The Layer 2 network’s ownership will be made more decentralized with the use of the StarkNet token, which will also be used to pay operators for transaction validation.
Launch of Token by StarkWare
A second Layer 2 Ethereum project is introducing its own governance token.
The Ethereum Layer 2 developer StarkWare intends to provide a governance token for its StarkNet network, according to a blog post published on Wednesday.
StarkWare will use the new StarkNet token to provide the community control over the network’s governance and development. The token will also be used to reward community operators, who supply the network with computer power to carry out transaction sequencing and STARK proof creation.
The StarkNet token will be used to pay gas prices on the Layer 2 network, and a percentage of the fees will be given to operators as compensation for handling transactions, according to posts introducing the new coin.
Currently, StarkWare is the only operator in charge of transaction processing on StarkNet. The firm intends to decentralize operating responsibilities in the future, and the StarkNet coin will be essential to attaining this goal. “StarkNet won’t rely on just one business to run it. Businesses may go out of business or elect to discontinue providing network maintenance. Such eventualities won’t knock down StarkNet after decentralization, the business said.
StarkWare intends to give tokens to its investors, staff, and consultants as well as to developers, contributors, and users in the community in order to realize its decentralized goal. 10 billion StarkNet coins have already been created and distributed off-chain to StarkWare investors and StarkNet’s key contributors. These initial coins will be requested for use in governance and voting on network improvements and are scheduled to be released on-chain as ERC-20 tokens in September. The StarkWare Foundation will also oversee a larger community token distribution next year.
According to the current StarkNet token allocation breakdown, investors in StarkWare receive 17 percent of the supply, core contributors—including StarkWare and its employees and consultants—receive 32.9 percent, and the StarkWare Foundation—a non-profit charged with maintaining StarkNet as a public good—receives 50.1 percent. All tokens awarded to core contributors and investors will have a four-year lock-up period, with linear release and a one-year cliff, in order to match their long-term incentives with the interests of the StarkNet community.
The Three Arrows Capital co-founder Su Zhu hinted at the company’s ambitions for decentralization in a tweet on Tuesday, which was followed by the launch of the StarkNet coin.
In an email exchange between Zhu’s attorneys and counterparty liquidators, it was mentioned that Three Arrows had received a “StarkWare token purchase offer” after investing in the company earlier this year. This information sparked widespread rumors that StarkWare was developing a token.