- StarsArena took off over the past week, banking on the hype of Friend.tech, holding $1.04 million presently.
- A user alleged that the protocol was being drained of $1.1 million owing to broken code.
- Crypto Twitter labeled this as FUD as it would cost $5 million to run the exploit to gain $1 million based on current gas prices.
- StarsArena confirmed the exploit adding that the firm was at war for the attack on the users.
Friend.tech, which rose to popularity for its concept, has witnessed a bunch of competition arise and fall since its launch in August. However, one Avalanche-based protocol stood apart, which is now being touted for a broken code that allegedly led to an exploit.
Avalanche-based StarsArena under scrutiny
The decentralized social network StarsArena, built on the Avalanche chain, grew over the past week, primarily being acclaimed as an alternative to Friend.tech. As the protocol banked on the popularity of the Ethereum-based protocol, it reached over $1.04 million in total value locked (TVL).
However, the legibility of the protocol came into question earlier on Thursday as one user on X, formerly Twitter, by the name of lilitch.eth claimed that nearly $1.1 million was drained from the protocol.
The user accused the developers of the project of creating a broken code that allowed users to sell 0 shares and still accumulate AVAX. The user also stated that owing to the high gas prices, about 80% of the AVAX drained by the exploiters is being burned.
And the saddest part is that exploiters ARE BURNING ~80% of AVAX they get— lilitch.eth (@0xlilitch) October 5, 2023
Because they want to extract as much money as possible -> blocks are full -> gas price is rising and it will not stop until the contract is EMPTY
R.I.P️ @starsarenacom pic.twitter.com/V5EQGwJsQ8
Despite the disbelief of some members of Crypto Twitter, the company later confirmed the exploit. One X user, Ry, stated,
"When u sell 0 shares you gain $0.03. It costs $0.15 to run the transaction net loss of $0.12 on current gas. If someone was to "drain" the contract it would cost them 5 million to get 1 million in return. This exploit is useless to any scammer from a profit perspective."
This was backed by popular crypto enthusiast Jedi Blocmates, who supported users claiming the drain exploit to be FUD (Fear, Uncertainity, Doubt).
Another crypto proliferator added to this statement, saying,
"... it's being "drained" is a stretch, it's been an hour since you posted and only $20K has left the contract. It's unlikely for gas to go so low that this vector would be ever be profitable. Kudos on finding this, but I don't think it's anything to ring such an alarm over."
However, panic outflows resulted in the TVL on StarsArena falling below $1 million at the time of writing.
Nevertheless, StarsArena confirmed that the allegations were accurate and that the protocol was exploited. The company tweeted in response to the same saying “they were at war”.
THE EXPLOIT HAS BEEN FIXED.— Stars Arena (@starsarenacom) October 5, 2023
BUT DON’T GET THIS WRONG WE ARE AT WAR.
We’re being targeted by malicious actors in the space that want to steal your money.
The little guy is under attack.
You are under attack.
Your right to platform diversity is under attack.
Don’t get it… pic.twitter.com/DmbMdf9cAq
Avalanche price remains unaffected
Avalanche price, trading at $9.92 at the time of writing, rose by more than 7% over the last 24 hours. This added to the recovery of the altcoin, which marked fresh year-to-date lows of $8.75 towards the end of September.
At the moment, Avalanche price is testing the 50-day Exponential Moving Average (EMA) as a resistance level, breaching which would allow the altcoin to advance toward the $10.97 barrier, which stands in confluence with the 100-day EMA.
AVAX/USD 1-day chart
However, if the cryptocurrency fails to breach the 50-day EMA and falls below the support line at $8.75, it would invalidate the bearish thesis and lead to a further decline towards $8.
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