StarkNet Struggles to Recover from Controversial Airdrop as Key Metrics Plummet

Ethereum Layer 2 network StarkNet is struggling to recover from an airdrop that left some users disgruntled as most activity metrics plummet.

Ethereum Layer 2 community StarkNet continues to battle for momentum following an airdrop that left some users disgruntled, with key metrics indicating a sharp decline in activity.

StarkNet activity plummets

According to the Dune dashboard of the StarkNet Foundation, unique daily active users (DAUs) have nosedived 98% to 6,100 on August 26, down from 298,400 on Feb.20 — the day before the airdrop. In comparison, DAUs of competing Layer 2 solutions like Scroll and Linea increased by 49% and 173% to 53,000 and 213,000, respectively, in the same time frame.

Dune data also reveals a steep decline in daily transactions on StarkNet. Transactions have plunged 82% to 113,000 on August 26, down from its all-time high of 1.2 million on Feb. 20.

StarkNet’s total value locked (TVL) has slumped by 65% to $588 million from its all-time high of $1.77 billion in March, and is down 51% since the project’s airdrop, according to L2Beat.

STRK token has plummeted to an all-time low of $0.37, down 86% from its high of $2.63 in March, according to CoinGecko. STRK has a market capitalization of $621 million and a fully diluted market cap of $3.83 billion.

StarkNet airdrop drama

StarkNet is a scaling solution for Ethereum, aiming to enhance transaction speeds and reduce costs using zero-knowledge (ZK) technology. ZK technology allows for the bundling of transactions off-chain while ensuring their validity through cryptographic proofs, thereby maintaining Ethereum’s security while scaling its capacity.

The StarkNet airdrop distributed 700 million STRK tokens, representing 7% of the total 10 billion token supply. Over a million users were eligible, with 478 million tokens already claimed, according to a Token Flow dashboard.

Of the distributed tokens, 51% went to StarkNet users (506,896 recipients). ETH stakers received 22%, shared among 19,006 individuals, while StarkEx users got 9.62%, reaching 622,996 users. StarkNet ECMP members received 9.05%, allocated to 2,098 recipients. The remaining 9% was shared among developers, EIP authors, and Ethereum Protocol Guild members.

StarkNet's post-airdrop decline exemplifies how even larger crypto projects can struggle to sustain momentum after airdrops. Airdrops in crypto often lead to frustration, as users perform tasks in anticipation of future rewards, only to become disappointed if they don't receive tokens.

Users felt abandoned by StarkNet

Eli5DeFi, a DeFi research firm, told The Defiant in an email message that many users felt abandoned after discovering they did not qualify for the airdrop, despite seemingly meeting the criteria based on their on-chain activity.

The controversy was mainly due to the condition that users needed to have at least 0.005 ETH in their wallets by Nov. 15, 2023. There was also anger within the community after a StarkNet team member labeled some users as “e-beggars”, for which the team later apologized.

A community member who goes by Nikola and @nikola488 on X, expressed his disappointment, citing the mishandling of StarkNet's airdrop as his reason for leaving the ecosystem.

"The way StarkNet treated the airdrop was essentially a slap in the face to everyone who supported the project until the token launch. The token launch turned out to be one of the biggest failures, leaving no incentive to hold the token or use the chain anymore,” Nikola, who wants to maintain anonymity, told The Defiant in a Telegram message.

Eduard Jubany Tur, founder of the ZKX decentralized exchange (DEX), noted that it's challenging to make everyone happy with how airdrops are managed.

"Anything you do in terms of an airdrop will always be seen from the point of view of the farmers and what their interests are. It's very difficult to balance the interests of everyone and do the perfect airdrop,” he told The Defiant.

Meanwhile, the StarkNet Foundation recently announced that its Chief Executive Officer, Diego Oliva, has stepped down from his role without specifying any reason. Oliva had been leading the organization since March 2023.

StarkNet lacks compelling dApps

Eli5DeFi added that StarkNet lacks compelling applications.

"Onboarding to the StarkNet ecosystem is challenging

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