The debut of StarkNet’s STRK token on February 20th was met with a steep decline in value. Despite high expectations, the altcoin’s value plummeted by over 50%, causing concern among investors and market observers.
Market Flooded by AirDrop Token Sales
Trading volumes for STRK soared past $1.2 billion as a 55% decrease in its price was reported, indicating a surge in sell-offs. The selloffs were mainly attributed to AirDrop recipients offloading their newly acquired tokens on the spot market.
Following the AirDrop, 1.3 million wallets received a collective 728 million STRK tokens, with the distribution based on engagement with the Blockchain and community contributions. However, the rush to sell by many suggests a preference for immediate liquidation, as over 220 million tokens have already been claimed by more than 100,000 addresses.
StarkNet has allocated a significant share of STRK tokens to various stakeholders, with over half directed to the StarkNet Foundation for community-focused initiatives, and a notable portion to early contributors, employees, advisors, and developers.
Challenges in Token Distribution Raise Questions
The strategy behind StarkNet’s token distribution has been scrutinized, especially regarding the scheduled release of tokens to the project team and investors. A token generation event planned for November 2022, with a vesting period set for April 2024, has been contentious, with concerns over favoritism and the transparency of the distribution process.
The StarkNet development team maintains that the token generation event was always part of the plan, documented in technical papers, though it may have been overlooked. Criticism centers around the announcement’s timing and clarity, which came significantly earlier than expected. Despite the criticism, StarkNet has not altered its vesting schedule, and stakeholders are gearing up for the release of a substantial portion of tokens in April and subsequent months.