Starknet STRK Token Price Drops 53%, Token Distribution Reaps Criticism

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Bittime -  Starknet's STRKtoken plunged 53% on its first day of trading, sparking concerns about a massive sell-off by recipients of the token. Criticism of the token distribution schedule to development teams and investors has also become louder.

Data shows that STRK has fallen 55% in the last 24 hours, with trading volume exceeding $1.2 billion. Only about $3 million of STRK was liquidated , indicating that most of the selling pressure came from the spot market.

About 728 million STRKs were distributed to 1.3 million addresses based on certain criteria, such as participation in the blockchain and its community. The sharp price drop indicates that many recipients are immediately offloading their assets.

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Why did the token price drop at the start of the launch?

Starknet is an Ethereum rollup platform that enables scalable applications using "zero-knowledge proof" technology to prove the accuracy of data without disclosing the data itself. More than 100,000 wallets have claimed more than 220 million STRK as of Tuesday, according to the development team.

Decreasing token prices after distribution is nothing new. Arbitrum's ARB lost nearly 50% of its initial price when it launched on March 23, 2023, and Curve's CRV plunged to $11 from $61 on its first day of trading in August 2020. However, the JUP of Solana-based exchange Jupiter actually jumped 50% in the first 24 hours once available on December 31, 2023.

The main problem lies in the distribution of tokens. 50.1% of the total supply is allocated for community airdrops, grants, and donations by the Starknet Foundation. 24.68% was allocated to early contributors and investors, while 32% went to StarkWare employees, consultants, and developer partners.

These tokens will be unlocked every month for 31 months, starting in April, potentially adding to selling pressure.

However, the unlocking timeline for teams and investors has drawn criticism. Some market observers recently discovered that the Starknet token generation event (TGE) actually occurred in November 2022, with a one-year vesting period that was later pushed back to April 2024.

Also Read: Starknet Plans to Distribute Tokens 'Widely' by the End of February 2024

Distribution of STRK Tokens Reaps Criticism

Starknet developers argued that TGE was mentioned and documented in their technical paper, but the market apparently missed it. Some critics consider this to be a blurring of the facts, benefiting insiders more than the community.

Generally, the vesting period ideally begins once the token is actively traded on an exchange or is issued close to the trading date. In STRK's case, the token issuance occurred almost two years before the public announcement, an unusual move.

This means core contributors and investors will receive 13.1% of the total unlocked supply in April 2024 and continue to grow every month. The initial unlock is potentially worth more than $2.6 billion at current prices.

Until now, Starknet has stuck to its decision and has not changed the vesting date.

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