Some $3 million worth of Avalanche's tokens were drained, leaving Stars Arena with just under $1 in funds after the attacker. X, formerly Twitter, user @0xLawliette appeared to first warn of the exploit in the early Asian hours on Saturday, but another user, @0xlilitch, warned of potential security issues.
Stars Arena, launched just over a week ago, has quickly drew a cult following among Avalanche community members, some of whom earned as much as 1,000 AVAX in trading fees from the platform. It also helped up the price of AVAX tokens by as much as 6% at one point during the week.
It was widely viewed as a clone of Friend.Tech, a social app based on Ethereum that grew to 100,000 users within weeks of its release in August. Both apps allow users to buy 'keys' or'shares' of popular X users in turn for access to a closed chatroom, which may offer different privileges to those holders.
The prices of these shares are very volatile, causing some users to treat price gyrations like tokens and make a profit.
The exploit came even as some Ava Labs employees spoke in favor of the developments, which may have buoyed user trust. Some Ava Labs employees, including founder Emin Gün Sirer, also appeared to hype the app over several X posts.
Crypto markets are a hotbed of poorly-secured security practices and criminal activities, with exploits and hacks accounting for some $1.3 billion in value lost in 2023 alone, according to estimates.