Starkware Cuts Jobs as Starknet Revenue Collapses

Key Takeaways:

• Starkware revenue fell from close to $6 million in 2023 to $48 in April 2026, forcing layoffs and restructuring.
• EIP-4844 cut Starknet fees, compressing income despite $242 million TVL, reshaping L2 economics.
• CEO, Eli Ben-Sasson plans pivot to apps unit in 2026, aiming to build sustainable revenue streams.

Starknet Revenue Declines as Starkware Shifts Strategy

Starkware is cutting jobs and reorganizing its business after a steep collapse in revenue from its Starknet network, underscoring mounting pressure on blockchain infrastructure firms to generate sustainable income.

The company said it will split into two independent units as part of a broader shift away from a pure scaling focus toward developing its own revenue-generating products. The changes were outlined by Chief Executive Eli Ben-Sasson during a company-wide address.

Revenue from Starknet, a layer two ( L2) network built to scale Ethereum, has dropped sharply from a peak of nearly $6 million in a single month in late 2023 to about $48,000 so far in April 2026, according to data from Defillama. The decline reflects both company-specific challenges and wider industry trends.

Data from Defillama

A key factor has been Ethereum’s EIP-4844 upgrade, introduced in March 2024, which significantly reduced transaction costs on Layer 2 networks. While the change improved efficiency for users, it also compressed fee revenue across the sector, affecting Starknet and its competitors alike.

Despite the revenue drop, Starknet continues to hold nearly $242 million in total value locked, suggesting that user activity has not disappeared but is generating less income.

Ben-Sasson said the company now needs to convert its technical strengths 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 establish a new applications unit focused on developing high-impact products. The division will be led by researcher Avihu Levy, who was recently promoted.

Levy’s work includes a proposal known as Quantum Safe Bitcoin, which aims to protect bitcoin transactions from potential quantum computing threats. The approach relies on hash-based proofs instead of traditional signatures, though it carries higher computational demands and significantly higher transaction costs.

While the company has not confirmed whether this technology will form part of its commercial strategy, Ben-Sasson said future products would focus on areas where Starkware can offer unique capabilities with minimal reliance on external blockchains or partners.

The restructuring comes at a time when many blockchain firms are reassessing their business models. A prolonged market downturn and declining transaction fees have exposed the limits of relying solely on infrastructure revenue.

Ben-Sasson, who has worked in the field for over a decade, described the current environment as a period of weak leadership across the industry, adding to the challenges facing companies. Further details on the company’s new direction are expected in the coming weeks.

The shift highlights a broader transition in the crypto sector, where firms are increasingly under pressure to move beyond technical innovation and demonstrate clear paths to profitability.