What is StarkNet?

StarkNet is a permissionless layer 2 network developed by Israeli software company StarkWare. StarkNet runs as a ZK Rollup on Ethereum, helping dApps use STARK proofs to achieve greater computational scale with lower transaction costs. The network allows smart contracts to interact with other contracts deployed on the blockchain, thereby improving composability between protocols.

When looking at the value of StarkNet, it is important to consider the entire StarkWare technology stack. StarkNet, StarkEx, and Cairo provide developers with a robust, reliable solution that delivers the desirable properties of Ethereum, 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 layer 2 scaling solutions.

A strong focus on decentralization

The first big advantage of StarkNet is that it places great emphasis on decentralization. STARK-proofs allow more users to verify the entire blockchain with low hardware requirements, and the permissionless layer of sequencers and attestors ensures that the network is censorship-resistant.

In terms of growth and development, the StarkNet Foundation has allocated 50.1% of the initial token supply for ecosystem development, one of whose development goals is to enhance 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 focus on building open networks that adhere to the core principles of decentralized technology. We see this as a positive boost to the development of the ecosystem.

Complex projects can have richer tools in StarkEx

The second value proposition of StarkNet is the availability of StarkEx, a heavy-duty layer 2 scalability engine that powers some large networks such as perpetual exchange platform dYdX, layer 2 scaling solution ImmutableX, and dApps such as 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 the sequencing of StarkNet. 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 network. Complex applications can take advantage of the strengths of StarkNet and StarkEx through vertical integration. StarkNet behaves more like a decentralized blockchain with a gas fee mechanism that provides more general functionality at the expense of throughput. StarkEx is like a giant computer for ubiquitous use cases such as large-scale payments, transactions, and large-scale minting of NFTs. As Web3 applications grow in complexity and functionality, it may be necessary to deploy parts of the project on different Rollups to optimize efficiency.

Ethereum’s boost

With the recent Ethereum merger complete, the focus now shifts to the other tracks in Vitalik’s newly laid out Ethereum roadmap. “The Surge” is the second track focused on speed, with the goal of achieving over 100,000 transactions per second via RollUps. Not just any RollUp, but a future-proof, quantum-secure SNARKed/STARKed Ethereum.

Investors have been happy to find 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 an $8 billion valuation in a Series D round led by Greenoaks Capital and Coatue, with participation from investors such as Tiger Global. CEO Uri Kolodny said the funds will be used for product and business development, engineering design, and growing the ecosystem. With ample resources, we expect StarkWare to begin ramping up business development to accelerate the growth of its ecosystem to compete with other layer 2 competitors such as Polygon.

Different programming languages ​​may slow adoption

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

Current and future state of the ecosystem

Since the launch of StarkNet's mainnet in November 2021, the StarkNet ecosystem has grown to include a large number of dApps across a wide range of different sectors. 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 great potential to mature into one of the frontrunners in the layer 2 race. So far, StarkNet has been a relatively restrained competitor in the layer 2 race. Since its launch, it has been focused on laying the foundation for its fledgling ecosystem. However, restrained does not mean incompetent. Obviously, we have seen the availability of StarkEx on StarkNet, and with its full resources, StarkNet looks ready to enter a period of explosive growth and become a top competitor in the scalability race.