"The three challenges of blockchain" or "the three challenges of scalability" emphasize the challenges that blockchain platforms face in balancing security, decentralization, and scalability. In most cases, blockchain architecture can only effectively prioritize two of these challenges. For example, Ethereum prioritizes security and decentralization, which leads to many challenges in terms of scalability. However, the Ethereum community has recognized the importance of scalability and has been actively seeking solutions.
When discussing Ethereum's scalability solutions, we mainly focus on Layer 2 solutions, which aim to address the limitations of Layer 1. These Layer 2 solutions aim to improve transaction throughput without compromising decentralization or security. Currently, there are several Ethereum Layer 2 solutions, including Rollups, State Channels, and Nested Blockchains.
Rollups are a Layer 2 solution that aggregates (bundles) numerous transactions into a single transaction on Layer 1, allowing participants within the aggregation to share transaction costs and save costs for users. Rollups mainly come in two types: Optimistic Rollups and Zero-knowledge Rollups (ZK-Rollups). The former assumes that every transaction bundled is accurate and trustworthy (hence the name "optimistic") and directly enters the verification process, but introduces a challenger mechanism to ensure the validity of off-chain transactions. The latter uses zero-knowledge proofs, a mathematical encryption method, to enhance privacy and security. Examples of Optimistic Rollups include Optimism, Arbitrum, and Boba Network, while applications of ZK-Rollups include Starknet, zkSync, and Scroll.
In this article, we will explore Starknet, an innovative Layer 2 solution based on ZK-Rollup technology.
Starknet: What is it? Why?
StarkWare, co-founded by Eli Ben-Sasson, co-founder of STARK and ZCash, was established in January 2018 with the aim of improving the scalability and privacy of blockchain. StarkWare achieves this goal by deploying and verifying zero-knowledge proofs using STARK technology, a cryptographic proof system.
One notable product of StarkWare is Starknet, a permissionless ZK-Rollup solution that enables general computation. Currently, Starknet operates as a Layer 2 network on Ethereum and ensures the final security of Layer 1 through STARK technology. Starknet achieves scalability by generating STARK proofs off-chain and then verifying them on-chain, thereby improving transaction throughput and efficiency.
Positive Data Performance
Starknet is becoming increasingly popular within the StarkWare ecosystem and has attracted broader community attention.
The number of daily active accounts on Starknet has shown significant growth since March 2023. As of August 26, 2023, the number of daily active accounts has reached 161,252, indicating a steady increase in user participation. This upward trend indicates a growing interest in Starknet and its capabilities as a Layer 2 solution. This means that more and more users are actively participating in transactions, interactions, and decentralized applications (dApps) built on the Starknet ecosystem.
It is worth noting that the platform reached its peak daily active account number on July 28, 2023, with 384,447 accounts. The surge in user activity was mainly driven by the introduction of a unique NFT called SPOK (Starknet Proof-of-Kudos) by the NFT trading marketplace Unframed. Unframed introduced this unique NFT through a one-time open and free minting event, which generated significant interest and participation within the community. According to Footprint Analytics data, 76.4% of the active accounts on that day interacted with the SPOK contract, further highlighting the enthusiasm of users participating in the event and the attractiveness of Starknet's NFT ecosystem.
The daily transaction volume on Starknet has significantly increased since March 2023, indicating growing activity on the platform. As of August 26, 2023, the daily transaction volume reached 598,200, showcasing a significant growth in user interaction and participation. It is worth noting that the platform reached a peak daily transaction volume of 560,400 on July 28, 2023, driven by the launch of SPOK NFT.
During this period, the transaction fees on Starknet fluctuated. On May 9, 2023, the platform's transaction fees reached a peak of 177.84 ETH. This indicates an increased demand for transaction processing, with users willing to pay higher fees for faster and more secure transactions. However, on August 26, 2023, the transaction fees decreased to 73.36 ETH. The decrease in fees may be attributed to various factors, such as protocol optimizations, increased competition among validators, or changes in user behavior.
According to Footprint Analytics data, as of August 26, 2023, the total transaction volume on Starknet is 32,788.4 ETH, with a total transaction fee of 8,963.15 ETH. The growth in daily transaction volume and fluctuation in transaction fees highlight the platform's ability to handle increased user activity while maintaining cost efficiency. With more users and dApps adopting Starknet, it is expected that the transaction volume will continue to rise, and transaction fees may vary based on market dynamics and network optimizations.
Since March 2023, the daily cross-chain volume (Ethereum) on Starknet has significantly increased. On August 12, 2023, the daily cross-chain volume reached its peak at 12,570.13 ETH, coinciding with 7,397 active users. On August 26, 2023, the number of active users reached its peak at 15,110, with a daily cross-chain volume of 6,622.88 ETH. This significant increase in cross-chain value indicates increased confidence in Starknet as a reliable and secure platform for Ethereum transfers and storage.
Key Features
As a Layer 2 solution, Starknet has several advantages:
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Once the validity of bundled transactions is verified on Layer 1, Starknet immediately approves state updates, ensuring faster transaction processing. This means that transactions can be confirmed quickly and securely, enhancing the overall user experience.
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Starknet utilizes Layer 1 data storage to ensure the security, censorship resistance, and decentralization of critical information. By storing off-chain state recovery data on Layer 1, Starknet ensures that user data is always protected and accessible.
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Starknet provides users with capital efficiency and withdrawal flexibility. Users can withdraw funds from Layer 2 without delays, allowing them better control over their assets and promoting widespread adoption of the platform.
On the other hand, Starknet also has some limitations:
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The native programming language of Starknet, Cairo, may be a barrier for dApp developers accustomed to languages like Solidity. Although Starknet is working on achieving compatibility between Solidity and Cairo through a transpiler called Warp, learning a new language may slow down the development speed of the ecosystem.
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Starknet is not fully compatible with the EVM, which means it needs to synchronize with EVM updates, potentially adding complexity to the development process.
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The generation of validity proofs on Starknet requires specialized hardware, which may lead to centralized control and a limited number of participants able to advance the chain. This may increase the risk of malicious operators freezing Rollup states or censoring users, highlighting the need for careful consideration of network governance and security mechanisms.
Ecosystem
One major advantage of Starknet is its ability to provide high throughput, low transaction costs, and privacy protection. These features make Starknet highly versatile and offer broad prospects for various applications in areas such as GameFi, NFTs, and DeFi.
Starknet positions itself as a significant supporter of full-chain games in the public chain sector. The platform has many popular and engaging full-chain games, including LootRealms, GOL2, Isaac, Unstoppable Games, and more. These games have garnered widespread attention and become exciting points of interest and entertainment for users within the Starknet ecosystem.
There are several noteworthy projects within the Starknet ecosystem. In the NFT space, projects like Starknet Quest, Starknet.id, AlmanacNFT, and Comoco are worth mentioning. In the DeFi space, projects like JediSwap, Nostra, zkLend, Brine, and StarkEx showcase the innovation and development potential of the Starknet ecosystem.
$STARK and Starknet Airdrop
In November 2022, Starknet launched its native token, $STARK, on the Ethereum network. These tokens were initially distributed among shareholders, employees, and independent partner software developers. However, these tokens have a lock-up period of four years and are planned to be gradually released starting from November 2023.
Due to the upcoming token airdrop, Starknet has garnered significant attention within the cryptocurrency community. Since July 2023, the highly anticipated airdrop has led to increased user participation and activity on the platform.
According to Footprint Analytics data, since July 2023, the monthly cross-chain transaction volume in ETH on Starknet has shown significant growth. In March, there were 139,823 unique users, and the monthly cross-chain volume reached 16,374.83 ETH. By August (as of August 26), the number of unique users on Starknet increased to 156,332. During this period, the monthly cross-chain volume significantly rose to 148,316.71 ETH.
Starknet has gained attention for its inclusive distribution of tokens to community members. If the airdrop takes place, it is expected to be allocated to individuals actively participating in the Starknet ecosystem. This may include those who have created Starknet wallets, linked assets to Starknet, used Starknet dApps, and participated in Starknet governance.
Conclusion
In summary, Starknet is experiencing significant growth and positive trends, indicating increasing user participation, adoption, and trust in its role as a scalable and efficient Ethereum Layer 2 solution.
At the ETH Seoul conference in 2022, Vitalik Buterin predicted that ZK-rollups would outperform Optimistic Rollups in the competition for Layer 2 scalability. With its promising features and capabilities, Starknet has the potential to shape the future of Ethereum and solidify its position as a leading ZK-rollup platform. The transformative impact Starknet can bring to the blockchain ecosystem is indeed something to look forward to with enthusiasm.