Ronin Network, a gaming-focused layer-2 Ethereum blockchain, has recorded over 5x gains since the start of the year thanks to its plans to shift to a Delegated Proof-of-Stake (DPoS) consensus mechanism and expand its gaming portfolio. The network will change its current Proof-of-Authority to the DPoS consensus mechanism on April 12, allowing RON stakers to earn from the network’s fees and vote on the set of validators operating the network. Sky Mavis, the team behind Axie Infinity and Ronin Network, is also working on expanding the gaming portfolio of the Ronin Network by collaborating with four new gaming studios including Tribes Studio, Bali Games, Directive Games, and Bowled.io.
The move to shift towards the DPoS consensus mechanism was made after the Ronin Network suffered a $650 million hack from its previous Proof-of-Authority mechanism on March 29, 2022. The previous mechanism had around six to nine participants securing and validating transactions on the network which put the network at centralization risk. The new mechanism will reduce the risk of such hacks while making the network more decentralized and reliable.
The Ronin upgrade to a DPoS consensus algorithm was announced on August 30, 2021, and the first testnet of the DPoS chain was rolled out in January 2023. Ronin is committed to becoming the launchpad for Web3 games and is competing with the likes of Immutable and Avalanche subnets.
Currently, 30% of the RON’s circulating supply is committed towards staking, which is encouraging as staked tokens are less likely to be sold. However, RON also faces dilution risk due to an upcoming token unlock of 4.15% of its total supply going towards the Sky Mavis team and ecosystem funds on April 27.
RON price suffered significantly after the hack, declining around 90% from $2.10 to lows of $0.22 in a couple of weeks after the attack. Since then, RON has traded below $0.50 throughout the rest of 2022 before surging up almost a year after the incident. The Ronin team deployed the DPoS consensus mechanism on the network’s testnet on January 5, which grabbed the market’s attention and resulted in its price rise. RON token also benefited from its listing on the MEXC exchange on February 7.
Technically, buyers have the upper hand as the RON/USD pair broke above the resistance from the February 2023 peak at around $1.01. As the resistance flips to support, buyers will likely target the 2022 breakdown levels at around $2.10.
Furthermore, a liquidity mining incentive by the Ronin team launched in January 2023 also pushed the prices of Axie Infinity tokens AXS and SLP. Liquidity providers (LPs) who paired RON with AXS or SLP received between 12,000 to 25,000 RON, worth around $13,500 to $28,250 at last trading prices. The Axie Network also witnessed an uptick in usage in January after the launch of land gameplay and new earnings mechanics for players, according to DappRadar. However, the trading volumes have dipped slightly after the land gameplay hype subsided in February.
Per DappRadar data, Axie Infinity is currently the 11th-ranked blockchain game in terms of unique active users in a 30-day period since Mar. 11, and concerning the total value of NFTs and tokens in the game, Axie is still on top with a balance of $804.9 million.
In conclusion, Ronin Network’s shift towards the DPoS consensus mechanism and its collaboration with new gaming studios has played a significant role in its growth. The network aims to provide a secure and decentralized gaming platform that can compete with other Web3 games. However, RON faces dilution risk due to an upcoming token unlock, and its price may be affected as a result. Investors should conduct their own research before investing in RON.
