<iframe src="https://www.googletagmanager.com/ns.html?id=GTM-NZKQMDR" height="0" width="0" style="display:none;visibility:hidden"></iframe>
Back to all research
Macro Research

Ronin: Empowering Gaming Samurai in the Blockchain Battlefield

Latest updates: Jun 13 2023

Key Takeaways

  • The Ronin Bridge exploit, while catastrophic, has brought positive transformations within the Ronin ecosystem. They have come back with better security measures, rebuilding trust within the crypto space.
  • The Ronin/Sky Mavis ecosystem has flourished since the hack, introducing exciting developments like Delegated Proof of Stake (DPoS) upgrade, the introduction of the Mavis Market, and the launch of $RON staking program. Additionally, their flagship game Axie Infinity Origins has made its debut on iOS.
  • Ronin has welcomed the first cohort of five game studios which have extensive gaming backgrounds, experienced veterans and a mobile-first focus. This will further enhance user experience and expand the Axie lore outside of the Axie-verse.
  • With a strategic focus on the APAC region and mobile gaming markets, Ronin is well-positioned to capitalize on the growing macro trends and expand its network.
  • Joining Ronin offers several advantages for builders, including go-to-market strategy strategies, live operations support and community-building opportunities. Furthermore, the network aims to be a decentralized and zero-trust ecosystem by transitioning to a permissionless chain by 2025 (phase 4).

Sky Mavis (SM) just makes a comeback in 2023!

From the debut of their hit game Axie Infinity Origins on Apple's App Store to the recent launch of the NFT marketplace Mavis Market, all of the positive news began to go in SM’s favour in 1H 2023. The spotlight is on SM’s blockchain, Ronin, with all eyes following the exciting on-chain activities, making it a highly discussed topic on Twitter in the past weeks.

The glory comes after SM faced significant challenges in 2022, particularly when Ronin Bridge was exploited with an enormous loss of $600M. Not letting this discourage them, they have demonstrated resilience and learned from their past setbacks. Not only have they managed to survive, but they are now thriving in the space.

To understand the exciting future and developments Ronin is heading to, we need to understand its past and what it has been through.


Ronin in a Nutshell

Back in the 20’-21’ period, there was a need for scalable solutions on Ethereum’s L1 due to high transaction volume and skyrocketing gas fees (remember paying $300 bucks for a single transaction? Whoop!). For that reason, Ethereum’s L1 was not a desirable destination for gaming. These limitations had a significant impact on the gaming ecosystem, especially for Axie Infinity, as it hindered their ability to attract new players and constrained their economic growth. In response to these challenges, The SM’s team tackled the issue head-on by creating their own blockchain Ronin, catering to the needs of the Axie Infinity community.

Ronin is an EVM blockchain designed specifically for gaming. Following their deployment on Ronin, Axies achieved remarkable milestones such as 2M+ DAUs, 2.2M Axie holders and 4M+ Ronin Wallet downloads (thecoreloop). To further serve the Axie nation, SM rolled out the native DEX Katana, enabling token swapping and serving as a versatile hub for players, reducing reliance on external platforms. With unprecedented success from Axie at that time, Kanata attracted over $1B TVL into the protocol but also drew attention from malicious actors.

It was when the tragedy came in. In March 2022, Ronin fell victim to a devastating compromise, resulting in a loss of over $600M via social engineering attacks. This incident sent a shockwave throughout the crypto space, triggering panic selling of both $RON (Ronin token) and $AXS (Axie Infinity token). The already harsh macro events, coupled with the downfall of Luna and FTX, were adding fuel to the fire, making $RON nosedive 90% of the value from its peak. For comparison, it was the second-largest hack in the crypto space after PolyNetwork (Elliptic).

Untitled (1).pngSource: Business Insider

While the loss was fully compensated to the users through $150M funding raised from Binance and a16z and the support from investigators to recover $30M, the catastrophe left an enduring mark in the history book of Ronin/SM.

The hack highlighted the vulnerabilities of Ronin's centralized system. The team has reflected on the incident and taken four key steps to enhance Ronin’s security (thecoreloop):

  1. Increase the number of validators; upgrade to the DPoS mechanism
  2. Enhance governance with mandatory voting
  3. Implement bridge alerts and circuit breakers.
  4. Quadrupled security team size

It’s worth noting that Ronin initially used a Proof-of-Authority (PoA) model in 2021 with a limited number of validators to verify and add transactions to the network (centralization). In March 2023, they switched to Delegated Proof of Stake (DPoS) mechanism. Now, $RON holders can delegate their stake to select validators who verify transactions, produce blocks, and earn rewards. Delegators who vote for them share in the rewards.

Today, the Ronin team has welcomed a total of 22 validators (including Ronin) to the network, including notable names like Google Cloud, Delphi Digital and Animoca Brands (see the full list). By expanding the validators, they aim to become progressively decentralized.

Post Exploitation

The Ronin hack took a massive hit to holders’ confidence, causing the price of $RON to plummet and remained stagnant throughout 2H 2022. However, 1H 2023 marked a reset for $RON, as the price and trading volume experienced a revival thanks to a series of positive news/developments from the team such as the introduction Katana Liquidity Mining Program, and the joining of five studios. As of writing, the $RON price saw a 370% or 4.7x increase from December 2022. Unique active wallets also experienced a rebound, with an average of 100k weekly active wallets.

2023-06-14 14.51.44.jpg

Source: CoinGecko         

Regarding the distribution of gas fees, GameFi stands out with the highest gas usage, reflecting the active engagement of users in Axie Infinity (this will increase when more games are onboarded). Notably, there has also been a noticeable increase in gas usage from DeFi and other categories on the chain. This is attributable to a growing interest in a new protocol MetaLend (Axies + lands lending), $RON staking and NFT trading.  

2023-06-13 21.59.24.jpg

Source: Footprint Analytics

Ronin ecosystem has been thriving ever since, gradually becoming a go-to Web3 gaming blockchain for builders and users.


Simplified ecosystem (Source: Ronin slides at AxieCon 2022)

The team recently rolled out Ronin’s first generalized NFT Marketplace (Mavis Market) to provide infinite experiences on the network. This is a step further to becoming a stop-shop for everyone hoping into the ecosystem (a similar approach to Treasure). The team envisions Mavis Market becoming a premier launchpad for game studios and their associated NFT collections.

Although not yet confirmed, there is a potential for a decentralized identity system like Ronin Naming Service (RNS) which would unlock unique experiences for all ecosystem participants.

$RON Token

$RON is the ecosystem token of Ronin. It is used to pay transaction gas fees of the network including decentralized finance (DeFi) features like community governance, and utility via staking through validators to earn rewards. $RON is also the money to buy/sell NFTs in the Ronin ecosystem.

$RON validators need to hold and stake a minimum of 250,000 $RON to be eligible for participating in validating blocks. The newly issued $RON as a reward will be divided between the validator and its delegators based on how much $RON each contributed. More details on $RON staking.

As more builders and users join Ronin, the more the value of $RON is. Value accrual of $RON is outlined in the infographic below:

Untitled (2).png
Source: Ronin Insider. More on $RON tokenomics here

Thecoreloop team has shared valuable insights from the Ronin team, dispelling any concerns about VCs taking advantage of discounted token prices to sell to retail investors. Also, SM hasn't sold any tokens except for minimal distributions to equity investors. These insights serve as a potential “safeguard” for retail investors and $RON enthusiasts. (Remember, not financial advice!)

Five Axie-inspired Game Studios Add to the Ecosystem

As shared by Aleksander (co-founder of Sky Mavis) at AxieCon 2022, the SM team revealed the six criteria to cherry-pick independent game studios including:

  • Mobile focused
  • Experienced founding team
  • No tokens issued
  • Growth mindset

(and of course, they must love Axie Infinity and what Ronin is building)

Aleksander believes that the next hundreds of millions of players will come to the market through mobile. With this in mind, SM has searched over 200 studios, carefully shortlisted and recently onboarded the first five studios as the first cohort to the network.

2023-06-13 21.59.28.jpg

Source: Ronin's Newsletter

Among the five studios, Directive Games is making significant progress with their Ronin flagship title The Machines Arena - a top-down 4v4 multiplayer shooter that features sci-fi environments where players engage in competitive battles as tanks, supports, or damage-dealing heroes. Besides, the studio is also working on a 4X strategy MMO called Civitas, which is one of the most anticipated Web3 triple-A games in the making.

By joining Ronin, these highly-curated studios can tap into a thriving community of players and can leverage their extensive expertise in product shipping and Web3 integration within SM. At the same time, the SM team can provide guidance and support the studios in their go-to-market efforts. This synergy will enable mutual learning to co-refine strategies to achieve optimal product market fit. Those partnered games have the freedom to leverage Axie IP into their game economy where they see fit. This, in turn, will help Axie expand its lore outside of the Axie-verse. Additionally, game studios have the opportunity to enjoy a 1%-2% cut in platform fees in the future if they can bring in a certain number of players to their games. An appealing incentive for game developers within the ecosystem.

This training session serves as an experimental initiative for the team, aiming to set a high standard and establish a systematic creative framework for future cohorts of developers.

Gaming Trends & Market Insights

Embracing the mobile-first strategy and focus on Asia is a smart move by the team. Notably, the APAC region accounted for half of the global game market ($95.6B) in 2022, with the mobile game revenue capturing 53% of the pie ($103.5B) and representing 55% of global gamers (1.7B), as reported by NewZoo. These statistics suggest the immense popularity and strong interest within the APAC region. With the current offerings from the ecosystem studios and the launch of Axie Infinity Origins on iOS, they greatly capture the growing trend of the gaming scene in this area (4 out of 5 studios have HQ in Asia). It wouldn’t be surprising if the next big Web3 (mobile) games emerge from this vibrant community.

Breaking it down further to global in-app purchases (IAP), the RPG genre dominated consumer spending in 2022, capturing roughly one-third of the market. Following closely behind were the Strategy ($12.1B) and Match ($8.7B) genres.

From another perspective, the hypercasual genre stands out with 17.5B downloads globally, representing a significant one-third of total downloads. Notably, India is leading the total downloads with approximately 15% of the market (data.ai). With a population of over 300 million mobile gamers (NewZoo) and a prominent hub for cricket, India presents a lucrative opportunity for Bowled.io studio (cricket game developer) to onboard Web2 gamers to Web3 as they set their sights on capturing this market.

2023-06-13 22.00.43.jpg

2023-06-13 21.59.38.jpg

Source: data.ai

These data provide valuable insights for SM and third-party studios to tailor their games to align with the preferences of gamers, maximizing the potential within these genres.

Advantages of Building on Ronin

Ronin/SM has a strong presence in Asia due to the massive success of Axie Infinity in Cabanatuan town, Philippines, where it became a cultural phenomenon in 2021. Building upon this reputation, the team has an opportunity to expand their network by focusing on key gaming hubs in Asia such as China, Japan, Korea, and India.

As outlined in their roadmap, the team is actively implementing battle-tested scaling solutions and exploring different zero-knowledge technology alternatives to enhance transaction bandwidth and maintain affordable costs for developers and players. In the final phase, the team aims to make Ronin a fully decentralized network where everyone can validate transactions and deploy smart contracts. Until then, Ronin still acts as a central curator to select which project will be deployed on mainnet, so there might be a possibility of favouritism.

Untitled (3).png
Source: Ronin slides at AxieCon 2022

Any teams/studios joining Ronin, similar to the initial cohort, will receive extensive support from community building, monetization and live operations. The Ronin team will also assist in growing the user base and attracting the first 1000 true fans faster, a milestone that took Axie nearly a year to achieve. Additionally, with a passionate group of 2.5k content creators from the Axie Creator Program, they can collaborate with partnered games to create engaging videos, blogs, fan art and various user-generated content to boost brand visibility and engagement.

This could be speculative, but it appears that their strategy aligns with that of Treasure as a game publisher and ecosystem for Web3 games. It is possible that they may introduce a shared token or NFT (like $MAGIC) that can be utilized across games, unlocking interoperability features within the ecosystem.

Closing Thoughts

The comeback of Ronin/SM has put the crypto space in awe with many wondering “How?”. Taking lessons from the crypto heist, the team has accelerated its security measures and worked towards becoming an antifragile and zero-trust organization/ecosystem. Ronin sets a great case study of a resilient mindset in facing headwinds and staying positive during chaos. Now, their efforts are bearing fruit with the successful launch of their flagship game on iOS, the addition of the five passionate studios and many exciting developments on the way. That said, the next phases of Ronin are worth keeping an eye on.

Untitled (4).pngSamurai-themed Axie (Credit: @JayLake47)

Ronin refers to samurai without a master. With a katana (DEX), a sturdy armour (security), an army of samurai (games) and a thriving empire (ecosystem), why need a master when they can become one?

Share this article
Treasure: The $MAGIC of Interconnected Gaming Metaverses
Interoperability perhaps is one of the most groundbreaking concepts that players and game developers have long anticipated for years. Imagine a scenario in which assets from game A can be seamlessly transferred and utilized in game B, fostering cross-game interactions and a more unified gaming ecosystem filled with endless possibilities. Treasure has embraced this idea at its very core and pursued a vision to cast magic into an interconnected metaverse of games. By bridging various gaming worlds, Treasure aims to create a truly immersive experience for players across different game universes.
May 25 2023
Bitcoin Ordinals: Satoshi’s Unexplored NFT Frontier
Bitcoin Ordinals, a new form of NFTs, have emerged on the Bitcoin network, thanks to technological upgrades like SegWit and Taproot, which allowed for the creation of ordinals by inscribing data on satoshis within a transaction.
Apr 12 2023
ArchLoot is a free-to-play, user-generated content (UGC) game with loot-style composability and playability. The game is built on Binance Chain and offers an interactive gameplay experience that allows for on-chain implementation of upgradeable characters/props NFTs using unique protocol, EIP 4985 and BEP 129, thus enhancing its potential for playability and robust user-generated content.
Mar 29 2023
  • Key Takeaways
  • Intro
  • Ronin in a Nutshell
  • Post Exploitation
  • $RON Token
  • Five Axie-inspired Game Studios Add to the Ecosystem
  • Gaming Trends & Market Insights
  • Advantages of Building on Ronin
  • Closing Thoughts