Starknet is a permissionless Validity-Rollup (ZK-Rollup) Layer 2 network that operates on top of Ethereum, enabling decentralized apps (dApps) to scale without compromising on security. ^[1][2]

Overview

The Starknet Validity-Rollup operates as a Layer 2 (L2) blockchain, enabling any dApp to achieve massive computation scale without compromising Ethereum’s composability and security. ^[1][3]

Starknet aims to achieve secure low-cost transactions and high performance by using the STARK cryptographic proof system. Starknet contracts and the Starknet OS are written in Cairo, a custom-built and specialized programming language. ^[3]

Starknet was developed by StarkWare Industries, an Israel-based blockchain firm, to scale Ethereum. Starknet launched fully in February 2022 as a permissionless Layer 2 network, allowing anyone to build decentralized applications or dApps on it. It was co-founded by Eli Ben-Sasson who is also the president of StarkWare and Chairman of its Board of Directors. ^[15]

The development and adoption of Starknet is driven by the Starknet Foundation led by the CEO, Diego Oliva^[5]. ^[6]

Technology

How Starknet Scales Ethereum

To address Ethereum's scalability challenge while maintaining security and decentralization, Starknet introduces the Validity Rollup solution. This approach shifts transaction processing off the Ethereum Mainnet, grouping transactions into off-chain blocks summarized into a single onchain transaction. ^[4]

To ensure transaction integrity without re-execution, Starknet utilizes STARK proofs for verifiable computation. These proofs are transmitted to Ethereum along with essential block information for efficient verification, allowing Starknet to achieve significant scalability without compromising security or decentralization. ^[4]

The Starknet Sequencer

Starknet's foundational element, the Starknet Sequencer, plays a crucial role in transaction validation and execution and block proposal. Sequencers group transactions and process them collectively, flagging unsuccessful transactions while allowing successful ones to proceed into a block. Starknet’s sequencers can handle substantially more transactions per second than Ethereum nodes. ^[4]

The Starknet Prover

The Prover ensures the mathematical validity of block transactions by generating a STARK proof, ensuring their integrity. Transactions are processed in groups concurrently, with the Prover documenting each step in transaction execution to create an Execution Trace. Changes in the system's state termed the State Diff, are also tracked. ^[4]

Next, an algorithm expands and mixes data from the Execution Trace, highlighting any issues as even a single instance of bad data affects the entire dataset. The Prover then selects random samples from this expanded data to create a STARK proof, which validates thousands of transactions. ^[4]

Secure Settlement on Ethereum

The STARK proof and State Diff are transmitted to Ethereum as a transaction, where an Ethereum node accepts the transactions and unpacks the proof and the State Diff. These unpacked components are processed by two Ethereum smart contracts: the Verifier and Starknet Core. ^[4]

The Verifier contract breaks down the proof and analyzes samples within it. Any hint of problematic data in the samples of the proof leads to prompt rejection by the Verifier. Once the proof's validity is confirmed, it advances to the Starknet Core smart contract. ^[4]

The Core contract verifies the proof's authenticity and confirms receiving the State Diff, subsequently updating the Starknet state on the Ethereum blockchain. This updated state is then added to an Ethereum block, distributed across the node network for validation and voting. When the block accumulates sufficient votes, it achieves "finalized" status, confirming its place as an immutable part of Ethereum. ^[4]

STRK Token

The Starknet token ($STRK) is used for paying fees to enable the operation of the network, maintaining and securing the network by enabling staking for consensus and deciding on Starknet’s values and technology goals by voting for governance proposals. ^[16]

The STRK token is used for transaction fees originally paid in Ether (ETH), for staking, and for governance. It became available for claiming on the Starknet Mainnet on February 20th, 2024. ^[16]

Tokenomics

Ten billion Starknet tokens were initially created by StarkWare in May 2022 and minted onchain on November 30, 2022. ^[16]

The existing ten billion tokens were planned to be distributed according to the following: 20.04% allocated to early contributors, 18.17% to Investors, 10.76% to StarkWare, 12.93% for Grants including Development Partners (aka DPs), 9.00% for Community Provisions, 9.00% for Community Rebates, 10.00% for the Foundation Strategic Reserves, 8.10% for Foundation Treasury, and 2.00% for Donations. ^[16]

The Starknet Foundation

Introduced in November 2022, the foundation was set up to fulfill the vision of Starknet’s decentralization proposal. The Foundation launched with 50.1% of the initial Token supply to ensure the network’s resources are effectively deployed towards the following goals: the maintenance and security of Starknet as a public good; the continued development and expansion of the network; and support for a culture of constructive collaboration between developers. ^[7]

The foundation's priorities include fostering the community of Starknet users, developers, and researchers, expanding the community by educating about Starknet and its technology, overseeing the continued development of the network and advancing research, and finally, furthering Starknet’s decentralization by developing Starknet governance mechanisms, and instituting decentralized sequencing and proving. ^[7]

The Starknet Foundation board comprises 7 board members: Andrew McLaughlin^[8], Prof. Eli Ben-Sasson^[9], Eric Wall^[10], Heather Meeker^[11], Prof. Shubhangi Saraf^[12], Tomasz Stańczak^[13], and Uri Kolodny^[14]. ^[7]

On May 5, 2024, the foundation launched a $5 Million grant program for emerging projects on the network. The $5 million Seed Grants Program was set up to support at least 200 promising teams, with $25,000 in USDC per award recipient, offering a “final push” to help final-stage projects launch on Starknet. The $5 million grants program came in response to the main challenges of current Starknet developers, according to Diego Oliva, the CEO of Starknet Foundation:

“We’ve been listening carefully to devs [developers] and hearing about the main challenges they face. We are talking about people with amazing creativity and vision who need support with that ever-hard ‘last mile’ to get a project over the line and into production. So we responded with this program, which is intended, very directly and with minimal bureaucracy, to address this.”^[18]

On May 28, 2024, Starknet launched a $25 million token incentive for top projects. As part of its Catalyst program, the Starknet Foundation will distribute approximately $25.2 million worth of Starknet tokens to the 21 best-performing projects in the ecosystem, according to an announcement shared with Cointelegraph. ^[17]

The program chose to reward the top user-facing protocols based on multiple factors, which were weighed by the Stark Foundation together with an independent third-party, according to Diego Oliva:

“We looked at a range of metrics with varying weights such as Total Value Locked, Fees Generated, Active Users, External Funding, Security Audits as well as several other metrics.”

The grants program aims to accelerate innovation on Starknet’s Ethereum layer-2 scaling solution based on zero-knowledge rollup technology. The first six best-performing projects that qualified for the grants include Ekubo, a token launch platform, AVNU, a DeFi protocol with gasless trading, Influence, a fully on-chain grand strategy game, Realms, an on-chain gaming universe, Nostra, a DeFi protocol with an upcoming crypto super app, and ZKX, a decentralized perpetual futures exchange. ^[17]