A social finance platform (SocialFi) built on Avalanche (AVAX) has suffered losses after bad actors targeted a smart contract vulnerability.
Stars Arena allows content creators to monetize their expertise by selling tickets or shares to their followers using AVAX tokens to facilitate sales.
In a post on social media platform
The vulnerability allows attackers to drain the funds from a smart contract repeatedly calling the withdrawal function before updating the balance.
Peckshield says the hackers targeted the vulnerability in an attempt to sell the tickets at a higher price.
“Our initial analysis of today’s $2.9 million Stars Arena hack indicates an issue with Stars Arena re-entry… The re-entry is being exploited to update the weight when the share/ticket is issued so that 1 share can be sold at a much higher price ~274,000 AVAX.”
Data from Avalanche blockchain tracker Snowtrace shows that Stars Arena’s smart contract will be left with less than $0.01 worth of AVAX after the exploit.
In a post on social media platform X, Stars Arena say it works to make every user complete.
“We are deeply sorry for what happened.
Our smart contract was exploited and funds drained. The site is currently being hit by a DDOS (distributed denial-of-service) attack. We are working on a solution to get everyone’s money back and move the Arena forward.”
Amid criticism, the SocialFi app, which just launched in late September, say it will not stop its activities because of the incident.
“Important news: We have secured the resources to close the gap caused by the exploit. In addition, a special white hat development team comes in to quickly assess the security of the platform.
We will fully reopen the contract by all means after a full security audit. This will happen very soon. We’re not going anywhere. The Arena marches on.”
AVAX is down 4% in the last 24 hours. The token is currently trading at $10.35.
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Featured image: Shutterstock/Dotted Yeti/Nikelser Kate