Avalanche’s native cryptocurrency, AVAX, had seen a 26% weekly increase following the launch of Stars Arena.
Stars Arena is a new decentralized social media platform or SocialFi built on Avalanche to allow users to create and share exclusive content. This new platform works very similarly to Friend.Tech, based on the Ethereum blockchain, and users must link their account to X (formerly Twitter) to interact with content creators.
Although Star Arena was launched just a few days ago, the platform has already accumulated a significant number of users from the Avalanche community, which has increased the number of transactions carried out on the network and, with it, the daily burning fees and the price of AVAX on the market.
According to data from CoinMarketCap, the price of AVAX approached $12 this week, registering an increase of more than 26%.
However, at the time of writing this article, the cryptocurrency has returned to above $10 due to the recent exploit suffered by the platform, in which nearly $3 million of the funds deposited in its smart contracts were drained.
Stars Arena suffers a $3 million exploit
Through X, Stars Arena developers have confirmed the existence of a security breach in their smart contracts, which allowed an attacker to extract part of the deposited funds. According to the developers, this security breach is being actively reviewed and they have called on users not to deposit new funds.
The security breach was discovered by user @0xLawliette on Saturday, warning that funds in the Stars Arena contract were constantly being depleted even though outgoing transactions were not being recorded. @0xLawliette also confirmed that around $3 million USD was drained from the contracts.
On the other hand, Ava Labs founder and CEO Emin Gün Sirer tried to downplay the impact of the exploit and acknowledge the efforts of the Stars Arena team and the developer known as theBuilder. “Reading the comments, you would think there was a $30 billion hack,” wrote Gün Sirer, indicating that it is necessary to give the development team “some time” to make the necessary code changes and fix the security hole. “I am sure that the bug will be fixed.”
Gün Sirer also projection the success of the SocialFi platform, indicating that it is a profitable service that generates money and that it will not be difficult for the Stars Arena team to recover the funds in the coming days.
“The amount lost is only $3 million… In the worst case, the team can borrow $3 million and pay it back with interest.”
What is Stars Arena?
Stars Arena combines the advantages of social media with blockchain technology to provide users with an innovative way to monetize. This SocialFi platform allows users to tokenize and trade with tokens linked to other users’ shares, which can be bought and sold on the platform with prices that vary based on market dynamics.
These actions grant users access to exclusive chats and threads and unique perks for chatting and interacting in the community. It also allows users to earn rewards in the form of tokens and be eligible for airdrops, as well as NFT auctions, giveaways, and live events with celebrities and influencers.
According to this description, the way Stars Arena works is quite similar to the decentralized social media platform Friend.Tech, which also allows users to tokenize their social media by buying and selling tokens linked to their favorite influencers and celebrities.
Additionally, both SocialFi platforms allow users to log in using their X accounts, which many see as a positive approach that eases the transition of social networks from Web2 to Web3.
Finally, since Stars Arena is built on the Avalanche blockchain, it benefits from the network’s advantages, such as low fees, high scalability, and interoperability with other blockchains.
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