Breaking: Stars Arena suffers major security vulnerability on its smart contract, loses $2.9 million

10/07/2023 07:39:56 GMT | By Lockridge Okoth

Avalanche’s Stars Arena has had its smart contract exploited, users asked not to deposit any funds
PeckShield blockchain security firm records a loss of approximately $2.9 million in the attack.
It operates side-by-side with Friend.tech, running as a social protocol on AVAX blockchain.
It is the second attack in less than three days.

Stars Arena is the latest victim to the works of hackers, with reports that its smart contract was compromised. It is a social protocol on the Avalanche blockchain, operating side-by-side against the likes of Friend.tech.

Also Read: Avalanche-based Friend.tech competitor, StarsArena, drained of $1 million; dApp says it's “at war”

Stars Arena compromised twice in under three days

Stars Arena has asked users not to deposit any funds after the protocol suffered a major security breach on its smart contract.

There has been a major security breach with the smart contract.

We're actively checking the issue.

DO NOT deposit any funds.

Stay tuned for updates.
— Stars Arena (@starsarenacom) October 7, 2023

Blockchain security firm PeckShield has explained the attack, noting that “Our initial analysis on today's Stars Arena $2.9M hack indicates a reentrancy issue on the Stars Arena: Shares contract on this address. Reportedly, the bad actors leveraged the reentrancy to update the weight when the share per ticket was issued so that a single share could be sold at a much higher price.

Our initial analysis on today's @starsarenacom $2.9M hack indicates a reentrancy issue on the Stars Arena: Shares contract at https://t.co/Hg6C8MCPan

The reentrancy is abused to update the weight when the share/ticket is issued so that 1 share can be sold at a much higher price… https://t.co/17CxO3uLbe pic.twitter.com/fouVjevYTs
— PeckShield Inc. (@peckshield) October 7, 2023

The attackers leveraged a previous bug, reported here, which saw the social protocol lose up to $1 million. The same user who exploited the 'Sell Shares' bug has strike again, now taking advantage of a new vulnerability in the Stars Arena contract to send 266,103 AVAX to the aforementioned address.

In an interesting update, PeckShield has associated the address related to the Stars Arena attack with another one linked to a phishing address that was originally funded from HTX Global (formerly Huobi Global)

#PeckShieldAlert @starsarenacom hacker-labeled address 0xa2Eb...ad7A is associated with the phishing address 0x85Ee...632a, originally funded from #HTX
Phishing site: https://lido[.]blue/ pic.twitter.com/a5lwyXnh6I
— PeckShieldAlert (@PeckShieldAlert) October 7, 2023

At the time of writing, Avalanche (AVAX) price is $10.77, recording a 2% rise in the last 24 hours.

Also Read: Can Avalanche's friend.tech-inspired StarsArena push AVAX price to $12?

Cryptocurrency metrics FAQs

What is circulating supply?

The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

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Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

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Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

What is funding rate?

Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

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