Starknet community greenlights staking mechanism for STRK token

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Starknet token holders have ratified a proposal to implement staking on the Layer 2 network, marking a significant milestone in the development and governance of the platform.

The proposal, called “SNIP 18” and presented by core developer StarkWare, received overwhelming support in a recent vote on Snapshot’s new Snapshot X decentralized platform. Of the participating voters, 98.94% voted in favor of implementing staking, while 0.45% abstained and 0.61% voted against.

Staking mechanism for STRK

The approved staking mechanism will allow STRK token holders with a minimum of 20,000 tokens to become participants, while others can delegate their tokens. StarkWare CEO Eli Ben-Sasson emphasized the importance of this development, saying that his was a “historic milestone” for the chain’s development towards full decentralization.

“As one of the first Layer 2 to offer this opportunity to its token holders, we are moving closer to a network that is fully operated and run by the community for the community,” says Ben-Sasson.

The staking implementation is scheduled to go live on the testnet soon, with a mainnet launch expected in the fourth quarter of this year. This timeline presents an urgent opportunity for STRK holders to prepare for participation in the network’s staking ecosystem.

Unique beating mechanism

A key component of the approved proposal is the minting mechanism, which aims to balance staker rewards with inflationary expectations. The mechanism uses a minting curve based on Professor Noam Nisan’s proposal, defined by the formula M = C/10 * √S, where S is the stake rate as a percentage of the total token supply, M is the annual minting rate, and C is the maximum rate theory of inflation.

Initially, the value of C will be set at 1.6, but the proposal includes provisions for future adjustments. Either a monetary committee created by the Starknet Foundation or the Foundation itself will have the authority to adjust C in a range of 1.0 to 4.0 based on stake participation rates.

To ensure transparency, any changes to the beat curve constant must be publicly announced on the community forum at least two weeks in advance, accompanied by a detailed justification.

Why the STRK stake?

The introduction of staking has significant implications for STRK token holders. It provides an opportunity for increased participation in network governance and the potential to earn rewards. However, the relatively low turnout of 0.08% of eligible voters underscores the need for greater community engagement in future governance decisions.

Looking ahead, Starknet plans to introduce additional governance functions and responsibilities for participants in phases. These may include potential roles in decentralizing the network’s sequencer and proofer, further enhancing the platform’s commitment to decentralization. In recent news, the Starknet Foundation saw its former CEO Diego Oliva resign from the organization in early August.

Acting as a layer 2 scaling solution for Ethereum, Starknet uses knowledge-free STARK proofs to validate off-chain transactions, significantly increasing transaction throughput. The network boasts the ability to handle up to 100,000 transactions per second during peak hours, potentially reducing transaction costs by a factor of 100 to 200.

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