Ethereum Scalability Solution, StarkNet Announces The Launch Of Tokens
[TL; DR]
StarkWare is an Israeli software development company with specialties in cryptography.
StarkWare is the developer of the layer2 scalability solution for Ethereum.
On July 13, 2022, StarkWare announced the launch of the StarkNet native token.
It is the same StarkNet responsible for the layer2 scaling solution of Ethereum.
The StarkNet native token will operate the ecosystem, maintain and secure it, decide on its values and strategic goals and direct its evolution.
The StarkNet token will serve three purposes that include paying transaction fees, serving as a governance token, and supporting the network's consensus mechanism.
The StarkNet foundation will retain 50.1% of the initial token release.
The StarkNet foundation is a non-profit organization that will maintain the network as a public good.
Keywords: StarkNet, StarkWare, Ethereum, scalability, network, layer2, foundation, token.
[Full Article]
The Ethereum network has scalability issues and is being solved by building layer two networks to unburden congestion, bring about faster transactions, and lower gas fees.
One of the Ethereum layer2 scalability solution networks is StarkWare. Recently, StarkWare launched its native token called StarkNet.
Several industry players have been optimistic about how StarkWare will deploy the token and are unsure whether it will affect the development of Ethereum's scalability solution.
Not to worry, this article will highlight the newly launched native token of Starkware and shed light on some salient issues raised concerning the StarkNet token.
Let's begin!
StarkWare; Ethereum’s Scalability Solution
Image: Medium
StarkWare is an Israeli software development company with specialties in cryptography. Starkware has a team that develops zero-knowledge proof technology to compress information and address scalability problems of blockchain protocols. The StarkWare scalability networks are deployed on the Ethereum platform.
StarkWare was founded in 2018 by Eli Ben-Sasson, Uri Kolodny, Michael Riabvez, and Alessandro Chiesa. In May 2022, StarkWare was estimated to be worth about $8 billion after receiving $100 million in funding.
StarkWare’s layer two solutions have continued to attract wide attention across the blockchain ecosystem. In 2021, the Loopring exchange unveiled a cross-layer 2 AMM with Starkware. Similarly, StarkWare has announced a layer 3 scaling solution for Ethereum, and this layer three scaling solution will be called hyper scaling.
StarkNet Native Token
Image: Swagtimus. eth
On July 13, 2022, the Israel-based developers of StarkWare announced the launch of a native token called the StarkNet.
The StarkNet token is believed to be part of a double-pronged plan to make StarkWare a “public good like Ethereum or the internet.” The second part of the announcement is the launch of StarkNet foundation, a non-profit organization (NGO).
The StarkNet technology behind the token leverages rollup technology to improve the network’s scalability. This network is also responsible for the layer2 scaling technology for Ethereum.
The Starkware team states, “ A new, native StarkNet token is needed to operate the ecosystem, maintain and secure it, decide on its values and strategic goals, and direct its evolution.”
It is expected that the StarkNet token will serve three purposes. They are; to pay transaction fees on StarkNet, serve as a governance token, and support the technology’s consensus mechanism.
During the launch, it was announced that an initial 10 billion tokens would be minted. Of these 10 billion tokens, 17% will go to the development team’s investors, 32.9% will accrue to development partners and employees, and 50.1% will go to the foundation. The StarkNet token will be minted as an ERC-20 token.
While the sales of the StarkNet token will go live on the Ethereum blockchain in September, it is unclear when StarkNet community members will receive an allocation of the token. However, there are insinuations that the token launch “will filter and exclude usage deemed to be an abuse and gamification of the network.”
According to StarkWare, the StarkNet token will help to actualize the full potential of a decentralized network. In addition, the token is a critical step in the platform’s decentralization following its mainnet launch in November 2021.
The token is designed for the community and will be run by the community. It will provide for the governance of the ecosystem and guarantee a reward system to those helping to secure the network.
The StarkNet Foundation
Image: Medium
On July 13, when StarkWare unveiled the StarkNet token, the StarkNet foundation was also revealed. 50.15% of the initial 10 billion tokens will go to this foundation. The breakdown of the Foundation share goes thus;
9% will be allocated to community provisions—those who performed work for StarkNet and developed its underlying technology. The community provisions will be based on verifiable results done in the past (before June 1, 2022).
12% will be for grants towards research and work done towards developing, testing, deploying, and maintaining the StarkNet protocol.
10% will go to the strategic reserve and fund the foundation’s mission.
2% will be donations to highly regarded institutions and organizations, including universities and other prominent Non-Governmental Organizations.
8.1% will be unallocated and will subsequently be deliberated upon by the community.
The StarkNet foundation is a non-profit and non-governmental organization that aims to “maintain the network as a public good.”
At the launch of the token and foundation, it was revealed that the StarkNet foundation would receive a one-time grant that would be used to encourage the development of bottom-up mechanisms.
The StarkNet foundation will promote transparency by distributing the needed information for making these decisions and maintain an archive for reference or easy accessibility of such data in the future.
Conclusion
StarkWare has painted the StarkNet as a protocol run by a decentralized community; however, there has been no clear definition of those that constitute the community.
Albeit, the launch of the token and foundation now gives a clearer picture that those that contribute to the governance protocol and earn rewards in StarkNet token will form the community.
It is expected that the newly launched token will not affect the layer two scalability solution, coupled with the fact that a layer three solution for Ethereum is underway. The token will be used for transaction fees, staking, governance, and other use cases.
Author: Valentine. A, Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
Gate.io reserves all rights to this article. Reposting of the article will be permitted, provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
