Core contributors and investors can unlock 1.3 billion Starknet tokens in just two months since they became available for trading.

The Starknet token is scheduled to be released within a week, and 728 million tokens, equivalent to 7.3% of the total supply, will be distributed to the community in the form of airdrops.

However, in an unusual move, core contributors and investors will see approximately 1.314 billion STRK, or 13.1% of the supply, unlocked within two months of the token becoming tradable. After this, more tokens will be unlocked each month. Judging by the pre-market trading price, the initial amount could be as high as $2.2 billion.

The reason the unlocking occurs immediately after the token becomes tradable is because the unlocking is tied to a token creation event that occurred in November 2022. After being created, the token could be used for governance purposes, but it could not be used. It cannot be moved or traded. That will change when it becomes fully active next week.

Token allocation for core contributors and investors was scheduled to be unlocked after a one-year cliffhanger in November 2023 following the token creation event, but was delayed five months to April 15 as the tokens were not yet ready.

Typically, a one-year cliff prevents investors from selling their discounted tokens to new buyers on the market immediately. By creating tokens well before they can be used for trading and shortening the token unlock time, there is a much smaller delay between when traders can purchase tokens and when investors can sell discounted tokens on the open market.

a sudden backlash

This approach has been met with widespread criticism in the cryptocurrency community.

“Starkware is a (tier 1) release priced in the billions of dollars (fully diluted valuation), with an unlock schedule more similar to how developers pay themselves for fair launch DeFi shitcoins. ” said Anonymous cryptocurrency influencer Sisyphus of X.

Token distribution grew very quickly in the first few months. Image: Starkware.

“Unlocking such a large amount of investor tokens in such a short period of time after the actual launch by masking it with a fake token creation event two years ago is predatory,” the founder of Endless Clouds, known by the pseudonym Loopify, told The Block. .

“Contrary to popular belief, I believe their airdrop criteria favored good categories of people, but this unlock move has ruined their reputation. “The only way to solve this problem is to delay unlocking investor tokens,” he added.

StarkWare Stays the Course

Despite the backlash, Starkware is sticking to its plan.

“Recipients of the 1.3 million provisions will receive liquid tokens upon receipt. Others who have put in the effort and money to make Starknet possible will wait until April for the first third of tokens to be unlocked. After that, more tokens will be unlocked every month,” said StarkWare co. -Founder and CEO Eli Ben-Sasson.

“Some of these people committed at a time when some of the builders and investors could not believe the success of STARK technology. This plan seems like a balanced solution that recognizes the commitment of both groups who have committed to STARK,” he added.

Although this approach is uncommon, Starknet is not the only project that has applied this approach. Gaming project Neon created 3 billion SHRAP tokens in April 2023. However, the tokens were in a private subnet of the Avalanche blockchain and could not be traded until November 2023. When activated, investors suddenly see the one-year unlock happen much sooner than expected.

“'(Token creation event) and token entry into circulation may be two different events.’ I think you should pay attention to something new. I recommend adding it to the list.” said Sparkc, a pseudonym investor for X, who was an investor in Shrapnel at the time. “They make you pay attention to cryptocurrencies!”

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