Scalability Challenges for Blockchains and the Role of Starknet
Blockchain networks, like Ethereum, face a significant challenge when it comes to scalability. As more users and transactions join the network, the speed decreases, and costs increase. To address this issue, Ethereum scaling solutions such as Starknet have been developed. The purpose of Starknet is to improve the speed and affordability of transactions on the Ethereum network.
Understanding Starknet
Starknet is a type of validity rollup known as a zk-rollup that operates on the Ethereum network. Rollups process most transaction operations outside of Ethereum and provide proof of those transactions to Ethereum, reducing the load on the Layer 1 blockchain. This results in faster and cheaper transactions.
StarkWare Industries, an Israeli blockchain firm, created Starknet with the goal of scaling Ethereum. It was fully launched in February 2022 as a permissionless Layer 2 network, allowing anyone to build decentralized applications (dapps) on it. StarkWare also developed another platform called StarkEx, which has been live since June 2020. However, StarkEx is a permissioned network designed specifically for dapp requirements.
StarkWare has received significant backing from investors such as Sequoia Capital, Paradigm, and Coatue. In May 2022, the company raised $100 million in a Series D funding round and reached a valuation of $8 billion. Overall, StarkWare has raised $261 million in funding to date.
The Functioning of Starknet
As a Layer 2 solution, Starknet processes transactions on its own network and settles them on Ethereum to enhance scalability. It achieves this by compressing thousands of transactions into a “proof” data structure and submitting it to Ethereum as a single transaction. This significantly improves throughput, allowing for more transactions to be processed per second, and reduces the cost per transaction.
Starknet utilizes a proprietary proof system called zk-STARK (zero-knowledge scalable transparent argument of knowledge) to verify the correctness of transactions without revealing confidential data. This enhances privacy and security.
Starknet consists of two core components: Sequencers and Provers. Sequencers execute transactions and propose blocks, processing a significantly higher number of transactions per second compared to Ethereum nodes. Provers provide a mathematical guarantee of the validity of block transactions, which are ultimately settled on Ethereum.
The Future of Starknet: STRK Token
In April 2024, Starknet is expected to introduce its native token called STRK. The deployment of the STRK token on Ethereum took place in November 2022. The total supply of STRK tokens is ten billion, and they will be utilized for covering transaction fees, governance, and staking within the Starknet network.
Hot Take: Starknet Revolutionizing Ethereum Scalability
Starknet is poised to revolutionize Ethereum scalability by addressing the challenges posed by increasing user activity and transaction volumes. With its zk-rollup approach and proprietary proof system, Starknet significantly improves transaction speed and affordability. As a permissionless Layer 2 network, it opens up opportunities for developers to build decentralized applications on top of it. With the upcoming introduction of the STRK token, Starknet aims to further enhance its ecosystem by providing utility for transaction fees, governance, and staking. Overall, Starknet is an important solution that contributes to the long-term viability and growth of the Ethereum network.
By
By
By