Starknet has launched a brand new function that allows Bitcoin holders to stake their property on its Ethereum-based Layer 2 community.
Introduced on Sept. 30, the replace marks what the group calls the primary trustless methodology of staking BTC past its unique blockchain. Via this system, individuals can delegate tokenized variations of Bitcoin, earn staking rewards, and contribute to Starknet’s safety, all with out surrendering custody of their cash.
Bitcoin itself was by no means designed for staking. Its proof-of-work system retains miners central to validation, leaving little room for holders to earn yield immediately. Starknet circumvents this limitation by accepting wrapped representations of Bitcoin, similar to WBTC, tBTC, Liquid Bitcoin, and SolvBTC.
These property might be built-in into Starknet’s consensus course of and are protected by zk-STARK cryptography. Notably, the expertise is well known for its pace and post-quantum resistance.
This initiative additionally ties into Starknet’s broader ambition of turning into an execution layer for Bitcoin. In current exams, the group used Circle STARKs to confirm Bitcoin’s full header chain in 25 milliseconds on a Raspberry Pi, demonstrating real-world efficiency.
Starknet has additionally launched decentralized sequencers and is collaborating with BitVM researchers to discover next-generation Bitcoin scaling options.
Will this make Bitcoin productive?
Starknet acknowledged that the improve goals to rectify a evident imbalance that has left most of Bitcoin’s $2 trillion market capitalization inactive on its base chain.
In line with the agency, roughly 98.5% of the provision stays unused, whereas Ethereum has developed a thriving staking financial system that now holds greater than $38 billion, or roughly one-third of its circulating provide.
Bitcoin’s equal sector is relatively small, at roughly $2.5 billion, with solely 58,500 BTC in circulation.
Starknet argued that staking Bitcoin on its community would assist redirect a part of this dormant worth by permitting BTC holders to realize recent yield alternatives and including a deeper safety base for the Ethereum layer-2.
Since BTC is taken into account comparatively lower-risk than most digital property, traders usually settle for slimmer returns. That dynamic makes BTC an environment friendly complement to STRK, Starknet’s native token, as a result of securing the community with Bitcoin might be less expensive than relying solely on STRK.
Builders argue that this design may provoke a reinforcing cycle as extra Bitcoin is transferred to Starknet, thereby growing liquidity and community safety.
This elevated liquidity makes Starknet’s ecosystem extra interesting to builders and asset holders, which in flip will increase STRK participation. On the similar time, the upper STRK involvement boosts the general reward pool, making Bitcoin staking extra enticing and drawing much more BTC into the system.
