Core contributors, investors to unlock 1.3 billion of starknet tokens just two months after it becomes tradable
Quick Take: Starkware’s core contributors and investors will see the first tranche of their tokens unlocked in less than two months after the token goes live next week. That’s because the token was generated a long time before it was made available for trading — something that has caused controversy among the crypto crowd.
However, in an unusual move, core contributors and investors will see nearly twice as many tokens — some 1.314 billion STRK, or 13.1% of the supply — unlocked in less than two months after the token becomes tradable. More tokens will be unlocked each month beyond this. Judging by pre-market trading prices , the initial amount could be worth $2.2 billion.
The reason why the unlocks are coming so shortly after the token becomes tradable is because the unlocks are linked to the token generation event, which took place in November 2022. After it was created, the token was able to be used for governance purposes but couldn't be moved or traded. This will change next week when it goes fully live.
The token allocations to core contributors and investors were supposed to be unlocked after a one-year cliff in November 2023, following the token generation event, but this was delayed by five months to April 15 as the token was not yet ready.
Normally the one-year cliff is to stop investors from being able to sell their discounted tokens immediately on the market to newer buyers. By making the token long before it was available for trading and running down the clock on the token unlocks, this has created a much smaller delay between when traders can buy the tokens and when investors can sell their discounted tokens on the open market.
A sudden backlash
The approach has come up against widespread criticism in the crypto community.
“Starkware is a [tier one] launch that will price at a multibillion [fully diluted valuation] and it has an unlock schedule that looks more like how the devs would pay themselves for a fair launch DeFi shitcoin,” said pseudonymous crypto influencer Sisyphus on X.
The token distribution has a very rapid rise in the first few months. Image: StarkWare.
“It’s predatory to unlock such a large portion of investor tokens in such a short amount of time after real launch by masking it with a fake token generation event 2 years ago,” the founder of Endless Clouds, known pseudonymously as Loopify, told The Block.
“Contrary to popular belief I think their airdrop criteria favored a good category of people, but this unlock move ruins their reputation. The only way you can fix this is by delaying investor token unlocks,” they added.
StarkWare stays the course
Despite the backlash, Starkware is sticking to its plan.
"The 1.3 million Provisions recipients will get tokens that are liquid upon receipt. Others who put effort and money in to making Starknet possible will wait until April for the first third of their tokens unlocked, after which more will unlock monthly," said StarkWare co-founder and CEO Eli Ben-Sasson.
"Some of these, among them builders and investors, committed to STARK technology when its success sounded farfetched. The plan seems like a balanced solution that recognizes the commitment of these two groups that have made a commitment to STARKs," he added.
While this approach is uncommon, Starknet is not the only project to have done so. Gaming project Neon generated 3 billion of its SHRAP tokens in April 2023. Yet the tokens were on a private subnet on the Avalanche blockchain and weren’t tradable until November 2023. When it went live, investors suddenly realized that the one-year unlocks would take place much quicker than anticipated.
“‘[Token generation event] token entering circulation can be two different events.’ I guess that's a new thing to watch out for. Better add it to the list,” said pseudonymous investor sparkc on X — who was an investor in Shrapnel — at the time. “They keep you on your toes in crypto!”
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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