TL;DR
- Starknet, a Layer 2 scaling solution for Ethereum, distributed over 728 million STRK tokens to around 1.3 million wallets, leading to a 53% decrease in the token’s value within 24 hours due to immediate selling.
- The token distribution has faced criticism, with some arguing that the token generation event and vesting period may favor insiders over the broader community.
- In response to the criticism, Starknet is implementing changes and planning for the future, which could play a crucial role in the token’s recovery.
Starknet, the Layer 2 scaling solution focused on improving the performance of decentralized applications on Ethereum, has recently faced criticism and a significant drop in the value of its native token, STRK. On February 20, Starknet distributed over 728 million STRK tokens to around 1.3 million wallets.
The distribution of tokens was carried out based on specific criteria, including involvement in the blockchain and its community. However, despite the extensive airdrop, the value of STRK has experienced a significant decline, with a 53% decrease since launch. Currently, the STRK token is trading at $1.91.
The intense selling pressure indicates that the recipients likely sold their tokens immediately. As of Tuesday, more than 100,000 wallets have claimed over 220 million STRK. This swift sell-off has resulted in trading volumes exceeding $1.2 billion.
Over 220 million STRK claimed!
Source: @_token_flow pic.twitter.com/IoDOZQFJ8W
— Starknet 🦇🔊 (@Starknet) February 20, 2024
The token distribution by Starknet has faced criticism. Some market analysts found that the actual token generation event for Starknet occurred in November 2022, with an initial one-year vesting period that was subsequently extended to April 2024. Critics contend that this arrangement may favor insiders over the broader community.
Starknet Responds to Community Feedback and Announces Changes
In response to the criticism from the cryptocurrency community, Starknet is implementing changes. The criticism primarily revolved around Starknet’s eligibility requirements, the unlocking of tokens by the team, and the derogatory term “e-beggars” used to refer to their users.
Starknet acknowledged on a certain date that they had received feedback suggesting that some of their dedicated community members and network users had been excluded due to specific eligibility criteria. In light of this, the team has announced that they are researching to formulate a significant response.
Despite the criticism and the drop in STRK’s value, Starknet remains a significant player in the blockchain space. Its technology enables applications to expand using zero-knowledge proof technology, which verifies the authenticity of a data set without disclosing the data itself.
The future of STRK remains uncertain. With the tokens being unlocked every month for 31 months, starting from April, there could be additional selling pressure. However, Starknet’s response to the criticism and its plans for the future could play a crucial role in the token’s recovery.
As the crypto market continues to evolve, the events surrounding Starknet’s STRK token serve as a reminder of the volatility and unpredictability inherent in the space. It also underscores the importance of transparency and community trust in the success of a cryptocurrency.
