Key points to remember:
- Starkware’s revenue fell from nearly $6 million in 2023 to $48 in April 2026, forcing layoffs and restructuring.
- EIP-4844 Reduced Starknet Fees, Squeezing Revenue Despite $242M in TVL, Reshaping L2 economy.
- CEO Eli Ben-Sasson plans to transition to the apps unit in 2026, aiming to create sustainable revenue streams.
Starknet revenue declines as Starkware shifts strategy
Starkware cuts jobs and reorganizes its business after a sharp collapse in revenue from its Starknet network, underscoring the growing pressure on blockchain infrastructure companies to generate sustainable revenue.
The company announced it would split into two independent units as part of a broader shift from a simple focus on scaling to developing its own revenue-generating products. The changes were presented by chief executive Eli Ben-Sasson during a company-wide speech.
Starknet income, a layer two ( L2) network built to scale Ethereumhas fallen sharply from a peak of nearly $6 million in a single month in late 2023 to around $48,000 so far in April 2026, according to data from Défilama. This decline reflects both company-specific challenges and broader industry trends.
A key factor was Ethereum’s EIP-4844 upgrade, introduced in March 2024, which significantly reduced transaction costs on Layer 2 networks. While the change improved user efficiency, it also reduced fee revenue across the industry, affecting Starknet and its competitors.
Despite the decline in revenue, Starknet continues to hold nearly $242 million in total value locked, suggesting that user activity has not disappeared but is generating less revenue.
Ben-Sasson said the company now needs to convert its technical assets into meaningful usage and revenue. He indicated a shift toward building proprietary applications, rather than relying solely on infrastructure that depends on external ecosystems.
Stakeware to launch new applications unit
As part of the restructuring, Starkware will create a new applications unit focused on developing high-impact products. The division will be led by recently promoted researcher Avihu Levy.
Levy’s work includes a proposal known as Quantum Safe Bitcoinwhich aims to protect bitcoin transactions against potential threats from quantum computing. The approach relies on hash-based proofs instead of traditional signatures, although it involves higher computational requirements and significantly higher transaction costs.
Although the company has not confirmed whether this technology will be part of its business strategy, Ben-Sasson said future products will focus on areas where Starkware can offer unique capabilities with minimal reliance on external resources. blockchains or partners.
The restructuring comes at a time when many blockchain Companies are re-evaluating their business models. A prolonged market slowdown and falling transaction fees have highlighted the limits of relying exclusively on infrastructure revenues.
Ben-Sasson, who has worked in the field for more than a decade, described the current environment as a period of weak leadership across the industry, adding to the challenges facing businesses. Further details on the company’s new direction are expected in the coming weeks.
This change highlights a broader transition in the crypto sector, where companies are under increasing pressure to go beyond technical innovation and demonstrate clear pathways to profitability.
