Starknet Faces User Activity Downturn Despite Revised Token Distribution Strategy
Summary:
Starknet is experiencing a continuous drop in network activity, with user engagement metrics decreasing despite the revision of its controversial token release plan. The revised plan will see 64 million tokens released on April 15 and the remainder gradually unlocked until March 2027, rather than an instantaneous release of 1.3 billion tokens for early investors. Two significant backers, Three Arrows Capital and Alameda Research, are bankrupt, adding market selling pressure. Meanwhile, the handling of Starknet's token generation event and token allocation has faced criticism for potentially favoring early investors and centralizing power. The rules around Starknet's massive February 2023 airdrop were also seemingly exploited by 'airdrop hunters'.
Despite making adjustments to its contentious token unlock plan, Starknet is witnessing a continuing decline in network activity. Starkscan data shows that active users fell under 100,000 addresses for the second time since Starknet's Valentine's Day airdrop announcement, dropping to about 43,000 on 1st March. Concurrently, transactions per second decreased from the airdrop day peak of 12.3 to 1.90. Starknet began distributing over 700 million STRK tokens to 1.3 million eligible wallets on 20th February, resulting in a daily user count surge to over 380,000. However, the network faced public backlash due to their proposed release of 1.3 billion tokens for early investors and contributors less than two months post the token's trading debut. This led Starknet to modify its token release schedule, now planning to release 64 million tokens on April 15 and gradually unlock the remaining tokens till March 2027. Anchit Goel from Bitrue feels this change could prevent rapid price fluctuation and stabilize the token value. Despite the amendment in the token release plan calming some community dismay over a potential massive token dump, it has not been sufficient to halt network engagement decline. Two of Starknet's principal backers, Three Arrows Capital and Alameda Research, are financially insolvent, adding to market selling pressure. Contrarily, the Starknet Foundation allocates 18% of its tokens for the community via rebates and provisions, which some argue could centralize power and tip the balance in governance and voting power. It has also been criticized for holding its November 2022 token generation event over a year prior to public access to the cryptocurrency, a strategy that critics claim benefits early investors and insiders. However, Bitrue's Goel suggests this is a common approach as it allows technology development and partnership establishment prior to public launch. Starknet's February 2023 provisions airdrop, one of history's largest, was possibly exploited by 'airdrop hunters' ignoring Sybil restrictions and claiming multiple tokens via several wallets. The remaining provision program funds amount to less than 200 million tokens.
Published At
3/1/2024 5:01:00 PM
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