Story [IP] Experiences Dramatic Decline as User Numbers Plummet 88%

Recent issues with Story's smart contracts have led to a significant drop in investor confidence, resulting in a sharp decline in user participation and overall market activity. With active users down by nearly 88% and a considerable loss in liquidity, the situation has raised major concerns about the platform's future.

Key Takeaways

An audit disclosed vulnerabilities in Story’s smart contracts, causing investor unease and a notable lack of communication from the company.
Daily active users, transactions, and Total Value Locked (TVL) have taken a serious hit, with $810,000 worth of IP tokens sold, and DEX trading volume dropping to a monthly low.
Story [IP] is facing one of the steepest declines in the market, indicating a significant shift in investor sentiment.
Reports detailing the state of the chain have increased fear among investors, prompting a bearish outlook and skepticism about potential recovery.

IP faces sharp market decline as smart contract vulnerabilities trigger investor exit

Audit Reveals Vulnerabilities, Spurring Investor Anxiety

A recent audit by AI security firm BitsLab uncovered two vulnerabilities within Story’s smart contract—one classified as medium severity and the other as low severity. Despite the expectation that these issues won't lead to immediate fund losses, the findings raised alarm among investors. Many interpreted the report as a warning sign, intensifying general market concerns.

Compounding the situation, Story has not yet issued a response to BitsLab’s findings, which likely heightened investor anxiety as of the latest updates.

Declining On-Chain Engagement

Data from Artemis indicates a continuing decline in on-chain activities. Users are increasingly leaving the protocol in growing numbers, with the daily active user count plummeting to approximately 1,600. This marks a drastic decline of nearly 88% compared to the previous level of over 13,000 active users.

Story daily active users
Source: Artemis

Transaction volumes have also stagnated as user engagement wanes, with recent figures showing around 303,000 transactions—a stark decrease from earlier activity levels. This shift in sentiment has led to diminishing demand for IP tokens, making their use in protocol transactions less prevalent.

Liquidity Issues Arise

The ongoing user decline has adversely affected the protocol's revenues and liquidity within the past day. Data from DeFiLlama reveals a significant drop in the Total Value Locked (TVL), which measures the amount of IP staked in various protocols.

IP TVL and DEX volume chart.
Source: DeFiLlama

Investors divested approximately $810,000 worth of IP tokens, which increased the circulating supply. Concurrently, chain fees plunged to just $124, indicating diminished network activity. Additionally, trading volume on decentralized exchanges (DEXs) also faced a downturn, dropping to $303,000—the lowest recorded since November 2nd, when prices were considerably lower.