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In a surprising twist, an Avalanche-based protocol, designed to mimic the Friend Tech social network, has hit a damning roadblock. Taking to the X platform to share the news, community user, lilitch.eth said the Stars Arena protocol failed because the developers who worked on the project did a bad job designing a durable protocol that can work properly.
Godfrey BenjaminStars Arena was dubbed the future of SocialFi on Avalanche, and its model also involves holding shares within the network to unlock unique features. While the protocol operated without a hitch for some days, lilitch.eth revealed that the protocol's smart contract is currently being drained of liquidity.
At the time they made the post, lilitch.eth noted that users can redeem 0 shares for some AVAX tokens, an anomaly that is being exploited. They highlighted the dynamics of the flow of Stars Arena shares with AVAX tokens, noting that no safeguards were put in place to claw back funds in case of issues like the current mishap.
The entirety of the Stars Arena exploit is getting worse according to lilitch.eth, as the exploiters are burning off approximately 80% of the AVAX tokens they are getting.
Bad situation for AVAX?
Tomiwabold OlajideAvalanche is one protocol whose underperformance has called for a crucial revival. At one point, the Stars Arena protocol helped push the total address count on Avalanche to its ATH, a trend that suggests an impending revival in the protocol's valuation.
With the current Stars Arena setback, Avalanche might take a much bigger plunge compared to the general market in the near term. This fear is not being priced in yet as AVAX is changing hands at a price of $9.94, up by 2.25% in the past 24 hours.
For now, Avalanche may need to build on its latest integrations to sustain its uptrend moving forward.
Yuri Molchan
Tomiwabold Olajide
Vladislav Sopov
Dan Burgin