What is StarkNet?

What is StarkNet?

StarkNet is a license-free Layer 2 network developed by StarkWare, an Israeli software company. StarkNet runs as a ZK Rollup on Ethereum, helping dApps achieve greater computational scale with lower transaction costs using STARK proofs. The network allows smart contracts to interact with other contracts deployed on the blockchain, increasing composability between protocols.

When looking at the value of StarkNet, it’s important to consider the entire StarkWare tech stack. StarkNet, StarkEx, and Cairo provide developers with a robust, reliable solution that offers Ethereum’s desirable features, such as security and decentralization, while speeding up transactions and reducing costs. Here are some of the reasons why we think StarkNet could be one of the biggest winners in the race for Tier 2 scaling solutions.

High focus on decentralization

The number one advantage of StarkNet is that it has a strong focus on decentralization. STARK-proofs allow more users to verify the entire blockchain with low hardware requirements, and the permissionless layer of serializers and provers ensures that the network is censorship-resistant.

In terms of growth and development, the StarkNet Foundation devotes 50.1% of its initial token supply to ecosystem development, with one of its development goals enhancing the decentralization of StarkNet by developing governance mechanisms, establishing decentralized ordering, and proofs. This focus on decentralization helps attract the kind of builders we want to see in Ethereum – those who are focused on building open networks that align with the core principles of decentralized technology. We see this as a positive boost to the development of the ecosystem.

Complex projects have more tools in StarkEx

The second value proposition of StarkNet is the availability of StarkEx, a heavy-duty Layer 2 scalability engine that powers some of the larger networks such as dApps such as perpetual trading platform dYdX, Layer 2 scaling solution ImmutableX, and NFT game Sorare. One of the reasons for the successful launch of StarkNet is the batch processor used in StarkEx, which plays a vital role in StarkNet’s sequencing. After testing on dYdX and other platforms, it gave developers confidence in StarkNet’s sequencer, even though it was launched in a semi-complete state.

This proprietary engine is another reason why StarkNet is attractive to developers considering building on the web. Complex applications can leverage the benefits of StarkNet and StarkEx through vertical integration. StarkNet behaves more like a decentralized blockchain, as it has a gas fee mechanism that provides more versatile functionality at the expense of throughput. StarkEx is like a giant computer for ubiquitous use cases like mass payments, transactions, and mass minting of NFTs. As Web3 applications increase in complexity and functionality, it may be necessary to deploy portions of the project on different rollups to optimize efficiency.

Ethereum Boost

With the recent completion of the Ethereum Merge, the focus has now shifted to other tracks in Vitalik’s newly developed Ethereum roadmap. “The Surge” is a speed-focused second track with the goal of achieving over 100,000 transactions per second with RollUp. Not just any RollUp, but future-proof, quantum-secure SNARKed/STARKed Ethereum.

Investors have always been willing to look for opportunities in ZK technology and have huge expectations for the future of Ethereum scaling. StarkNet has undoubtedly benefited from the surge in investor interest, raising $100 million at a valuation of $8 billion in a Series D funding round led by Greenoaks Capital and Coatue, with investors such as Tiger Global also participating. Chief executive officer Uri Kolodny said the funds will be used for product and business development, engineering and growing the ecosystem. With ample resources, we expect StarkWare to start ramping up its business to accelerate the growth of its ecosystem to compete with other Tier 2 competitors such as Polygon.

Different programming languages can slow adoption

Probably the biggest obstacle to adoption is StarkNet’s programming language, Cairo. While Cairo is powerful and optimized for provable computation, Cairo is more difficult to learn, and there are currently far fewer developers in Cairo than in Solidity. If developers don’t already know about Cairo, they will experience additional friction when joining StarkNet, slowing down StarkNet adoption. Nonetheless, as the ZK movement generates tremendous momentum, we expect to see more developers opting for Cairo. The StarkWare team, led by Eli Ben Sasson and Uri Kolodny, is very competent and provides excellent support to the developers. In addition, Nethermind’s Nubia team has released a Solidity to Cairo transpiler that allows developers to quickly deploy smart contracts written on Solidity on StarkNet.

Ecosystem Current and Future State

Since the launch of StarkNet’s mainnet in November 2021, the StarkNet ecosystem has grown to include a large number of dApps across different domains and a wide range of dApps. Many infrastructures, wallets, tools and development tools, DeFi, GameFi, and even NFT projects are built on StarkNet. The ecosystem is expanding and becoming more vibrant, with a lot of potential to mature as one of the frontrunners in the Tier 2 race. So far, StarkNet has been a more restrained contender in the Tier 2 race. Since its launch, it has focused on laying the groundwork for its fledgling ecosystem. However, being introverted does not mean being incompetent. Obviously, we’ve seen the availability of StarkEx on StarkNet, and with its ample resources, StarkNet looks poised to enter a period of explosive growth and emerge as a top contender in the scalability race.