The second assault in as many days has been directed against a SocialFi protocol running on Avalanche (AVAX). Some observers have accused the team of being behind the attack, while others believe the same bad actors are taking advantage of a known flaw.
Overhyped SocialFi technology Stars Arena running on the Avalanche (AVAX) blockchain was hacked at about 6 a.m. UTC on October 7, 2023. PeckShield, a cryptocurrency security firm, warned on X that the total value of its liquidity ecosystem might be more than 274,000 AVAX, or about $2.9 million.
The attacker took use of the “reentrancy bug” to unfairly raise or lower the cost of a single “share,” a virtual commodity utilized inside the program. The hackers made it feasible to purchase shares at artificially low prices and then quickly flip them for a huge profit.
It’s also important to remember that only two days after its release, the Avalanche-based SocialFi was already being used to the tune of over a million dollars. As previously reported by U.Today, the attackers cashed in their zero shares for “real” AVAX rewards.
Leaders from both Avalanche (AVAX) and Stars Arena emphasized that the assault wasn’t that serious because of gas inefficiency.
The Stars Arena controversy, however, created great commotion in the Web3 world since it occurred during the “SocialFi frenzy” sparked by the success of Friend.tech. “Reentrancy” assaults, which have been used to manipulate prices in DeFi in the past, have been called out by several X commentators.
“I don’t see how SA can make such a basic mistake as not checking for reentry, which is such an old and classic assault.”
Others have accused the team of being an inside job since they find “vulnerable” parts of the contract to be superfluous.
According to U.Today, the Rari/Fei hack in 2022 cost $80 million due to this attack method. This technique was also used in the notorious DAO attack of 2016 to steal ETH.
Also Read: Gary Wang testifies that Alameda Research utilized client cash as early as 2019
