Following Optimism's token airdrop in May, speculation is rife as to whether Arbitrum, zkSync, or StarkNet may be the next to do so.
Important Takeaways
- Several Ethereum Layer 2 projects are planning to create their own native coins in the near future.
- Arbitrum, StarkNet, and zkSync have all stated that they may need to launch their own token in order to decentralize.
- StarkNet has previously acknowledged that it will issue a token in the future, though no specific date has been set.
Several Ethereum Layer 2 networks have hinted that they may introduce their own native coins in the coming months, which would almost certainly result in airdrops for early adopters. Join Crypto Briefing as we examine who might be the first to pull the trigger.
Arbitrum
Arbitrum, an Ethereum Optimistic Rollup solution developed by Off-chain Labs, is one of the most widely awaited Layer 2 coins.
Arbitrum's developers have been tight-lipped on whether the project will require a token, but multiple hints suggest that one is on the way in the not-too-distant future.
Arbitrum's transaction sequencing and proving are currently handled completely by its inventor, Off-chain Labs. This approach was required for the chain's early stages of development to ensure stability, and it has allowed Off-chain Labs to respond to issues as they arise.
Offchain Labs may soon begin the process of opening the chain up to decentralized sequencing now that Arbitrum has been operational for almost a year and has undergone its recent Nitro update. Arbitrum's developer has often claimed that its long-term plan is to decentralize transaction sequencing in order to bring Layer 2 more in line with Ethereum's foundational ideals. However, it is not straightforward to ensure that Arbitrum is both secure and decentralized.
Arbitrum may issue a token to assist collateralizing and encourage decentralized sequencing, according to many notable players in the crypto community. Layer 2 might reward sequencers with tokens for assisting in chain security, similar to how Ethereum's main net rewards validators with ETH. Offchain Labs might also develop a fee market where certain services need payment in Arbitrum tokens, thereby creating a sub-ecosystem on the chain. Offchain Labs might also employ a token for on-chain governance; but, because Offchain Labs is a registered corporation, it may find it difficult to do so without violating US securities rules.
In recent months, Aribtrum has seen a flood of people registering on the chain in the hopes of obtaining a token airdrop. Arbitrum's main competitor, Optimism, debuted its own token in May of this year, with both early and frequent users earning a portion of OP tokens in exchange for their support. The Arbitrum Odyssey campaign has fueled rumors that an Arbitrum token is on the way. With limited formal information, it is uncertain whether (or when) Arbitrum will launch a token.
StarkNet
While an Arbitrum token is still a rumor, StarkWare's StarkNet has officially stated its intention to create a token.
StarkWare indicated in a series of blog articles published in July that decentralizing its StarkNet Layer 2 network would include producing a token to be used as the network's payment and staking asset. StarkNet is a Layer 2 network that helps Ethereum scale by utilizing Zero-Knowledge Rollups.
StarkNet's transaction sequencing is centralized in the same way that Offchain Labs now handles all transaction sequencing on Arbitrum. To make the network more secure and decentralized, StarkWare plans to delegate transaction verification and sequencing to its community. The StarkNet token will be utilized in the network's consensus mechanism as staking collateral submitted by sequencers and will be distributed as a reward to those that contribute to the network's security.
Furthermore, while StarkNet transaction costs are presently paid in ETH, StarkWare intends to transfer fees to StarkNet's native currency following the introduction of StarkNet. Once this occurs, a part of user fees will be diverted to stakers, just as they are on the Ethereum mainnet. Stakeholder fees should continue to incentivize decentralized sequencing even after the total supply of 10 billion StarkNet coins has been distributed.
The StarkNet token's final planned application is in governance. Although StarkWare will retain ownership of StarkNet, those who hold the network's token will be able to vote on the network's values and strategic goals via on-chain voting. The decisions that token holders will be able to influence are not yet known. However, StarkWare has acknowledged that major modifications, such as changes to StarkNet's operating system, will require token holders' approval.
Anyone hoping to participate in an airdrop of the StarkNet token is likely out of luck. According to StarkWare, the token launch is primarily intended to recompense core contributors and engineers. Early investors, StarkWare workers, and consultants, and StarkNet software developer partners have received half of the token supply. A community allocation of 9% has been put aside from the remaining 50%.
Those that verifiably did development work for StarkNet, as well as prior StarkEx users who used the scaling project before June 1, 2022, will earn tokens. This means that anyone who frequently uses protocols like dYdX, Immutable X, or Sorare may be eligible for an allocation.
Although StarkWare has not confirmed a launch date, the July release stated that the StarkNet token would be available in September 2022. However, while the contracts may go live in the next weeks, tokens are unlikely to enter circulation until much later. This is due to the fact that most tokens will be locked and vested for at least one year following the StarkNet token genesis event. Anyone interested in investing in the StarkNet token will most likely have to wait until community provisions are issued later before the market has enough liquidity to facilitate trade.
zkSync
Another Zero-Knowledge Rollup initiative working to scale Ethereum on Layer 2 may also be developing a coin.
Matter Labs, zkSync's development team, has been open about its aim to produce a token since the beginning of its development. According to the project's developer documentation, zkSync will launch a native token that will be necessary to aid in the validation of Layer 2 transactions. Although no specifics on how the currency would be distributed or function have been disclosed, zkSync will most likely take a similar path to StarkNet in that both projects intend to introduce a token to aid decentralization.
zkSync is ahead of StarkNet in terms of development, having already released a fully-composable Layer 2. Users can transfer cash to the zkSync 1.0 mainnet and engage in various activities like as trading on the ZigZag market, playing games on Tevaera, and donating to Gitcoin grants. The 1.0 version, however, lacks features such as Validium, which can provide off-chain data availability, higher transaction throughput, and cheaper fees.
zkSync is currently working on a 2.0 version that will include Validium as part of the zkSync API. zkSync 2.0 is now in testnet mode, with a final release anticipated for October. If Matter Labs' 2.0 launch is successful, the company may move its focus to decentralization, most likely in the form of decentralized sequencing and a native token.
However, because Matter Labs has yet to disclose how it intends to decentralize zkSync, a token launch could be a long way off. As a result, anyone interested in participating in a prospective airdrop may still have time to get involved and register activity on the network. Those that used zkSync 1.0 to donate to Gitcoin grants before a deadline was included in Optimism's first token airdrop. It may also be worthwhile to try out zkSync 2.0. Several DeFi and NFT apps have contracts published on the 2.0 testnet, therefore interacting with each of them may also qualify users for extra protocol-specific airdrops.
So, which Ethereum project is likely to come next?
If StarkNet can meet its September deadline, it will almost definitely be the next Ethereum Layer 2 coin to be launched. However, due to the lengthy vesting timetable of the first allocated tokens, the StarkNet token community provision may take some time to reach the market and provide sufficient liquidity for trade.
If this is true, token airdrops from Arbitrum or zkSync might eventually dethrone StarkNet with larger allocations to their communities. Although neither project has made a formal announcement, a token launch for either is not out of the question. To avoid Sybil attacks from airdrop farmers projects that intend to airdrop tokens normally avoid revealing launch dates in advance. In the case of Optimism, the project announced its token around a month before its launch.
At their current rates of development, Arbitrum or zkSync could launch their tokens before of StarkNet's complete launch. However, a token launch in late 2022 or early 2023 appears more likely. In any case, one thing is certain: Arbitrum, StarkNet, and zkSync have all pledged to follow Ethereum's ethos and optimize their networks for decentralization—and they'll all require their own coins to do so.