Bitcoin Integrates into Starknet Ecosystem

Bitcoin became a core part of Starknet’s ecosystem on Tuesday, as the Ethereum layer-2 network began using the asset as a way to secure itself, according to a press release.

Starknet users can now participate in the process of validating transactions by delegating Bitcoin to the network to earn rewards, StarkWare, the network’s developers, stated. Previously, Starknet users could only stake its native STRK token.

The company also mentioned that RE7, a London-based investment firm, is building a Bitcoin-denominated yield product on Starknet. The Starknet Foundation plans to use 100 million STRK to encourage Bitcoin-related activity on the network, StarkWare added.

If Bitcoin has a flaw, it’s that the asset is being “too much hodled,” StarkWare co-founder and CEO Eli Ben-Sasson told Decrypt, using a misspelling of “hold” that’s emerged as a rallying cry for steadfast cryptocurrency investors in recent years.

Ben-Sasson explained that while Bitcoin is “pristine capital,” its use has been limited within decentralized finance (DeFi) because centralized exchanges have historically provided superior scale, better user experiences, and lower prices.

As Bitcoin’s borrowing becomes more commonplace, Ben-Sasson expressed that Starknet is “perfectly aligned to make Starknet the financialization layer and the execution layer for Bitcoin,” a scenario he believes will be winner-takes-most.

This year, crypto exchange Coinbase has embraced a service that connects its customers with the lending protocol Morpho on its Ethereum layer-2 network Base. Nearly $1 billion in loans have originated through this collaboration, according to a Dune dashboard.

StarkWare emphasized that Bitcoin staking on Starknet does not require users to relinquish custody of their assets, claiming that its approach does not compromise security.

Although StarkWare is positioning Starknet as a Bitcoin layer-2, some design elements of the network’s staking feature don’t fully align with Bitcoin maximalists, who often consider all other cryptocurrencies to be inferior and liken them to “shitcoins.”

Those who stake Bitcoin on Starknet receive STRK, Starknet’s native token, as a reward. Other projects aiming to enhance Bitcoin’s programmability, such as GOAT Network, primarily pay rewards in Bitcoin but still use a native token for incentives.

As of Monday, STRK had a market capitalization of $498 million, according to crypto data provider CoinGecko. The asset’s price had decreased by 74% over the past year to $0.122. In 2024, STRK reached an all-time high of $4.41, just one month after its debut.

The Israeli-based firm announced last June that it was raising $1 million to venture into the Bitcoin-scaling space. At that time, it expressed support for restoring the OP_CAT, a command within Bitcoin’s programming language that some believe could spur innovation.

Starknet employs a specific zero-knowledge proof system introduced by Ben-Sasson in 2018. Ethereum co-founder Vitalik Buterin has stated that this advanced cryptography could be essential in balancing privacy with regulatory compliance.

Ben-Sasson has had an interest in utilizing zero-knowledge proofs to scale Bitcoin since he discovered it in 2013 but stated that Ethereum was the most straightforward blockchain to begin with.

“I think there’s a much higher need for this stuff on the Bitcoin side,” he noted. “We’re not leaving Ethereum, but definitely our main goal in 2025 and 2026 is to service Bitcoin the best possible way that we can.”