- Starknet, an Ethereum L2 solution, has been embroiled in controversy since its airdrop earlier in February.
- Despite the lack of market confidence, DeFi users have been flocking to the network.
- The near-200%+ surge in TVL means Starknet is now the fourth-biggest Ethereum L2 based on this metric.
- However, the news did nothing to prevent the freefall of the project’s native coin, STRK.
Starknet, a decentralised L2 rollup for Ethereum, recently airdropped its native token (STRK) to community members – setting off a wave of controversy. In short, the distribution method used by the developers wasn’t exactly popular, with several high-profile community members feeling short-changed due to seemingly arbitrary participation requirements. As a result, the coin’s price took a significant dive from its initial price.
Network Becomes Fourth-Largest ETH L2 Amid Surge
According to L2Beat, an Ether scaling solution analytics database, Starknet’s Total Value Locked (TVL) has experienced a major resurgence in the past week, jumping nearly 200%. TVL is typically a useful metric for determining ecosystem health, as it suggests that investors are comfortable engaging with the network and its associated decentralised applications. Nostra and zkLend are two platforms on the Starknet blockchain leading the charge, accounting for over 50% of the network’s TVL. Thanks to the jump in TVL, Starknet is now the fourth-largest Ethereum L2, sitting behind major players like Optimism and Arbitrum.
While community confidence may be returning to Starknet’s infrastructure itself, this has not been reflected in the price movements of its native coin. The token has fallen 18% since inception, and is down 4% in the last seven days, despite the surging TVL. So while DeFi users are clearly interested in what Starknet has to offer, the overall market still firmly has STRK in their “sell” columns – at least for now.
So now the question remains: Will investors believe that STRK is a value play thanks to its heightened ecosystem activity, resulting in a bullish run? Or will they maintain the gap is justified, causing even more bleeding for the new token?
It will be an interesting watch to see how the market ultimately responds to the swell in TVL.
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