Sky Mavis and Axie Infinity: The Vietnamese Game That Made and Lost a Fortune

Axie Infinity is the most important business story to come out of Vietnam’s startup scene, and most of what it teaches is cautionary. For roughly eighteen months a small studio in Ho Chi Minh City ran the largest experiment in play-to-earn economics ever attempted, paid real wages to hundreds of thousands of people in the Philippines and elsewhere, attracted the most prominent venture investors in the world and then suffered one of the largest thefts in the history of digital assets. This article explains how the game worked, why it grew so fast, what the economics actually were, how the hack happened and what the company and its investors have done since. It is part of the Vietnam Company Stories hub.

How did a small Vietnamese studio build the biggest blockchain game?

Sky Mavis built Axie Infinity by combining a Pokémon-style collectible game with Ethereum NFTs at a time when almost no one else was trying to make a blockchain game that was actually fun to play. The studio was founded in 2018 by Trung Nguyễn, a Vietnamese developer, with a Norwegian co-founder, Aleksander Larsen, and a small team in Ho Chi Minh City.

The founders came from the first wave of crypto gaming. Trung Nguyễn had built a project in the CryptoKitties era, the 2017 collectible-cat game that briefly clogged the Ethereum network, and Larsen had been a competitive gamer and an early participant in blockchain-game communities. With Jeffrey Zirlin, Tu Doan and Andy Ho they set out to make a game with a real economy in which players owned their assets. Early versions of Axie were slow, expensive to play because every action was an Ethereum transaction, and appealed only to a few thousand enthusiasts.

Two decisions changed that. The first was to build Ronin, a dedicated sidechain launched in early 2021 that moved Axie transactions off Ethereum, cutting fees to near zero and making the game usable for someone with a few dollars rather than a few hundred. The second was to lean into play-to-earn: the game paid out Smooth Love Potion, an unlimited-supply token needed to breed Axies, as a reward for winning battles, and SLP could be sold on exchanges for cash.

Vietnam was the right place to build it. The country had a deep pool of game developers trained by studios such as VNG and by outsourcers, salaries were a fraction of Singapore or Seoul, and Vietnamese users were among the most active crypto adopters in the world according to Chainalysis rankings. Sky Mavis could hire the engineers it needed and test products on a domestic audience that understood tokens before most Western gamers did.

Why did Axie Infinity grow so fast in 2021?

Axie grew because it offered real income to people in countries where the pandemic had destroyed jobs, particularly the Philippines, and because a scholarship system let people with no capital play using Axies lent by investors. Growth was then amplified by a rising crypto market and by the game’s own token appreciating.

The Philippines was the epicentre. A short documentary in 2021 showed residents of a town in Nueva Ecija earning more from Axie than from farming or driving, and the story spread. At the peak roughly 40 percent of the game’s players were Filipino, with large communities in Venezuela, Brazil, Indonesia and Vietnam itself. For a few months in mid-2021 a diligent player could earn several hundred dollars a month, above the local minimum wage, by winning battles and selling SLP.

The scholarship model was the growth mechanism. A team of three Axies cost several hundred dollars at the peak, far beyond most players. Guilds such as Yield Guild Games, which raised venture money to buy Axies in bulk, lent them to scholars who played and split the earnings, typically keeping 60 to 70 percent. The model created a labour market on top of the game, with managers, recruiters and a hierarchy of guilds, and it turned player acquisition into an investable business.

The numbers followed. Daily active users rose from tens of thousands in early 2021 to over 2.7 million by November. Cumulative NFT sales passed $4 billion, more than any other collection. The AXS governance token, which Sky Mavis and its investors held in quantity, rose from under $1 to a peak of around $165. In October 2021 the company raised $152 million in a Series B led by Andreessen Horowitz, with Accel and Paradigm participating, at a valuation of about $3 billion, making it comfortably the most valuable startup ever founded in Vietnam.

How did the play-to-earn economy actually work, and why was it unstable?

The economy worked because new players had to buy Axies, bred by existing players using SLP, which meant new money continuously flowed to old players. It was unstable because SLP had unlimited supply, most players earned to sell rather than to play, and the moment new-player growth slowed, the token price fell and earnings collapsed with it.

Consider the flows. A new player needed three Axies, purchased from other players with ETH. Existing players earned SLP by playing, and used SLP plus a small amount of AXS to breed new Axies, which they sold to the next wave of new players. SLP was also the main cash-out mechanism: scholars sold it on exchanges to convert their earnings into pesos or dong. As long as more people were joining than leaving, demand for Axies and for the SLP needed to breed them held the token price up.

The system had no external revenue to speak of. Sky Mavis took a fee on marketplace trades and breeding, which generated a large treasury in 2021, but the player earnings were not funded by that fee; they were funded by the next player’s entry price. Analysts who called it a Ponzi scheme were making a structural point, not a legal one: the returns to existing participants depended on new participants, and the game had few of the features, such as consumable items or cosmetics, that let conventional free-to-play games absorb money without paying it back out.

The unwinding began before the hack. SLP peaked at around $0.35 in mid-2021 and had fallen to about $0.02 by early 2022 as supply grew faster than breeding demand. Sky Mavis cut SLP rewards in February 2022 in an attempt to stabilise the price, which reduced scholar earnings further and accelerated the exit. Daily active users had already fallen from the November peak when, on 23 March 2022, the bridge was drained.

What happened in the Ronin bridge hack?

On 23 March 2022 attackers linked by the US Treasury to North Korea’s Lazarus Group withdrew about 173,600 ETH and 25.5 million USDC, worth roughly $620 million at the time, from the Ronin bridge, the contract that held assets moved from Ethereum to Ronin. The theft went unnoticed for six days until a user reported being unable to withdraw.

The mechanism was social engineering rather than a code exploit. Ronin was secured by nine validator nodes, and a withdrawal required signatures from five. Sky Mavis controlled four of them, and a fifth, run by the Axie DAO, had granted Sky Mavis signing permission during a period of heavy traffic in late 2021 and never revoked it. According to later reporting, an engineer at the company was approached with a fake job offer, opened a document laced with spyware and gave the attackers access to the company’s systems, from which they obtained the keys to all five signatures they needed.

The scale was extraordinary. At the time it was the largest theft in the history of decentralised finance, larger than the Poly Network exploit of 2021, and the US Treasury sanctioned the Ethereum address involved within weeks, attributing it to the North Korean state. Only a small fraction of the funds were ever recovered, and the incident became a reference case in the debate about whether bridges, which concentrate large pools of assets behind a small set of keys, are a fundamentally unsafe design.

Sky Mavis’s response was the reason it survived. Within a week it announced a $150 million round led by Binance, with Andreessen Horowitz, Paradigm, Accel and others participating, and committed to reimbursing every user whose funds were stolen. The bridge reopened in June 2022 after an audit and a redesign that raised the validator threshold and added external validators. Users were repaid; the company’s reputation with its investors was preserved; but the combination of the hack and the token collapse meant the game they returned to was a fraction of what it had been.

What has Sky Mavis become since the collapse?

Sky Mavis has become a platform company. Ronin, originally built for one game, opened to third-party developers from 2023, and games such as Pixels drove a recovery in network activity in 2024. Axie Infinity itself was rebuilt as Axie Infinity: Origins, with a free-to-play entry point, and the company reduced headcount by about a fifth in late 2024.

The strategic logic is that the chain is more durable than the game. Ronin has low fees, a large base of wallets created during the Axie boom and a track record, however painful, of surviving a catastrophic attack. By offering it as infrastructure to other studios, Sky Mavis converts its most expensive lesson into a product. Pixels, a farming game that migrated to Ronin in late 2023, at times reported daily user numbers in the hundreds of thousands, and other titles followed. The company also operates the Mavis Marketplace and a wallet, taking a fee on activity across the ecosystem rather than depending on Axie alone.

The Axie franchise was reworked to address the economic flaw. Origins introduced free starter Axies so that new players do not need to buy in, moved rewards toward competitive ranking rather than grinding, and constrained token emissions. The result is a smaller but more stable game with a core of committed players, which is what the founders say they wanted all along. It is not, and is unlikely to become, a source of income for hundreds of thousands of people.

Financially the company is opaque. It holds a treasury from the 2021 and 2022 rounds and from marketplace fees earned at the peak, and the AXS token, of which the company and its founders retain a substantial allocation, trades at a small fraction of its high. Sky Mavis has not disclosed a valuation since 2021, and secondary-market pricing implies a figure far below $3 billion. The layoffs announced in October 2024, affecting roughly 21 percent of staff, were framed as a refocusing on the Ronin platform and a smaller number of core products.

What does the Axie story mean for founders and investors in Vietnam?

The lesson is that Vietnam can produce a global product company with a small team and modest capital, and that when it does, the risks scale as fast as the rewards. Sky Mavis demonstrated the talent; it also demonstrated what happens when a startup’s security, economics and governance lag behind its growth.

For founders the first lesson is about the difference between growth and demand. Axie’s growth was real, but a large share of it was financial demand for token yield rather than consumer demand for the game. The same pattern appears in fintech, where MoMo’s subsidised user base had to be converted into paying customers once the cashback stopped, and in e-commerce. Growth bought with a promise of returns evaporates when the returns do.

The second lesson concerns operational maturity. A company that held more than half a billion dollars of user assets behind five keys, four of which it controlled from an office in Ho Chi Minh City, was running a bank’s risk with a startup’s controls. Vietnam’s startup ecosystem is young and still overshadowed by the state giants and private conglomerates that dominate the economy, its pool of security engineers and compliance professionals is thin, and international investors did not insist on the controls a financial institution would have required. The gap between the sophistication of the product and the sophistication of the organisation was where the loss occurred.

For investors, Sky Mavis is the outlier that defines the range. It is the largest venture outcome in Vietnamese history on paper and one of the largest losses of user funds in the history of the industry, and both occurred within a year. Vietnam-focused funds that cite Axie as proof of the country’s potential are right; those that treat it as a template are not. The company’s survival owes as much to the willingness of its backers to write a second cheque as to anything it did itself.

How does Vietnam regulate what Sky Mavis does, and what could go wrong next?

Vietnam does not recognise cryptocurrencies as legal tender or as a lawful means of payment, but for most of Sky Mavis’s life it also did not regulate ownership or trading of digital assets, leaving the company in a tolerated grey zone. Legislation passed in 2025 began to define digital assets and pilot licensed exchanges, which brings both clarity and new obligations.

The grey zone was, for a time, an advantage. Sky Mavis structured itself with a Singapore holding company and Vietnamese operations, the tokens were issued offshore and the players were largely foreign, so Vietnamese regulators had little reason to intervene. The State Bank’s position that crypto payments were illegal did not touch a game whose economy ran on exchanges outside the country. Domestic players who cashed out through local peer-to-peer channels were the ones taking legal risk, not the company.

That is changing. The Law on Digital Technology Industry, adopted in 2025, gave digital assets a legal definition for the first time, and the government moved to pilot licensed crypto exchanges under a framework overseen by the Ministry of Finance. For a company like Sky Mavis the implications are mixed: legal recognition makes it easier to operate, hire and bank in Vietnam, but it also brings tax, anti-money-laundering and consumer-protection obligations that did not previously apply, and a regulator that now has a mandate to look.

The other risks are the ones the company has already lived through. Ronin remains a target: any chain with a large treasury and a history of compromise attracts attention, and North Korean groups have continued to hit exchanges and bridges every year since 2022. Token prices could recover with the broader market and inflate a new cycle of financial demand for Sky Mavis’s games, tempting the company to repeat the pattern it has spent three years unwinding. And the platform strategy depends on other studios choosing Ronin over rival chains that have more capital and fewer scars. Sky Mavis has survived once; the test is whether it can become boring enough to last, in the way the country’s manufacturing champions have.

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