StarkWare
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StarkWare

Part 1: StarkNet Sovereignty: A Decentralization Proposal

TL;DR

  • StarkNet’s decentralization involves a native token and a new foundation.
  • The StarkNet token is used for governance and as the network’s payment and staking asset.
  • Ten billion tokens have been minted and their allocation has begun.
  • The StarkNet Foundation, now being set up, will have a mission to maintain StarkNet as a public good.

StarkNet is a permissionless decentralized Layer 2 (L2) validity rollup, built to allow Ethereum to scale via cryptographic protocols called STARKs, without compromising Ethereum’s core principles of decentralization, transparency, inclusivity and security.

StarkNet’s Alpha launched on Mainnet in November 2021. Less than one year in, an ecosystem is forming, with dozens of teams worldwide working on it. Now is the time to advance the decentralization of the network, so it achieves the liveness, censorship resistance, transparency and inclusivity demanded of an L2 on Ethereum.

Decentralization means the network’s operation and evolution will not rely on any single entity, including StarkWare. A permissionless proof-of-stake leader election mechanism and on-chain payment of transaction fees, both using a native token, will enable the network to operate reliably as an L2 on Ethereum even should StarkWare cease to exist. Decisions regarding the ongoing maintenance of StarkNet will shift from StarkWare to the community. A StarkNet Token and Foundation will be key elements of this effort.

This post, the first of three published simultaneously, summarizes StarkNet’s journey thus far and introduces the StarkNet Token and the StarkNet Foundation. The next post discusses the StarkNet governance model and the third focuses on StarkNet’s token model.

We thank the following StarkNet supporters (alphabetically ordered) for their comments on a draft of these posts: Guily_Gioza (Topology), Itamar Lesuisse (Argent), Jonas Nelle (Pontis), Martin Triay (OpenZeppelin), Polynya, Sylve Chevet (Briq), and Tomasz Stańczak (Nethermind).

The story so far

StarkNet is built from cryptography and an open ecosystem. The cryptography is STARKs. These are protocols based on math that scale Ethereum by orders of magnitude. They require no trusted setup, are post-quantum secure, and can be deployed succinctly at any scale. The ecosystem is composed of core developers who have wanted for years to build infrastructure and tools for scaling blockchain technology, as well as new and creative application domains that become possible when the computational power of Ethereum is expanded.

StarkNet gives all developers and users access to the scale and security benefits of STARKs, for the purpose of scaling Ethereum while maintaining Ethereum’s core values. STARKs were invented by co-founders of StarkWare, who first used them to build the StarkEx scaling solution for clients. Subsequently, StarkWare and other developer teams (collectively “Core Contributors”) built StarkNet, a public, decentralized, and permissionless infrastructure, to ensure that these scaling technologies are accessible to all in perpetuity.

The launch of StarkNet Alpha nearly a year ago prompted the emergence of a larger ecosystem that is committed to build and nurture StarkNet. There are numerous teams of developers worldwide building its core infrastructure, as well as new applications on it.

The way to decentralize

STARK technology is mature and secure, but StarkNet has not achieved the status of a public good like Ethereum or the Internet. For StarkNet to reach this goal, its governance, operation and development must continue to decentralize. This will be facilitated through two mechanisms: the StarkNet Foundation and the StarkNet Token.

Foundation

As a non-profit, the Foundation’s mission will be to maintain StarkNet as a public good — a commodity or service that is made available to all members of society. StarkNet is permissionless infrastructure that should be available to all. It must be well maintained in order to be safe and efficient for public usage. It also must not discriminate between users.

The Foundation will be funded by a one-time grant of StarkNet Tokens. It will encourage the development of bottom-up mechanisms for community decision-making on essential technological questions, such as protocol updates, dispute resolution, and public goods funding.

Token

The StarkNet Token is needed to operate the ecosystem, maintain and secure it, decide on its values and strategic goals, and direct its evolution. This token will be required for (i) governance, (ii) payment of transaction fees on StarkNet, and (iii) participation in StarkNet’s consensus mechanism.

We have minted an initial ten billion tokens which are being allocated to Core Contributors of the StarkNet ecosystem including StarkWare and StarkWare’s investors, to StarkNet software developer partners, and to the Foundation. Soon (target: September 2022) the token will go on Ethereum as an ERC-20 token and be requested for use in governance and voting on network upgrades. Later, StarkNet fees will be paid only in this token, while ensuring good user experience for users interested in paying fees in ETH. Later still, automatic minting of additional StarkNet Tokens will commence, (i.e., the number of circulating tokens will be greater than ten billion).

The StarkNet Token model emphasizes compensating developers for their work. A portion of new minting and transaction fees — fees assessed for use of StarkNet — will be granted to core infrastructure developers and smart contract developers for the work they have done to design and launch the protocol, in addition to compensating StarkNet operators for the work they have done to operate it.

The full rationale behind a new and dedicated StarkNet Token is explained in our second post, and the StarkNet Token design principles and initial allocation are discussed in the third post.

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