Starknet’s network activity is on a continuous decline despite making revisions to its controversial token unlock schedule. According to Starkscan data, the number of active users fell below 100,000 addresses for the second time since the provisions airdrop was announced on Valentine’s Day, reaching only around 43,000 on March 1. Additionally, transactions per second dropped to 1.90 from the peak of 12.3 observed on the airdrop day.
The Ethereum layer-2 network initiated the airdrop of over 700 million STRK tokens to 1.3 million eligible wallets on February 20, resulting in a sudden surge in daily user count to over 380,000. However, Starknet faced backlash from the public due to its planned unlocking event of 1.3 billion tokens for early investors and contributors on April 15, which was less than two months after the token’s trading debut. In response, Starknet adjusted its token release schedule. Now, 64 million tokens will be released on April 15, and the remaining tokens will be gradually unlocked until March 2027.
Bitrue, one of the crypto exchanges that listed STRK on the airdrop day, expressed support for the revised token release schedule. Anchit Goel, the head of listings at Bitrue, stated that the original plan would have increased the token supply and added to the selling pressure from early investors and contributors. He believes that the change will help maintain a more stable token value and reduce the risk of rapid price fluctuations.
Despite the revised schedule, STRK’s price has dropped significantly. It reached a high of $7 on Binance but has fallen to $1.87 at the time of writing, according to CoinGecko. While the revised token release schedule has addressed some community concerns about a potential token dump, it hasn’t been enough to halt the network’s decline in engagement metrics.
Two major backers of Starknet, Three Arrows Capital (3AC) and Alameda Research, are bankrupt, which has raised concerns among market watchers. It is believed that the bankruptcy proceedings of these firms could add selling pressure to the market. Blockchain data shows that the liquidator of 3AC, Teneo, owns the eighth-largest STRK account with 134.18 million tokens worth around $256 million. There is no record of Alameda-associated wallets, including FTX, receiving STRK tokens.
Starknet’s token allocation strategy has also sparked discussions about centralization. The Starknet Foundation has allocated 18% of the tokens for the community through rebates and provisions, while the rest will be controlled by the foundation and investors. This could potentially tip the network’s governance and voting power to one side. Tokenomics auditor Stylianos Kampakis states that centralization is a common issue for early projects and that token allocation can become more decentralized over time.
The project’s approach to its token generation event (TGE) has also faced scrutiny. The TGE took place in November 2022, over a year before the general public could access the cryptocurrency. This has led to criticism that it favors insiders and early investors. Bitrue’s Anchit Goel defends the approach, stating that it is not uncommon for projects to hold a TGE before exchange listings as it allows them to develop their technology and establish partnerships before going public. However, he acknowledges that the delayed launch could contribute to uncertainty and reduced investor confidence in the current dynamic cryptocurrency market.
Starknet’s recent provisions airdrop was one of the largest in history, joining the trend of projects choosing the token distribution method over initial coin offerings. “Moving forward, we’re going to be seeing more and more airdrops,” says Kampakis. However, the airdrop event may have been flooded by “airdrop hunters,” as some individuals bypassed Starknet’s restrictions to receive multiple tokens. Blockchain analytics platform Lookonchain claims that one entity received over 1.4 million tokens (worth around $3 million) through 1,361 wallets. Some community members also expressed discontent as they believed the eligibility criteria prevented them from receiving airdrops despite contributing to the network.
Out of the over 700 million tokens allocated to the airdrop, at least 450.5 million STRK tokens have been claimed, according to Starknet data platform Voyager. With a total supply of 10 billion tokens, only less than 200 million tokens are left for distribution under the provisions program. The Starknet Foundation is expected to hold future provisions airdrops to include community members who were left out.