Bitcoin Integration into Starknet
On Tuesday, Bitcoin was integrated into Starknet’s framework, establishing a significant presence in the Ethereum layer-2 network. As detailed in an announcement from StarkWare, the creators of Starknet, users can now engage in transaction validation by staking Bitcoin, allowing them to earn rewards in the process. Up until this point, participation was limited to the network’s native STRK token.
New Developments and Initiatives
Additionally, a London-based investment firm, RE7, is in the process of developing a yield product denominated in Bitcoin on the Starknet platform. To promote Bitcoin-related ventures, StarkWare revealed that the Starknet Foundation intends to allocate 100 million STRK tokens for these efforts.
Concerns and Optimism
Eli Ben-Sasson, co-founder and CEO of StarkWare, acknowledged a notable concern regarding Bitcoin’s utility. He referenced the trend of Bitcoin being excessively ‘hodled’—a term coined from a misspelling of ‘hold’—indicating that its potential use in decentralized finance (DeFi) remains understated.
He attributed this limitation to the dominance of centralized exchanges, which often offer superior scalability, user-friendliness, and lower transaction costs. He expressed optimism about Bitcoin becoming a more prominent player in lending markets, describing Starknet as ideally suited to evolve into both a financial and execution layer for Bitcoin, predicting that those who seize this opportunity could prevail in an increasingly competitive marketplace.
Related Developments
In related developments, Coinbase has implemented a service linking its users with the Morpho lending protocol on its Ethereum layer-2 infrastructure, Base, facilitating nearly $1 billion in loans through this partnership.
Staking and Market Dynamics
StarkWare highlighted that staking Bitcoin on Starknet allows users to maintain control over their assets, asserting that its method does not compromise security. However, Starknet’s approach may not align entirely with the beliefs of Bitcoin maximalists—who assert the superiority of Bitcoin over other cryptocurrencies—since participants who stake Bitcoin receive STRK in return. Other platforms striving to enhance Bitcoin’s functionality, like the GOAT Network, also reward users primarily in Bitcoin but incorporate native tokens for incentives.
Market Performance and Future Goals
As of recent data, STRK had a market capitalization of approximately $498 million, with its price experiencing a significant decline of 74% over the past year, settling at $0.122 after peaking at $4.41 in 2024, just a month into its launch.
In June of the previous year, StarkWare announced a fundraising effort of $1 million aimed at capitalizing on Bitcoin’s scaling opportunities, expressing support for the restoration of OP_CAT—a command in Bitcoin’s coding that some believe could spur innovation.
Technological Innovations
Starknet utilizes a unique zero-knowledge proof system, a cryptographic method introduced by Ben-Sasson in 2018, which Ethereum co-founder Vitalik Buterin contended could play a vital role in reconciling privacy with regulatory requirements. Ben-Sasson himself has been keen on applying zero-knowledge proofs for Bitcoin expansion since discovering the concept in 2013, noting that Ethereum was a more accessible starting point.
“There’s a much higher need for this technology to address scalability on the Bitcoin side,” he stated, clarifying that while Starkware remains committed to Ethereum, the primary objective for 2025 and 2026 is to enhance services for Bitcoin efficiently.
