Ronin operated as a sidechain connected to Ethereum via a bridge.
By becoming an L2, you delegate security to the main network, By becoming an L2, Ronin.
Four years after the hack that caused losses of USD 625 million, Ronin, the cryptoasset network specialized in video games such as Axie Infinity, completed its migration to Ethereum as a second layer (L2) network on May 12. All user assets were migrated automatically, without requiring any action on their part, according to the statement from the Ronin team.
Sky Mavis, the studio behind Axie Infinity, created Ronin in 2021 as a sidechain (sidechain) of Ethereum. This made Ronin an independent network operating in parallel, connected to Ethereum via a bridgebut managing your own security.
That decision was not ideological but economic, as they explain, since in 2021, Ethereum fees made it unfeasible to move low-value assets within a video game, and Ronin solved that problem with its own low commissions. The cost was assuming an autonomous security model that, as demonstrated in 2022, had critical vulnerabilities.
Why did Ronin decide to migrate to Ethereum?
Operating as an independent chain required Ronin to fund its own network of validators (the nodes that verify and approve each transaction) by constantly issuing RON tokens. According to the Sky Mavis statement, this dynamic brought the token’s annual inflation above 20%. When migrating to an L2, Ronin delegates security to Ethereum and eliminates that structural cost.
With the migration, Ronin now operates on the OP Stack, the infrastructure developed by Optimism (an organization focused on scaling Ethereum) that is used by more than 50 layer 2 networks.
Unlike a sidechain, an L2 processes transactions outside of Ethereum, but publish your log to that base layerinheriting security from Ethereum without paying its fees. To reduce the cost of publishing those records, Ronin incorporated EigenDA, an external data availability system that compresses and distributes the information before sending it to Ethereum, keeping fees low for users.
The most direct impact of abandoning the independent chain model is on the RON token. According to the Sky Mavis statement, before the migration Ronin was issuing 45 million RON per year to compensate validators securing the network. The more tokens are issued, the more the value of those that already exist is diluted, leading to inflation. By delegating that function to Ethereum, that expense disappears.
According to Ronin’s announcement, The annual issuance of its RON token falls from 45 million to 5 million and inflation falls from 20% to approximately 1.2%.
A new revenue and rewards model
The resources previously absorbed by payment to validators are now redirected to Ronin’s Treasure via three sources: the profits from the sequencer (the component that orders and processes transactions before publishing them on Ethereum), the network’s NFT marketplace fees, which increased from 0.5% to 1.25%, and the 90 million RON reserved for staking.
The Ronin team also introduces the Proof of Distribution (proof of distribution), a system that distributes RON rewards to developers based on their activity on the network. The statement itself warns that the metrics of this system were selected because “they correlate with the price of RON”, without detailing independent impact criteria for users.
The hack that marked the breaking point
The migration closes a cycle opened in March 2022, when Ronin suffered one of the largest thefts in the history of cryptocurrencies. As reported by CriptoNoticias, an attacker compromised the validator nodes of Sky Mavis and those of Axie DAO to falsify withdrawals from the Ronin bridge, stealing 173,600 ETH and more than 25 million USDC, equivalent to more than USD 625 million at the time of the attack.
The entry vector was an access setup that Sky Mavis had granted to Axie DAO months earlier to manage transactions during a period of high demand. That permit was never revoked. The attacker took advantage of it to get Axie DAO validator signature through a remote access node, thus completing the control of five of the nine validators necessary to authorize withdrawals.
That episode exposed the structural risk of the sovereign sidechain model that Ronin has just abandoned: concentrating security on a small set of its own validators made it vulnerable to coordination attacks. By inheriting the security of Ethereum, that vector disappears.