Starknet’s STRK tokens lost half their value after going live for trading on Tuesday, while the team faces ongoing criticism around a 2022 token generation event.
Data shows that STRK has been down 55% in the past 24 hours, with over $1.2 billion in trading volumes. Only $3 million worth of STRK futures were liquidated, suggesting most of the selling pressure was spot-driven.
Some 728 million STRK were distributed to around 1.3 million addresses based on predetermined criteria, such as participation on the blockchain and in its community. The selling pressure suggests that recipients likely sold tokens as soon as possible.
Starknet is an Ethereum rollup platform that allows applications to scale using zero-knowledge proof technology to prove the veracity of a set of data without revealing the data itself. Over 100,000 wallets have claimed upward of 220 million STRK as of Tuesday, the team said on X.
To be sure, many tokens drop in the hours after issuance. Arbitrum’s ARB lost nearly 50% from initial prices when it was launched on Mar. 23, 2023 and Curve’s CRV slumped to $11 from $61 on its first day of trading in August 2020. On the other hand, the recently launched JUP from Solana-based exchange Jupiter, rallied 50% in the first 24 hours after it became available on Dec. 31, 2023. The price movements are determined by airdrop recipients who either hold or buy tokens on upcoming catalysts, or chose to take profits.
A large part, 50.1%, of STRK’s supply has been allocated to the Starknet Foundation for community airdrops, grants and donations. 24.68% of STRK’s total supply will be distributed to early contributors and investors, while 32% has been assigned to developer StarkWare’s (its developer) employees, consultants and developer partners.
The tokens will be unlocked every month for 31 months, starting from April, adding to possible selling pressure.
However, the schedule for team and investor unlocks has created criticism among some in crypto circles.
In the past week, market observers seemingly discovered that Starknet’s actual token generation event took place in November 2022, initially having a one-year vesting period that was later pushed to April 2024.
Starknet developers say the generation event was mentioned and documented in its technical papers, but it was one that the market seemed to have missed. Some critics consider it an obfuscation of facts – one that may benefit insiders more than the community, observers say.
Ideally, such a vesting period begins after tokens go live on exchanges or are issued closer to their trading date. In STRK’s case, the issuance occurred almost two years before a public announcement of the tokens, an unusual step.
That means core contributors and investors will see 13.1% of the supply unlocked in April 2024 and more each month beyond this. The initial unlock could be worth more than $2.6 billion at current prices, data from Token Unlocks shows.
Starknet has followed its decision so far and has not changed the vesting date as of Wednesday.
CORRECTION (Feb. 21, 9:18 UTC): Corrects date of unlocking in penultimate paragraph. An earlier version of this story had it as April 2023.
UPDATE (Feb. 21, 11:17 UTC): Adds perspective on price performance of other newly released tokens in fifth paragraph.