Challenges Persist for Ethereum’s StarkNet Layer 2 Network After Airdrop
The StarkNet network, a Layer 2 solution for Ethereum, is facing challenges following an airdrop that has left users dissatisfied, leading to a significant drop in key metrics. Data from the StarkNet Foundation’s Dune dashboard shows a sharp decline in unique daily active users (DAUs), plummeting by 98% to 6,100 on Aug. 26 from 298,400 on Feb. 20, just before the airdrop. In contrast, competing Layer 2 solutions like Scroll and Linea experienced increases in DAUs by 49% and 173% to 53,000 and 213,000, respectively, during the same period.
Furthermore, daily transactions on StarkNet have decreased by 82%, falling to 113,000 on Aug. 26 from its peak of 1.2 million on Feb. 20. The total value locked (TVL) on StarkNet has also seen a decline of 65% to $588 million from its all-time high of $1.77 billion in March.
The STRK token associated with StarkNet has hit an all-time low of $0.37, marking an 86% drop from its peak of $2.63 in March. The token currently has a market capitalization of $621 million and a fully diluted market cap of $3.83 billion.
StarkNet, founded in 2022 by Eli Ben-Sasson, Uri Kolodny, Michael Riabzev, and Alessandro Chiesa, aims to improve transaction speeds and reduce costs on Ethereum using zero-knowledge (ZK) technology. This technology allows for off-chain transaction bundling while ensuring their validity through cryptographic proofs, maintaining Ethereum’s security while scaling its capacity.
Despite its initial success, StarkNet has faced challenges following a controversial airdrop that distributed 700 million STRK tokens to eligible users. The decline post-airdrop highlights the difficulties even large crypto projects encounter in sustaining momentum after such events.
Users expressed feeling abandoned after not qualifying for the airdrop, despite meeting what they believed to be the criteria based on their on-chain activity. StarkNet’s handling of the airdrop led to frustration among users, with some labeling the project’s token launch as a failure, diminishing incentives to hold or use the token.
In response to the declining metrics, StarkNet is focusing on increasing user engagement by supporting developers to create new applications and providing incentives for network participation. The Foundation is offering seed grants to aid app development, with programs like the DeFi Spring Program and Propulsion initiative aimed at boosting transaction volumes and enhancing user engagement.
StarkWare has also proposed a StarkNet Improvement Proposal (SNIP) to introduce staking to Ethereum Layer 2, potentially further engaging the community. Despite the challenges, StarkNet remains committed to supporting developers and fostering high-quality applications to drive ongoing user engagement and network growth.
