Avalanche’s Stars Arena Loses $3 Million, TVL Fails By 100%

In a recent development, the decentralized protocol Stars Arena, based on Avalanche, was the victim of an external attack that cost $3 million in lost assets. According to a report by the blockchain security company Beosin, a huge amount of money has been lost due to breaches in the cryptocurrency industry.

Beosin said that the Stars Arena was the unlucky subject of a cunning attack in this particular occurrence, which led to significant financial losses. Beosin’s report also said that the DeFi industry has been a popular target for hackers, due to the abundance of assets and liquidity it provides. According to Beosin’s research, DeFi was responsible for 18% of the astonishing $540.1 million lost to hacking in total.

More information about the activities revealed that the platform’s total value locked (TVL), according to data from DeFiLlama, fell from $1.26 million to $0.47 million in a single day. The loss of user confidence and faith in the platform is demonstrated by the 100% decrease in TVL as investors hurry to remove their assets to reduce potential dangers.

Type Of Attack Uncovered, Termed A Re-entrancy Attack

It was determined that the exploit was a re-entrancy attack, a popular flaw in smart contracts. Describing the type of attack, Opeyemi Sule, with NewsBTC, explained that the attacker repeatedly calls the function of a weak contract before the state transforms, allowing them to alter the contract’s logic.

He further explained that the attackers could sell a single share for an absurdly high price of about 274,000 AVAX by manipulating the weight update when issuing shares or tickets. The cryptocurrency community has also reacted to this development, with many influencers reminding the entire industry of the urgent need for DeFi initiatives to prioritize security and carry out comprehensive audits of their smart contracts.

However, on their official X handle, Stars Arena, @starsarenacom, today informed their users to suspend any form of fund deposit until the issue is resolved. In other news, Maxin Network, a DeFi Peer-to-Peer (P2P) service company, has also lost $200 million on its cloud service database.

Team At Stars Arena Issues Statement, Issues Warning

Stars Arena management, through their team, stated on their official X handle. In the post, the company said it has prevented some security exploits from external forces, which they believe may have caused the loss of  $1 million in funds. The report says that PeckShield, a  blockchain security company, has flagged the latest exploit on Stars Arena.

The company revealed that AVAX worth almost $2.9 million had been stolen from the DeFi social media application and generated hundreds of Avalanche members, many of whom earned over 1000 AVAX in trading.

The company has also issued an unfriendly warning on the rising security concerns in the cryptocurrency industry. The analysis also said that Stars Arena had once helped pump the price of AVAX by 6% within a week. They also mentioned that 2023 recorded the highest breaches in the third quarter of 2023.

According to the quarterly report from Beosin, another blockchain security company, the losses by blockchain companies in the third quarter of 2023 were bigger than what they experienced for the first half of the year. It was also gathered that $889.26 million was lost to external attacks in the last quarter of 2023.