoke to were unconvinced that Axie Infinity had much appeal beyond making money. “Because at the end, it’s a play-to-earn game,” Juan Samitier said — and players don’t want to play if they aren’t earning. “Maybe the scholars prefer to play FIFA!” 

In Samitier’s view, there needs to be a serious rethink of the whole economy; it currently isn’t worth burning SLP to breed new Axies, because it’s less profitable than it used to be. As for Li’s argument that Axie represents incentivized fun, Samitier said that isn’t the experience of his scholars. “Honestly, yeah, they just play because of the money. I’m completely sure about it,” he said.

“It’s not about what you do during your first cycle in crypto, it’s about what you learn.”

Many of the players and managers who lost big on Axie Infinity are desperately hoping that the economy will revive so they can cash out. Meanwhile, upbeat tweets from Sky Mavis staff about developments in the game are invariably ratioed by angry responses from disgruntled players. 

When Rest of World asked Zirlin about players losing money after the value of SLP dropped, he waxed philosophical. The fact users got burnt was simply the natural consequence of introducing millions of new people to the world of crypto, NFTs, and blockchain. 

“That’s what happened to me,” Zirlin said, referring to his own first brush with crypto a few years ago, when he claims he lost 95% on an investment in Ethereum that had at one point reached a value of $10,000. “We have to have empathy and sympathy for anyone having a hard time because of getting burnt by this technology for the first time,” he said. But, he added, Sky Mavis cannot give people “financial advice” on how much to invest or when to be cautious.

“It’s not about what you do during your first cycle in crypto, it’s about what you learn,” Zirlin added. “From our end, the only thing that we can do to control the situation and improve it is for us to continue to deliver and ship product.”

Despite the crashing value of SLP and the hack, Zirlin came off a little cavalier. He compared the situation to the housing bubble: “Is it the government’s job to tell people, ‘Hey, housing seems overheated right now, you probably shouldn’t take out a second or third mortgage?’” Above all, Zirlin is still very bullish about the future of Sky Mavis, Axie, and Web3, which he sees as a “decades”-long project: “I see Web3 as the vaccine to a lot of the sicknesses we have afflicting the world right now.” 

I asked Zirlin whether the technology behind Axie, including Ronin’s centralized validation process, had actually contributed to the hack. “Decentralization matters, and it’s really important,” Zirlin said. “We need to make sure that we have a robust validator set that’s diverse and decentralized.” 

He believes that the way he and the team have navigated adversity will define their legacy. “How will I look back on this in five, 10, 15, 20, or 50 years?” he recalled asking himself. “I found that kind of thinking very helpful.” 

He quoted from an “Axie Creator Guide” he wrote in 2019, which encourages fans to make Axie Infinity-related memes and videos to help spread the word about the game: ​​“This will be a long and arduous journey. It’s going to be dark. Cold. If we’re successful, eternal glory and recognition await for those that walked the road with us.”

And so the message now to the Axie community was essentially, to tough it out. “We’ve always been, I think, pretty upfront that this is not for the faint of heart,” Zirlin said. “And we’re the type of people that cherish that type of situation. It’s not for everybody, right?” He added: “Like, we’re the Arctic explorers.”