Major upgrade "Origin" delayed by one week, venture capitalists predict Sky Mavis will sell equity to fill six billion funding gap

Axie Infinity's sidechain Ronin has suffered a $616 million loss due to a vulnerability. The highly anticipated major update and new v3 version battle mode "Origin" that was originally scheduled to launch has been delayed by a week. A prominent venture capital partner has predicted or hinted that Sky Mavis may need to sell equity to overcome this challenge, and there is even a potential acquisition crisis looming.

''Origin'' Postponed

At the beginning of February, Axie Infinity announced a major update, Battle v3, featuring a new interface, gameplay mechanics, art, and storyline, expected to be released in the first quarter of this year.

Axie Infinity stated in an official announcement:

Originally scheduled to launch today, Origin has been delayed by a week due to the emergence of a security vulnerability, requiring a reorganization of the work priorities of some team members.

Sky Mavis Faces Potential Equity Crisis

Renowned venture capital partner Adam Cochran posted an analysis on Twitter, suggesting that how Sky Mavis handles this issue will be very interesting:

Historically, similar large-scale losses typically receive assistance because larger vested entities rely on their survival. However, Sky Mavis lacks significant support from major trading institutions or venture capital entities. Many investors are traditional venture capitalists, game developers, rather than high-risk investment institutions.

He predicts that Sky Mavis may need to engage in equity financing to fill the funding gap. Assuming that Axie Infinity's valuation of $3 billion in October last year has slightly decreased, the $600 million gap from this vulnerability represents selling off 20-30% of equity.

Most companies, when reaching a valuation of $3 billion, have usually sold 20% of Class B shares. Selling off more equity could potentially lead Sky Mavis to lose relative control over Axie Infinity.

Adam Cochran pointed out:

Furthermore, Axie Infinity's revenue has significantly decreased, with an annual revenue of $30 million, a 70% drop from previous months and far below the peak revenue of $1 billion per year. Unless previous revenue has left Sky Mavis with substantial cash reserves, they may face difficulties.

Axie Infinity's sidechain Ronin emphasized on Twitter today that they are committed to recovering and reimbursing all funds depleted by hackers due to the vulnerability.