Ethereum StarkWare Second Layer Scalability Company confirmed rumors about the upcoming launch of the StarkNet token. The asset aims to enable the project to operate a decentralized ecosystem and create an effective mechanism to “steer its evolution”.
The StarkNet is a second layer Ethereum scalability solution based on Zero Knowledge (ZK) Rollup technology. This provides decentralized applications (dApps) with “unlimited” scalability without compromising security, decentralization, and composability.
The StarkNet token was designed to power and motivate the key elements of this network. The ad claims they are StarkNet users, operators, and developers.
In this sense, the company has implemented a fee structure and token minting mechanism to prevent “speculative manipulation”, with “largely automated” processes, and a history of successful features on other blockchains.
The announcement is very explicit about the important roles of operators and developers. Thus, these components of the StarkWare ecosystem will receive part of the StarkNet token.
For example, smart contract developers will be rewarded with a portion of the fees paid by users to leverage L1 and L2 smart contracts. This process will be automated, according to the design explained above.
The more value a project or smart contract brings to the StarkWare and StarkNet ecosystem, the more developers will be rewarded with a “greater portion of the tokens allocated for this purpose”. The company clarified that the token allocation mechanism is “yet to be determined”, but that it will focus on preventing “gamification” and will be transparent about this process.
Additionally, the company stated that the StarkNet token will not have a fixed supply. On the contrary, supply will “increase over time”. The strike schedule is also to be determined by the StarkNet community.
#StarkNet Alpha launched on Ethereum Mainnet in November 2021.
It is now time to advance its decentralization as required of an L2 on Ethereum.
Here is our proposal for decentralization, introducing the StarkNet token and the StarkNet Foundationhttps://t.co/zk33gANsin pic.twitter.com/YTd0Uj5NbW
—StarkWare (@StarkWareLtd) July 13, 2022
StarkWare token allocation discourages “speculation”?
The company claims to have minted ten billion StarkNet tokens. As seen below, these tokens will have the following allocation: 32.9% for “Core Contributors”, 50.1% to be granted by StarkWare to the newly created StarkNet Foundation, and 17% for StarkWare Investors .
The StarkNet Foundation token allocation will be split with 18% going towards community provisions and community discounts. These tokens will reward key community members and users “who have done work for StarNet”.
The latter is essential in the whole allocation of StarkNet tokens, the project aims to reward hard work and prevent people from speculating and “gamifying” the mechanism. As the announcement said, there will be “no shortcuts to receiving tokens.” StarkWare said the following about its lock-up and vest periods:
To align the long-term incentives of major contributors and investors with the interests of the StarkNet community, and in line with common practice in decentralized ecosystems, all tokens awarded to major contributors and investors will be subject to a lock-up period of 4 years , with linear release and a one-year cliff.
Some members of the crypto community disagreed with the token allocation, saying users and operators, allegedly two major components of the ecosystem, will not receive proper compensation. For StarkNet users, the company recommends the following in light of the token’s upcoming launch:
If you are an end user, use StarkNet, but only to the extent that it meets your current needs. Use it for the transactions and applications you enjoy, not in expectation of a future reward of StarkNet tokens.
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At the time of writing, Ethereum (ETH) is trading at $1,140 with a profit of 7% in the last 24 hours.