On Market Caps and Network Metrics

The official Solana account on X published a sarcastic tweet claiming that Starknet (a ZK-rollup for the Ethereum blockchain) has only eight daily active users and ten transactions, while its market capitalization is around $1 billion. The author of the tweet suggests that this valuation should be sent to zero.

The Solana's tweet is written as if the market capitalization of the STRK token were the capitalization of the Starknet network itself - in other words, the value of a business. Yes, if a crypto company serves only eight users per day, those users make ten transactions with minimal fees, and the company is valued at a billion dollars, I would agree that the price is wildly inflated.

But a token is not a company. A token price does not depend on business performance. It depends only on whether someone is willing to sell it cheaper or buy it more expensively. If someone is willing to sell STRK for zero, then at that moment STRK will be worth zero. As long as no one is willing to sell it cheaper, it will trade at the price sellers are willing to accept.

In late 2023 - early 2024, Bitcoin had so many transactions that users had to pay enormous fees just to get their transactions included in a block. At that time, BTC itself was priced 2-3x lower than it is today, when block space is plentiful and fees are minimal.

Why is Bitcoin worth more now than it was then? Simply because no one wants to sell it cheaper. The same applies to the STRK token. And this has nothing to do with network congestion.