Starknet experienced a significant decline in decentralized finance activity following the migration of Extended, a perpetual futures exchange, to the Arc blockchain. Total value locked on the network fell 73% from $158M to $42M on October 22nd, with Extended's departure accounting for $120M of the exodus.
Extended's move to Arc was motivated by a strategic partnership with Circle and the pursuit of improved performance capabilities. The scale of the migration indicated that Extended represented the dominant source of Starknet's DeFi activity. Stablecoin liquidity on the network also contracted sharply, declining 75% from $147M to $37M during the same period.
L1 Transition Vote
Despite the liquidity drain, Starknet's governance community approved an ambitious transition plan. On October 15th, a formal proposal to research methods for converting Starknet from an Ethereum layer 2 to an independent layer 1 received 93% support from voters.
The proposal was championed by Starknet team lead Eli Ben-Sasson, who argued that Ethereum's post-quantum security roadmap moves too slowly and may inadequately address emerging threats from advanced AI and quantum computing developments. Following the vote, StarkWare and the Starknet Foundation committed to allocating resources toward L1 research pathways, with any transition plan requiring community approval before implementation. The STRK token will remain the network's native asset.
Token Price Reaction
The governance approval did not translate into sustained price momentum for STRK. The token initially rallied over 120% in early October, climbing from $0.05 to $0.12 on the L1 proposal announcement. However, profit-taking reversed those gains entirely, with STRK declining 58% from its peak and shedding an additional 7% on October 22nd.
