Starknet (STRK) Token Holders Could Earn 12% Annually

UTC by Godfrey Benjamin · 3 min read
Starknet (STRK) Token Holders Could Earn 12% Annually
Photo: Starknet / X

The timing of Starknet’s STRK token airdrop coincides with a broader trend of token distributions within the crypto space.

Starknet, the Ethereum layer 2 network developed by Starkware, is about to begin its highly anticipated STRK token airdrop. With this milestone approaching, Starkware has introduced a proposal outlining the token’s inflation rate, a pivotal aspect that could shape the network’s dynamics.

Starkware’s Proposal for STRK Token Airdrop and Inflation

The proposed reward algorithm suggests a maximum annual inflation rate of 4% for the STRK token. However, individual stakers could earn over 12% annually, contingent upon the percentage of STRK’s 10 billion supply that is staked. While these figures offer a glimpse into the potential rewards for participants, it’s essential to recognize that they are subject to community review and a subsequent governance vote before implementation into Starknet.

Decentralization lies at the heart of Starknet’s vision, and to achieve this, Starkware plans to transition transaction sequencing and proving on the network to a Proof-of-Stake (PoS) protocol. This transition will empower STRK holders to stake their tokens, thereby contributing to the security of Starknet while receiving newly minted STRK as rewards.

However, such a system necessitates a delicate balance. While stakers must be incentivized sufficiently to participate, excessive rewards could lead to unchecked token inflation, potentially undermining the network’s stability and value proposition.

Starkware’s journey with Starknet began in November 2021 when the solution was launched on the Ethereum mainnet. Since then, the team has been progressively open-sourcing various elements of the StarkNet stack, including the sequencer, client software Papyrus, and the Cairo 1.0 programming language.

This commitment to transparency and community involvement highlights Starkware’s dedication to fostering a robust and inclusive ecosystem.

Lessons from Recent Airdrops

The timing of Starknet’s STRK token airdrop coincides with a broader trend of token distributions within the crypto space. On January 31, 2024, Jupiter (JUP) conducted one of the largest token airdrops on the Solana (SOL) blockchain, distributing approximately $700 million worth of JUP tokens to over a million wallets. This successful distribution event catalyzed a surge in JUP token price, demonstrating investors’ enthusiasm and confidence in the project.

Similarly, Jito, a Decentralized Finance (DeFi) liquid staking protocol on Solana, distributed over 90 million of its native tokens, JTO to early contributors, with the value of the distributed assets soaring post-airdrop.

Amidst these developments, the performance of the underlying blockchain infrastructure is paramount. Solana’s ability to maintain 100% uptime during the peak traffic of Jupiter’s airdrop underscores the importance of scalability and reliability in supporting the burgeoning ecosystem of Decentralized Applications (DApps) and token economies.

As Starknet prepares to launch its STRK token airdrop, it sits at the intersection of innovation and decentralization in the Ethereum ecosystem. The planned inflation rate and transition to Proof-of-Stake indicate a new chapter in the network’s evolution, allowing stakeholders to actively participate in governance while earning rewards through staking. In the near future, multiple exchange listings are likely to trail the Starknet’s STRK airdrop.

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