Starkware is the scalability and privacy blockchain company on which protocols like DYDX run. This network is finally becoming decentralized in its governance. This decentralization requires the introduction of a native token called STARK, as well as StarkNet DAO.
Here’s what you need to know about this new token.
STARK Use Case
The StarkNet is a Layer 2 rollup that exists to help the Ethereum network scale and meet the demands of the many users working on it. StarkNet uses special cryptographic protocols, STARKs, that allow this L2 network to be secure, scalable, inclusive, transparent, and cheap without compromising Ethereum’s main principles.
Since the company is for decentralization, the team realized there could not be true decentralization and transparency if only a single entity, i.e., StarkWare, controls the network’s operations and evolution. Therefore, they saw the need for a “permissionless proof-of-stake leader election mechanism and on-chain payment of transaction fees, both using a native token.”
This would allow the network to run reliably and independently of StarkWare parent company.
According to their medium blog post, the STARK token’s use cases include:
- Governance of the StarkNet DAO and ecosystem,
- Compensation for parties that show up to perform work that powers the decentralized service (Staking), and
- Payment of transaction fees on StarkNet
STARK Tokenomics and Allocation
10 billion STARK tokens have been minted on the StarkNet network. However, ERC-20 STARK tokens will be coming to Ethereum soon. The 10 Billion tokens have been allocated to the core contributors of the StarkNet ecosystem. These include investors (VCs), developers, and the community.
32.9% goes to developers and partners, 17% to the investors (VCs), and 50.1% to the community (A.K.A, the newly formed StarkNet Foundation). Being part of the community, let’s break down the 50.1%.
Breakdown of the 50.1%
9% goes to the community provisions. This means previous users of the StarkEx L2. This could be in the form of an airdrop. (snapshot was taken June 1, 2022).
9% goes to community rebates (i.e., onboarding from Ethereum mainnet to StarkNet), and 12% goes to grants for research and development. A further 10% will be preserved for funding ecosystem activities (not specified which activities). 2% will go to donations, and finally, 8.1% will be left unallocated to be used to support the StarkNet community in whatever manner the community decides.
The token will go live in September. However, details of the token allocations to the community (aka airdrop) are still hazy. Here is what StarkWare had to say to potential airdrop farmers:
“If you are an end user, use StarkNet — but only as it serves your needs today. Use it for those transactions and applications that you value, not in expectation of any future reward of StarkNet Tokens. When Community Provisions are announced, they will refer only to snapshots that have occurred previous to the announcement date, and will filter and exclude usage that is deemed by it to be an abuse and gamification of the network, based on the information available at that point in time.”
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.