The problems with the smart contract were not thoroughly fixed by the Star Arena team even though we had some issues within the week. Earlier, the team announced that they were able to fix the problem in the smart contract. Yet, this little journey ends up losing $3M worth of AVAX (266,201) because of an exploit.
Currently, the existing users can withdraw their AVAX but they have lost all their Keys held in the contract. So, it might be better to move all your funds if it is still possible.
PeckShield tweeted about the rug / exploit to inform the community. Unfortunately, I have already seen some crypto people who lost $2,000 because of this case.
The SocialFi attempt on Avalanche by copying Friend Tech did not go well. Even if a project reaches millions of dollars, we, once again, understand the importance of the team behind it.
Due to the recent exploit, there is another problem for the Avalanche community: Sell-pressure. In today's market conditions, a $3M sell-off may hurt the majority of the altcoins while the market has very limited liquidity inside.
When I look at the chart, I see Bitconnect and the funds that I lost. Sadly, this can be one of the worst pictures an investor would see in the crypto ecosystem. There is nobody to help, and nothing to do after the case happens on a blockchain. I am deeply sorry for people who lost their funds because of a low-quality project.
AVAX Dropped Drastically
AVAX had been on the rise thanks to the hype in Star Arena.
The price of the token started from $9 to around $11.8 only in a week while the rest of the market is still in the vertical channel.
Half of the gains have been paid back with the exploit.
In addition to the sell-off by the holders, AVAX had added one more risk to its portfolio.
Historically, the amount of money is not much as AVAX is one of the top projects of crypto. The stolen AVAX does not exceed %4 - %5 of the daily trading volume.
Possibly, we will see a recession in the hype of SocialFi which is not a real Web3, but rather in Web 2.5 form. This will cut down the volume and fee earnings on the Layer 1 and Layer 2 chains as if the hype did not exist. Though the hype was not fundamentally strong, it was a nice form of hype with pure simplicity: Buy low and sell high considering the popularity of the profiles on Twitter. Inevitably, the expectation of easy money, airdrops, and the fun side of the trades convinced many of us from the very first days of the concept.
I think this is a natural flow of hype considering the starting point with Friend Tech, the hype on all chains, and eventually a drastic drop because of a hack or negative event. If you have big positions in one of these projects, it might be a better idea to lessen your exposure to them as people will start to take their money out and the fear will affect the similar projects of Star Arena.
I only deposited some funds on Friend Tech and Friend3 projects.
How is everything on your side? Are you in any one of the new SocialFi projects?
Share your experience below 👇
Hive On ✌🏼