The Bankless Guide to Starknet

Updated September 2023
Mar 24, 20236 min read

Starknet is a Layer 2 (L2) scaling solution for the Ethereum network created by the StarkWare team.

A ZK rollup implementation, Starknet exists to address the scalability challenges of Ethereum by enabling drastically faster and drastically cheaper transactions compared to the L1 mainnet. The L2 accomplishes these optimizations all while maintaining its own security and decentralization by being layered atop the Ethereum blockchain.

In specifically building on zero-knowledge STARKs, a special class of cryptographic proofs, Starknet aims to solve the Blockchain Trilemma with a system that is decentralized, scalable, and secure. Additionally, in being designed for general-purpose applications and with further optimizations to come, Starknet is positioned to play an increasingly useful role in the Ethereum ecosystem in the years ahead.

What is Starknet

As a ZK rollup, Starknet functions as an external execution environment for Ethereum transactions. It aggregates numerous transactions offchain, i.e. outside of Ethereum, and subsequently posts these condensed batches to Ethereum using zero-knowledge proofs to guarantee validity.

This efficient batching approach enables remarkably low-cost transactions. Additionally, since fees are spread out among all users, Starknet becomes that much more affordable as more people use it.

Besides being a ZK rollup, Starknet has other foundational pillars like its native Cairo programming language. Since Starknet isn’t directly compatible with the Ethereum Virtual Machine (EVM), smart contracts written for the L2’s execution environment, the Starknet OS, must be written in Cairo instead of Solidity.

However, there are groups currently working on bringing EVM support to Starknet like Nethermind, which has a team developing a Solidity-to-Cairo transpiler named Warp. This extension will transform Starknet into what Vitalik Buterin calls a Type 4 zkEVM, i.e. a ZK rollup compatible with the EVM that will have better direct compatibility with a range of Ethereum smart contracts.

Zooming out, Starknet is already a live L2 but its “Universe” roadmap will see the scaling solution reach its final form and full decentralization within a matter of years. Until then, the L2 already demonstrates significant efficiency; for example, data from L2Fees.info shows that token swaps on Starknet are currently significantly less expensive than those on Ethereum.

The pulse of Starknet

At the time of this guide’s latest update (September 2023), Starknet was the 6th-largest L2 in the cryptoeconomy per its ~$147M in current total value locked (TVL).

While this size pales in comparison to the activity we’re seeing on larger rollups like Arbitrum and Optimism right now, Starknet has still been responsible for facilitating considerable activity so far. For instance, StarkNet's STARK Prover system has successfully processed more than 200 million transactions and settled over $700 billion in trade value on Ethereum to date.

Relatedly, Starknet doesn’t have a massive DeFi or NFT ecosystem yet, but there is a surprisingly teeming community of projects that are building on or experimenting with Starknet tech right now. To track activity in this community, Dappland is a helpful resource that sorts apps by category like DeFi, NFTs, and so forth.

The Starknet token

Although the token is not currently transferable or available for purchase, STRK has been deployed on the Ethereum mainnet in anticipation of an official token plan implementation. A preliminary proposal suggested allocating 9% of the STRK token supply to community rebates to help Starknet projects cover the costs of onboarding new users.

Notably, the native Starknet token will be used for paying transaction fees, staking, and governance, and it will support both onchain and offchain voting and various delegation mechanisms. Since the token is not currently tradable, be cautious of scams and await official communications from the Starknet team for further updates on the token’s status. Additionally, it’s not advisable to try and “farm” the STRK release with arbitrary activities because the token’s distribution is being devised with anti-gamification in mind.

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What you need to use Starknet

  1. 👛 A wallet — since Starknet isn’t EVM-compatible, you will need a Starknet-compatible wallet to begin; the Argent X Starknet browser wallet is the most popular and trusted option available today.
  2. 🪙 Starter ETH — ahead of STRK being rolled out as Starknet’s native token, ETH is what’s used to pay for transaction fees on the L2; thus to use Starknet you will first need to bridge some ETH over.

How to bridge to Starknet

StarkGate is the official Ethereum-to-Starknet bridge. You connect your Ethereum and Starknet wallets, select which direction you want to go (to or from Starknet), input your desired deposit amount, and then complete the prompted transaction. Withdrawals work the same way, just in reverse. Keep in mind that this is an alpha version of the bridge, so it can take a while for your deposits to appear.

Additionally, there are third-party bridging services like Layerswap and Orbiter Finance that you can also consider trying depending on your needs. These services support more tokens and more chains than StarkGate, so you have options here.

What to do on Starknet

1. Trade tokens on JediSwap

Inspired by Uniswap V2, JediSwap is an automated market maker (AMM) that’s among the largest decentralized exchanges on Starknet today. It may be smaller activity-wise than other DEXes you’re used to on Ethereum, but it works similarly and is much faster and much cheaper with regard to making trades. If you’re looking for a first app to try on Starknet, JediSwap is a solid contender right now.

2. Create virtual builds with briq

Reminiscent of Minecraft, briq is an NFT crafting and construction system on Starknet that revolves around its foundational building components, which are simply called briqs. These briq NFTs can be assembled, disassembled, and reassembled in various ways, so users can enjoy flexibility in how they customize their creations. The project’s currently in alpha, so expect there to be some bugs along the way.

3. Mint and collect NFTs on Mint Square

Mint Square is an NFT minting platform and marketplace that specializes in supporting ZK rollups infra, e.g. Starknet and zkSync. On the project’s Starknet deployment, people readily mint their own NFTs by uploading an image and then completing the relevant metadata with a transaction. Moreover, Mint Square also makes it simple to list your Starknet NFTs for sale or to browse currently listed NFTs.

Additional Starknet apps

Eager to delve deeper into the Starknet app landscape? When you're prepared to dive in, consider exploring the following projects on Starknet that are currently available to try:

  1. 🪙 zkLend — Money market protocol
  2. 💸 Yagi Finance — Yield aggregator
  3. ⛰️ Realms — Fantasy NFT game

Additional Starknet resources

If you want to broaden your knowledge of Starknet and delve further into its intricacies, there are plenty of helpful community resources available. Here are a handful of these resources to get you started:

  1. 📜 Starknet Docs
  2. 📊 Starkboard analytics hub
  3. 🎴 Aspect NFT services
  4. 🔍 Voyager block explorer
  5. 🦙 Starknet DeFiLlama dashboard

Zooming out

Starknet represents a leap forward in Ethereum's quest for scalability, security, and decentralization. As an L2 scaling solution, it offers remarkable transactional efficiency and affordability that is already being leveraged by a range of different projects within its ecosystem.

Looking ahead the future of Starknet is bright, with multiple ongoing ecosystem efforts worth tracking closely right now like the introduction of the native STRK token and the potential for greater compatibility with Ethereum Virtual Machine via projects like Warp. As you explore the L2’s current offerings, from trading tokens on JediSwap to creating virtual builds with briq, you'll be helping to shape a rising community and technology that's actively paving the way to a more bankless frontier.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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