Starknet’s declining activity persists despite failed token release revision

Starknet’s network activity continues to decline despite making changes to its controversial token unlock schedule. According to data from Starkscan, 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 around 43,000 on March 1. Transaction per second also decreased from a peak of 12.3 on airdrop day to 1.90. The Ethereum layer-2 network distributed over 700 million STRK tokens to 1.3 million eligible wallets on Feb. 20, causing a surge in daily user count to over 380,000. However, Starknet faced backlash due to its planned unlocking event of 1.3 billion tokens for early investors and contributors on April 15, less than two months after the token’s trading debut. In response, Starknet adjusted its token release schedule. Instead of unlocking all tokens on April 15, only 64 million will be released, with the remaining tokens gradually unlocked until March 2027. Anchit Goel, head of listings at Bitrue, one of the crypto exchanges that listed STRK on airdrop day, believes that this change will help maintain a more stable token value and reduce the risk of price fluctuations. The token’s price initially reached $7 but has since fallen to $1.87. Despite the revised token release schedule, the network’s engagement metrics continue to decline. Two major backers of Starknet, Three Arrows Capital and Alameda Research, have filed for bankruptcy, which may add selling pressure to the market. The token allocation strategy of the project has also raised concerns about centralization, as the majority of tokens will be controlled by the Starknet Foundation and investors. Stylianos Kampakis, a tokenomics auditor at Hacken, explains that centralization is a common issue for early projects, but token allocation can become more decentralized over time. The project’s token generation event (TGE), held in November 2022, has also faced criticism for benefiting insiders and early investors. However, Bitrue’s Goel argues that it is not uncommon for projects to hold a TGE before exchange listings. Starknet’s recent provisions airdrop was one of the largest in history, and it is expected that more projects will opt for this distribution method over initial coin offerings. The airdrop event may have been flooded by “airdrop hunters,” and some individuals managed to bypass the eligibility criteria set by Starknet. There were also concerns that the criteria prevented some community members from receiving airdrops despite contributing to the network. Over 450.5 million STRK tokens have been claimed out of the over 700 million allocated to the airdrop, and less than 200 million tokens are left for distribution under the provisions program.