Nansen's Ronin Quarterly Report - Q1 2022

This report provides an overview of Ronin's ecosystem and performance of the chain via on-chain metrics.

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Disclaimer: Nansen has produced the following report as part of its existing contract for services provided to Sky Mavis at the time of publication. While Sky Mavis has the right to review and provide feedback to Nansen, Nansen maintains full editorial control over the publication of this report. All views expressed are the independent opinions of Nansen's research analyst(s) who are the author(s) named in this report. This report is intended for informational purposes only and does not serve as investment, financial, professional, or other advice. For more information, please refer to the disclaimer at the end of this report, as well as our Terms of Service.


Ronin is an Ethereum sidechain built specifically for the Axie ecosystem. It was created to fuel the play-to-earn revolution and has then become a key player in the crypto gaming space. The network powers the entire Axie Infinity ecosystem, facilitating transactions and holding its assets - Axies, Land, SLP, AXS, Wrapped ETH (wETH). 

Axie Infinity’s team recently announced their highly anticipated Origin release date, which is set to launch at the end of Q1. As far as we know, the game mechanics will make it so that Axie holders are able to utilize their current Axies in Origin, and get access to special features. The team has also leaked a new feature added to the gaming ecosystem.

The team has launched new mouth cards that are categorized under four labels and also announced that the cards are dynamic and will change over time in relative power. We believe that the launch of Axie’s Origin (Battle v3) will contribute to the overall success of the ecosystem. 

What are sidechains? 

A sidechain is a separate blockchain that runs in parallel to the Ethereum network and operates independently. It has its own consensus algorithm and is connected to Mainnet by a two-way bridge. 

Sidechains work as it supports general computation and is EVM compatible, however, sidechains are less decentralized and use a separate consensus mechanism. What this means is that it is that a quorum of sidechain validators can also commit fraud. Since the sidechains are independent, if hacked or compromised, the damage will be contained within that chain and will not affect the main chain. 

Ronin Ecosystem Overview 

Since Ronin was made to be a gaming-specific layer one (L1) focused on onboarding gaming studios and bringing together a collective group of gamers, one of the main advantages of building a dedicated sidechain is its near-instant transactions and nominal fees, allowing millions of in-game microtransactions.

Source: Axie Infinity Whitepaper 

Axie Infinity surged in popularity last year but has seen declining transaction volumes. Moreover, their NFT sales volume also significantly declined since the peak. Although the overall volume has declined since the peak, Axie Infinity has a sizeable roadmap ahead, with their upcoming Origin launch. The gameplay will feature NFT land plots, free “starter Axies” for onboarding purposes, and plenty of other incentives to address the current limitations of the game. 

Source: Nansen (as at 30 March) 
Source: Nansen (as at 30 March) 

Ronin Bridge Stats 

On March 23 2022, the Ronin Bridge was exploited, with the loss of 173,600 ETH (worth around $590M at current prices) and 25.5M worth of USDC. It was said that around 5 out of 9 validators were attacked and controlled during the incident. The main purpose of validators is to create transaction blocks and update data oracles. 

The team explained that "Five validator private keys were hacked; 4 Sky Mavis validators and 1 Axie DAO. The validator key scheme is set up to be decentralized so that it limits an attack vector such as this, but the attacker found a backdoor through our gas-free RPC node, which they abused to get the signature for the Axie DAO validator. This traces back to November 2021 when the Axie DAO validator was allowlisted to distribute free transactions. This was discontinued in December 2021, but the Axie DAO validator IP was still on the allowlist."

Although the exploit happened on March 23 2022, the team only discovered the breach on March 29 2022, after a user failed to withdraw funds from the Ronin Bridge. 

Source: Nansen (as at 30 March) 

Comparing the number of validators 

The Ronin network consists of 9 validators to reach a consensus on transactions. This means that when a user makes a request to withdraw or deposit, at least 5 out of the 9 nodes will need to verify the transaction. If someone is able to control the majority of the nodes, they can essentially approve “fake” transactions. 

During the recent exploit, the attacker managed to get control of 4 validators run by Sky Mavis, and one validator run by AxieDAO. What is needed to control the validators is access to each of the validator’s private keys. 

For context, in November 2021, the Sky Mavis team requested for AxieDAO to distribute free transactions due to the high user load. In order to achieve this, AxieDAO allowed Sky Mavis to sign transactions on its behalf, meaning that AxieDAO became a “trusted party” for Sky Mavis. The distribution of free transactions was halted in December 2021, but access was not revoked. 

As the attacker managed to get into the Sky Mavis systems, they were able to sign transactions using the trusted connection that was set up with AxieDAO - allowing the attacker to control 5 nodes. 

Link to the official team announcement and action on the next steps: Here

Revenues on Ronin 

Source: Nansen (as at 30 March) 

The daily revenues on Ronin in USD have been seeing a gradual decline since its peak in August (at almost ~17M USD). 

At the time of writing, the daily revenues are as low as 50k USD per day. Diving deeper into the main sources of revenue, it is clear that their main revenue stream is generated from breeding fees & marketplace fees. 


Since December 8 2021, there was a breeding fee update. The SLP cost per breed was tripled and the AXS cost per breed halved to 0.5 AXS. 

To start, let’s break down some core Axie economic concepts: 

  • SLP can only be created through gameplay. 
  • The only way Axie can be created is by burning SLP. 
  • When there are new players to Axie, the only way they can play is if there are more Axies than players. There needs to be more thought here into managing future demand shocks to the Axie market and SLP when rebalancing the economy. 

The goal of the breeding fee adjustment is precisely to manage inflation of in-game resources to increase stability. The team trusts that the adjustment of breeding fees can help to balance SLP burning, Axie supply growth, and incentives for both breeders and players. 


Overall, Axie Infinity fares exceptionally well when it comes to protocol revenue, leading in 2nd place at $1.3b, with Ethereum in first place at $7.2b. However, as of recently (30D interval), Axie Infinity is falling behind with $2.6m in the past 30D, overrun by Ethereum ($310.5m), Opensea ($49.6M), dYdx ($48.3M), and many others. 

The introduction of Ronin evidently brought in a new wave of demand, due to its virtually zero transaction fees. The game became appreciably less expensive and they were able to onboard new gamers into the field. Once Axie lived on Ronin, players no longer had to spend on gas fees for every transaction and lose a large portion to miners for logging breeding activity on-chain. This helped to dramatically reduce the barriers to entry and made it more affordable for new players to enter. 

Source: Token Terminal Protocol Revenue (as at 30 March) 

Katana DEX

Katana is a decentralized exchange built on top of Ronin. Currently, the available tokens on Katana are ETH, AXS, SLP, USDC, and RON. 

Some benefits of using Katana include: 

  • Breeders can trade AXS 
  • Users can trade SLP for WETH and use that WETH to buy additional Axie teams with minimal fees

When the Ronin Dex Katana launched on 4 Nov 2021, we saw a dramatic increase of SLP Mints of 1.2B, from 300M on 3 Nov itself. The surge of SLP mints was a key result of the introduction of Katana, which makes it more economical for users. Moreover, the DEX also reduces Axie’s reliance on other parties by becoming the largest exchange for their ecosystem’s tokens and helps to increase liquidity for assets - essentially making it a seamless process for users to exchange the tokens.

To add further, SLP is a utility token/ potion in the Axie ecosystem, which is used to breed Axies. Ideally, the daily amount of SLP created through play and burned through breeding would be close to balanced. This can help with the supply and demand side of the economy. With the increasing growth of the Ronin ecosystem, we can observe that the amount of SLP burned can sometimes exceed the amount minted. Why? This happens when there is a greater overall demand from outsiders who are interested in the ecosystem but are not actively playing the game. Currently, we are seeing a disproportionate ratio of SLP mints/burns. Although the SLP mint in the past few months has greatly decreased overall, the SLP mints are far exceeding the SLP burns. This signifies that although participants are still minting consistently, users are not exactly breeding their Axies (as this would be evident through the SLP burns if it was the case). With this in mind, people are typically incentivized to burn SLP if they can reap additional money/ rewards. 

Jiho mentioned a few factors that can help address the disproportion of SLP mint/ burn ratio: 

  • Decreasing AXS portion of breeding fees (again) 
  • Increasing SLP portion of breeding fees (again)
  • Decreasing SLP issuance (again) 
  • Adding new sources of demand for Axies (inducing more SLP burn)   

Source: Nansen (as at 30 March) 


Based on their whitepaper, they mentioned a few key milestones that they are aiming to achieve in the next quarter: 

  • Origin Cards : These origin cards are dynamic and will change over time based on feedback from the community and data they collect around relative power. Link for more information here.
  • Land gameplay 
  • Lunacia SDK Alpha: The Lunacia SDK Alpha is meant for developers and creators to make games using existing Axie Infinity assets and hosting them on land
  • $AXS ecosystem begins: Governance, play-to-earn, mainstream release of Axie Infinity on IOS/ Android 


Overall, there have been some interesting developments in the Ronin chain and Axie ecosystem, and it has opened up many opportunities for play-to-earn games. 

With the recent bridge exploit and uncertainty caused by the Ronin Bridge, the team has been working with the Sky Mavis board and key cybersecurity personnel to get a complete overview of the situation. This incident has sparked plenty of questions regarding cross-chain bridges and their vulnerability. 

While the incident is still far from being solved, it will be interesting to watch how the situation unfolds. Given the upcoming launch of Axie Origin, this will most likely act as a catalyst for the Axie Ecosystem overall. 


The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.

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