What is Starknet?

StarkNet is a permissionless decentralized Layer 2 (L2) validity rollup, built to allow Ethereum to scale via cryptographic protocols called STARKs, without compromising Ethereum’s core principles of decentralization, transparency, inclusivity and security. The StarkNet Token is needed to operate the ecosystem, maintain and secure it, decide on its values and strategic goals, and direct its evolution. This token will be required for (i) governance, (ii) payment of transaction fees on StarkNet, and (iii) participation in StarkNet’s consensus mechanism.

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Vladislav Ch

19 February 2024
Обновлено 19 February

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StarkNet

StarkNet is a second-layer solution for Ethereum, utilizing a ZK-Rollup approach. This enables decentralized applications (dApps) to operate and scale without limitations while maintaining the aggregation and security capabilities of the Ethereum blockchain.

At the core of StarkNet is the STARK system, developed on the foundation of StarkWare technologies.

Comparison with Optimistic Rollups

zk-Rollups (zero-knowledge Rollups) stand out against Optimistic Rollups technology thanks to a faster transaction validation process. Unlike Optimistic Rollups, which are considered viable in the short term, zk-Rollups are viewed as the primary scaling solution for the Ethereum network in the medium to long term.

How zk-Rollups Work

• Transaction Aggregation: In zk-Rollups, transactions are collected into "batches" and processed off-chain.
• Proof Generation: After the transactions are processed, cryptographic proofs (zero-knowledge proofs) are generated to confirm their validity.
• Publication on Ethereum: These proofs are then published on the main Ethereum chain, where they are verified by a "validator."

Benefits

This process significantly reduces the amount of data that needs to be transmitted and processed on the main chain, thereby increasing transaction speed and lowering fees.

What is StarkWare?

Foundation and Founders

StarkWare, also known as StarkWare Industries, was founded in January 2018 by Eli Ben-Sasson, a co-founder of STARK and ZCash.

Goals and Technologies

StarkWare aims to enhance blockchain scalability and privacy through the deployment and verification of zero-knowledge proofs using STARK technology.

Features of STARK

• Scalability: STARK technology allows for the processing of a large number of transactions off-chain, reducing the load on the Ethereum network.
• Privacy: Zero-knowledge proofs provide transaction privacy without disclosing specific data about them.
• Security: STARK offers a high level of security, resistant to quantum computing.

Thus, StarkWare is a key player in the field of blockchain scalability and privacy improvement, making a significant contribution to the development of Ethereum technology.

Features and Technologies of StarkNet

Smart Contracts and StarkNet OS

Programming in the Cairo language supports the deployment and scaling of dApps and smart contracts, regardless of business logic.

Scalability and Performance

• Efficiency: High throughput, low fees.
• Scalability: Utilization of STARK cryptographic proofs.
• Achievements: Processing transactions worth nearly $1 billion, over 380 million transactions, issuance of 100 million NFTs.

Key Products

Cairo

A programming language for creating dApps and smart contracts, used in StarkEx and StarkNet.

SHARP

A system for aggregating various Cairo programs, creating a proof for all, and publishing it on Ethereum for validation by a STARK validator, reducing the gas cost of transactions.

VeeDo

A trustless randomization feature verified using STARK technology, similar to Chainlink's VDF.

StarkEx and StarkNet

StarkEx - a specialized version of StarkNet for trading, StarkNet - a full version, a decentralized, permissionless ZK-Rollup.

Distinguished Features of StarkNet

Cairo Programming Language

Enables developers to create and deploy dApps or smart contracts in any domain.

Scalability Capabilities

Scales while maintaining Ethereum Layer 1 security, creating STARK proofs off-chain and verifying them on-chain.

Developer Support

Allows developers to launch enterprises using StarkNet contracts.

Combination Ability

Facilitates aggregation, allowing projects on the Ethereum network to easily interact and connect with each other.

zk-Rollup Technology

A new technology surpassing existing Layer 2 solutions, simplifying interaction between Layer 1 and Layer 2, reducing the connection time between projects.

StarkNet Ecosystem

DEX (Decentralized Exchanges)

• Starkswap: AMM DEX developed on the network.
• Jediswap: The first AMM application on StarkNet.
• mySwap: A leading AMM on the network, similar to StarkSwap, currently in testing phase.
• Zigzag: DEX operating on an order book mechanism.
• ZKX: Perpetual contract exchange.
• ZKEX: Multichain L2 Orderbook AMM-DEX.

Lending

• zkLend: An experimental lending market on StarkNet, product yet to be launched.
• Aave, Maker DAO, Curve Zero: Other projects in the lending sector.

Infrastructure

Development of bridges (Suez, Qasr, Kubri) and infrastructure for app development. An explorer for monitoring transactions and system information. Metamask: A popular wallet for asset storage and interaction with system applications.

DAO Infrastructure

Snapshot and Zorro Protocol: Infrastructure applications for DAO voting. Bibliotheca: Specialized infrastructure for the Ethereum-based NFT project, Loot.

Games and NFT

Gaming Projects

Dope Wars, Influence, Realms, Game of Blocks, Eykar, bitmapbox, Phi Φ, The Ninth: Gaming projects on StarkNet.

NFT Market

• Oasis: The first NFT Market project on StarkNet, in testing phase.
• Mint Square: A platform for issuing NFTs on StarkNet, also in testing phase.
• NFTflow: A liquidity provider for NFTs.
• Briq: A program for developing NFTs on StarkNet.

StarkNet Token Distribution

StarkWare has issued 10 billion StarkNet tokens off-chain. It's crucial to understand that these tokens do not represent a share in StarkWare, do not grant rights to participate in StarkWare's activities, and do not provide entitlements to claims against StarkWare. The circulating supply of tokens will increase over time through the issuance of new tokens by the protocol, according to a schedule to be determined by the community later. Therefore, the circulating supply may change.

Token Distribution

StarkWare Investors

17% of the tokens have been allocated to StarkWare investors.

Core Contributors

32.9% of the tokens are directed to core contributors: StarkWare employees and consultants, as well as StarkNet software development partners.

StarkNet Foundation

50.1% of the tokens have been transferred to the StarkNet Foundation with specific purposes:

• 9% Community Grants: For those who have worked on StarkNet and developed its underlying technology, such as through the use of StarkEx L2 systems. Importantly, all Community Grants will be based on verifiable work performed in the past. For instance, token distribution among past users of StarkEx will be based on verified use of StarkEx technology prior to June 1, 2022.
• 9% Community Discounts: Token discounts for partially covering the costs of transitioning to StarkNet from Ethereum. To prevent manipulation, Community Discounts will only apply to transactions that occurred after the announcement of the discount mechanism.
• 12% Research and Development Grants: For research and work on the development, testing, deployment, and support of the StarkNet protocol.
• 10% Strategic Reserve: For financing activities of the ecosystem that align with the Foundation's mission, as described in a previous message of this series.
• 2% Donations: To reputable institutions and organizations, such as universities, NGOs, etc., decisions on which are made by StarkNet token holders and the Foundation.
• 8.1% Unallocated Funds: A reserve of the Foundation intended for further support of the StarkNet community in accordance with community decisions.

Lock-Up Terms

To align the long-term interests of core contributors and investors with those of the StarkNet community, in line with common practice in decentralized ecosystems, all tokens allocated to core contributors and investors will be subject to a 4-year lock-up period with linear release and a one-year cliff.

Conclusion

Leveraging STARK technology and the ZK-Rollup approach, StarkNet represents one of the most promising second-layer solutions for Ethereum. Its combination of high throughput, low fees, and scalability positions it as a key player in the blockchain ecosystem. The strong developer team and support from the StarkNet Foundation contribute to further development and adoption of this technology. The StarkNet token plays a crucial role in governance and incentivizing the ecosystem, ensuring its sustainable development.