From underdog to leader? How a bet on quantum security revived Starknet

The developers of Starknet are considering transitioning to an independent Layer 1 blockchain* with protection against quantum attacks. Against the backdrop, the STRK token surged more than 300% between September and October 2026, reaching its highest level since December 2025.

* Layer 1 blockchain (L1) is an independent blockchain network that processes and validates transactions, stores data, and ensures transaction security without relying on another blockchain as its foundation. Such networks have their own consensus mechanisms — rules that determine how participants agree on the state of the blockchain. Examples of Layer 1 networks include Bitcoin, Ethereum, and Solana.

The project team expects that this architectural transformation could make Starknet the world's first fully quantum-resistant blockchain network by 2027.

From billion-dollar valuations to a 99% collapse

Starknet was launched in 2021 by the Israeli company StarkWare Industries as a Layer 2 (L2) scaling solution* for Ethereum. The network processes transactions off the main blockchain, batches them, and submits compact cryptographic proofs of validity to Ethereum. This approach reduces the load on the underlying network, accelerates transfers, and lowers transaction fees.

* Layer 2 (L2) solution is a blockchain scaling technology that processes some transactions outside the main network, reducing congestion and transaction costs. At the same time, L2 relies on the underlying blockchain for data publication, transaction verification, or security. This enables more transactions to be processed at lower costs while maintaining a connection to the security of the base network. However, L2 capabilities may depend on the technical characteristics and limitations of the underlying blockchain.

Despite its technological advantages, Starknet faced criticism from the crypto community for a long time.

The STRK token entered the market in February 2024, when investor interest in Ethereum Layer 2 solutions had already begun to decline. Immediately after its launch, the project faced accusations of unfair token distribution through an airdrop* and the premature unlocking of tokens allocated to venture capital investors.

* Airdrop is a token distribution method in which a project distributes tokens free of charge to selected users. Recipients may include cryptocurrency wallet holders, community members, or users who previously interacted with the platform. Airdrops are used to attract users, reward early adopters, and distribute governance tokens.

Approximately six weeks after trading began, STRK entered a prolonged downward trend. Its price eventually fell 99% from its all-time high of $3.66.

On social media, Starknet began to be described as a "dead" network, while posts about the project were accompanied by the hashtag #scamnet. Users also mocked its low activity, claiming that a network valued at approximately $1 billion had only eight daily active users.

Although those claims were exaggerated, the project's financial performance revealed serious problems. Starknet's monthly revenue, which had reached $5.7 million in 2023, declined by more than 98% by April 2024. Over the following 18 months, monthly revenue averaged approximately $8,000.

However, these challenges affected not only Starknet but almost the entire Ethereum Layer 2 sector. During the 2022–2025 market cycle, this segment proved to be one of the most overvalued areas from an investment perspective.

Despite hundreds of millions of dollars in venture capital funding* and multibillion-dollar valuations, many projects failed to establish sustainable user bases. Their token prices declined significantly, while revenues remained disproportionately low relative to their market capitalizations.

* Venture capital funding is a form of investment in early-stage companies and technology projects that offer high growth potential but also carry substantial financial risks. Venture capital investors fund product development, infrastructure expansion, and business growth, expecting to profit as the project's value increases.

In February 2026, Ethereum co-founder Vitalik Buterin also questioned the need for most existing Layer 2 networks. In his view, improvements to Ethereum's base layer had significantly increased its performance, making the traditional role of Layer 2 solutions less clear.

Technological progress despite the token's decline

Despite negative investor sentiment, Starknet's developers continued improving the project's infrastructure.

Since the beginning of 2026, the team has introduced several products and technological upgrades. These include confidential transfers, its own wrapped Bitcoin token* called strkBTC, liquid staking* for STRK, an improved fee system, and STARK proof verification directly at the protocol level.

* Wrapped token is a digital asset that represents the value of another cryptocurrency on a blockchain where the original asset cannot be used directly. Such tokens are typically backed by reserves of the underlying cryptocurrency or by specialized locking mechanisms.

* Liquid staking is a mechanism for participating in cryptocurrency staking that allows users to earn rewards for helping secure a blockchain while retaining the ability to use the value of their staked assets. In traditional staking, cryptocurrency may be locked or unavailable for immediate withdrawal. Under the liquid staking model, users receive a special token representing their share of the staked assets and associated rewards. This token can be transferred, traded, or used in DeFi protocols.

In August, the developers reported that network revenue had increased by approximately 1,200% compared with the same period a year earlier. In addition, 2026 became Starknet's first profitable year.

The project now intends to move beyond its original concept of scaling Ethereum and focus on two new areas: financial transaction privacy and protection against quantum computing threats.

Betting on privacy: a new growth driver for STRK

One of Starknet's key development priorities has become private transaction* technology.

* Private transactions are cryptocurrency transactions in which certain information is hidden from public view through cryptographic technologies. Depending on the protocol, hidden information may include transaction amounts, wallet balances, sender addresses, or recipient addresses.

In June 2026, the team launched the STRK20 privacy standard. It is designed for ERC-20 tokens and enables users to conceal information about their balances and transfers.

The developers also introduced Private KYC* technology, which makes it possible to verify a person's identity without disclosing their complete personal information to the verifying party.

* KYC (Know Your Customer) is a customer identification and identity verification procedure used by financial institutions, cryptocurrency exchanges, and other services to comply with regulatory requirements and prevent illicit financial activities. As part of KYC, users may be required to provide passport details, photographs of identity documents, proof of residential address, or biometric verification. The procedure helps establish a customer's identity, assess associated risks, and reduce the likelihood of fraud, money laundering, and terrorist financing.

Such solutions could attract institutional participants interested in using decentralized finance (DeFi) while maintaining regulatory compliance and confidentiality.

The development of private transactions is also important for Starknet's token economy. Processing these transactions requires computational resources and STRK fees, creating additional demand for the token.

Interest in privacy-focused blockchain technologies increased significantly in 2026. One indication of this trend was the severalfold appreciation of ZEC and NEAR tokens.

Notably, StarkWare's CEO is also among the co-founders of Zcash, one of the best-known blockchain projects focused on privacy.

Independence as a path to quantum resistance

Starknet's second strategic priority is preparing for potential threats posed by quantum computers.

The concern is that sufficiently powerful quantum computing systems could theoretically break elliptic-curve cryptographic algorithms used by Bitcoin and Ethereum.

Unlike these algorithms, STARK proof technology relies on hash functions, which are considered resistant to known quantum attack methods.

StarkWare has already experimented with quantum-resistant transactions and presented a three-stage roadmap for transitioning Starknet to post-quantum cryptography.

On October 8, 2026, the developers announced that they were actively exploring the possibility of transforming Starknet from a Layer 2 network into an independent Layer 1 blockchain.

According to the team, such a transition could make Starknet the world's first fully quantum-resistant blockchain network as early as 2027.

As long as Starknet remains a Layer 2 solution, its security depends on the underlying Ethereum blockchain and the pace at which changes are implemented in Ethereum's protocol. Meanwhile, Ethereum's transition to quantum-resistant cryptography is not scheduled until late 2029.

Becoming an independent Layer 1 network would let Starknet control its cryptographic mechanisms and implement the necessary protections more quickly.

Experts emphasize that the quantum threat could become relevant much sooner than currently anticipated. Rapid advances in artificial intelligence, particularly its mathematical capabilities, are raising additional concerns.

Starknet's developers have also called for entering "bunker mode," supporting discussions about the urgent need to protect cryptography from threats associated with AI development.

However, Starknet's potential transformation into a Layer 1 blockchain remains only one of the scenarios under consideration. The developers have not yet announced a final decision on changing the network's architecture.

A 300% rally: what could threaten STRK's growth?

News about quantum resistance and Starknet's potential transition to its own blockchain triggered a new wave of interest in the STRK token.

Between September and October 2026, its price surged more than 300%, reaching its highest level since December 2025.

However, much of this sharp appreciation can be attributed to speculative demand. Even after the rally, STRK still trades about 97% below its all-time high of $3.66, recorded in February 2024.

Furthermore, Starknet's fundamental indicators, including revenue and user activity, remain relatively weak.

Upcoming token unlocks represent another risk factor.

The next STRK token unlock* is scheduled for October 15, 2026. According to the vesting* schedule, the project still has six monthly unlock events ahead. With STRK trading at approximately $0.084, each unlock is estimated to be worth around $11 million.

* Token unlock is an event in which previously locked tokens become available for transfer, sale, or other uses in accordance with predetermined conditions. Restrictions are typically applied to tokens allocated to project teams, venture capital investors, advisers, or participants in reward programs. Once unlocked, these assets may enter the open market, increasing the supply available for trading.

* Vesting is a mechanism through which rights to tokens are gradually granted, or tokens are progressively unlocked, according to a predetermined schedule. Vesting is commonly used to distribute cryptocurrencies among developers, investors, and other project participants. For example, the terms may include a one-year lockup period followed by monthly releases of a specified portion of the tokens. This mechanism spreads token distribution over time, reduces the risk of mass selling immediately after a project's launch, and encourages long-term participation by the team.

The total number of tokens scheduled to enter circulation through the remaining unlocks represents approximately 10% of the current circulating supply.

A token unlock does not necessarily mean that all newly released tokens will be sold immediately. Nevertheless, following a price increase of several hundred percent, investors and other recipients of unlocked assets have an additional incentive to take profits.

Starknet is therefore attempting to reposition itself in the cryptocurrency market by focusing on privacy and post-quantum security. However, STRK's prospects will depend not only on the developers' technological ambitions but also on their implementation, growth in real-world network usage, and the project's ability to establish a sustainable economic model.