SocialFi Drama: Avalanche-Based "Stars Arena" Boom and Bust
Launched in August, the Friend.tech decentralised social media network quickly shot up in the TVL rankings and has become the largest SocialFi crypto project. In late September, a similar influencer-focused SocialFi platform, Stars Arena, was launched on the Avalanche (AVAX) blockchain. In the ten days since its birth, Stars Arena first rose to become Friend.tech’s biggest challenger and then experienced a massive hack that took its TVL down to zero. Today, we cover the drama-filled early days of Stars Arena on the market.
What is Stars Arena?
Stars Arena, an Avalanche (AVAX)-based decentralised social app, made waves in the cryptocurrency market within a week of its launch. The SocialFi platform allows users to buy and sell shares of popular profiles on the X social media network using Avalanche’s native crypto coin, AVAX. Stars Arena’s concept virtually replicates that of Friend.tech. Friend.tech, launched in August on the Coinbase-owned Base Layer 2 protocol, quickly rose in TVL ranking and became the leader of the SocialFi category in the first month of its operation.
Stars Arena’s developers decided to replicate the influencer-focused concept of Friend.tech, hoping to piggyback on the latter’s success.
Stars Arena's Meteoric Rise
Launched in late September, Stars Arena gained significant traction and became the highest-ranked decentralised app (DApp) on the Avalanche network within just a few days on the market. It also quickly rose to the second spot in the SocialFi world, right behind Friend.tech, in the TVL rankings, amassing a TVL of nearly $3 million by 6 October.
Evidently, the market took up Friend.tech’s clone enthusiastically. The platform’s growth was so rapid that some observers forecast Stars Arena overtaking Friend.tech in the near future, possibly as early as this month.
Rollercoaster - From Big Jump to Big Hack
The excitement surrounding Stars Arena was marred by a major security exploit soon after its launch. On Friday, 6th of October, an X user, @0xlilitch, warned of a potential vulnerability within the platform. Soon afterwards, Stars Arena was hit with a major security exploit that quickly drained nearly all funds from the platform.
On Saturday morning, the platform’s developers acknowledged the exploit and asked users not to deposit any funds while they were addressing the problem. The current hack, which completely depleted Stars Arena’s TVL, might be the second stage of an earlier attempted exploit, reported a couple of days ago. On 5 October, when the first hack attempt was made, the Stars Arena’s developer team blamed “monopolistic forces” for targeting the protocol.
Many in the SocialFi world interpreted the referral to “monopolistic forces” as a barely disguised reference to Friend.tech. By the time of Stars Arena’s surge to the second spot in the SocialFi category, Friend.tech had already amassed a TVL of over $40 million and had cemented its position as the niche’s confident leader.
It looks like some in the Stars Arena’s team might be suspicious of sinister motives and behaviour originating from Friend.tech or parties related to it.
As of the time of writing on 7 October, Stars Arena’s TVL remains near zero, while the developer team is racing to address the vulnerability. These are critical hours and days for the SocialFi platform.
If the hack is not addressed successfully and quickly, we might never hear about Stars Arena again. If the project’s team manages to restore the service, Stars Arena will likely shoot back to the popularity levels it enjoyed during its first days on the market. Regardless of how things develop over the coming days, one thing is certain – the rapid rise of the likes of Friend.tech and Stars Arena points to massive market potential for the influencer-focused SocialFi concept.