What Is Crypto Starknet (STRK)?

Starknet is a Validity-Rollup (aka ZK-Rollup) Layer 2 network that operates on top of Ethereum, enabling dApps to massively scale without compromising on security.

It achieves this by bundling transactions into an off-chain computed STARK proof. This proof is then submitted to Ethereum as a single transaction, resulting in significantly higher throughput, faster processing times, and much lower costs, all while retaining the robust security of the Ethereum settlement layer.

How does Starknet work?

Because the purpose of blockchain is to make all interactions decentralized and trustless, off-chain processing (found in multiple types of scaling solutions) must be validated in a similarly trustless way. Starknet accomplishes this by using a Scalable, Transparent Argument of Knowledge (STARK) proof, which was first introduced in 2018. Unlike their older cousin, zk-SNARK, zk-STARKs do not require trust in a centralized party during their set-up.

Sequencers and provers

There are two main components of Starknet’s STARK-based L2: the sequencers and the provers.

Transactions are submitted to Starknet just as they would be on the mainnet. These are first processed and validated by sequencers, which act like Ethereum nodes with more capabilities. These computers put transactions into a queue called a mempool, and they propose blocks and then place these transactions into those blocks. Unsuccessful transactions don’t move forward. Once a group of transactions are executed and finalized into a block, the sequencer communicates to other sequencers for approval, and then the block is sent to provers.

Provers are responsible for further guaranteeing transactions in a block are valid. They organize blocks in groups (like sequencers process transactions) and process them in parallel, which makes the process faster. In doing so, they create an Execution Trace and a State Diff, which record the steps of transaction execution and how the state of Starknet changes, respectively. The Execution Trace then is fed through an algorithm that mixes together its data and identifies any bad data (such as a single bad transaction). A small, random sample of transactions is then used as a verification for the STARK proof that contains thousands.

Publishing to the Ethereum mainnet

The STARK proof and State Diff are then communicated back to the mainnet as a single Ethereum transaction. This is how Starknet scales so effectively: it batches thousands of transactions into this one transaction.

On Ethereum, a node accepts the transaction and unpacks it to find the proof and State Diff, which are then processed by the Verifier smart contract. The Verifier examines the samples in the proof to ensure their validity and then passes the next step to the Starknet Core smart contract. At this step, there is confirmation that the proof is valid (per the Verifier) and that the State Diff is present, and the Starknet’s state is updated on Ethereum. The rest of the process is Ethereum’s usual operating procedure: adding the Starknet transaction to a block and then sending it to the network to be validated and finalized.

How was Starknet developed?

Starknet was developed by StarkWare Industries, an Israeli tech company founded in 2018 by Eli Ben-Sasson, Uri Kolodny, Michael Riabzev, and Alessandro Chiesa. Ben-Sasson was also a founder of the privacy-focused Zcash cryptocurrency that was based on Bitcoin. At the time of Starknet’s founding, he was a professor at Technion – Israel Institute of Technology, and in 2019, Technion sued him over intellectual property (IP) allegations. This eventually resulted in a settlement and Ben-Sasson’s departure from the institution.

StarkWare’s first product was StarkEx, a permissioned scaling solution introduced in 2020 that uses the same zk-STARK technology behind Starknet. It is used by decentralized derivatives exchange dYdX and the L2 Immutable X. However, StarkWare ultimately aimed to build its own permissionless L2, and that effort culminated in the publishing of Starknet’s genesis block in November 2021. Exactly one year later, the Starknet token (STRK) was deployed on the Ethereum Mainnet, though the tokens were not immediately offered for sale. They became publicly available in February 2024.

Within its first five years, StarkWare was one of the industry’s most well-funded projects. Its seed funding round from private investors was quickly followed by a $12 million grant from the Ethereum Foundation. It continued to receive hundreds of millions of dollars in funding from notable participants including the now-defunct Alameda Research, Paradigm, Sequoia Capital, and other venture capital firms.

What is the STRK Token?

The StarkNet Provisions Program marks a milestone in StarkNet’s journey toward decentralisation by introducing the StarkNet Token (STRK) to its community. With an initial allocation of more than 700 million STRK to nearly 1.3 million addresses, the program is part of a broader effort to distribute 1.8 billion STRK (18% of the total supply) dedicated to the community. This wide distribution reflects StarkNet’s commitment to engaging its diverse user base, including developers, users, and contributors across various sectors, in the network’s governance and operation.

STRK is used as a payment option for transaction fees on the StarkNet network. This functionality allows users to choose between paying fees in STRK or ETH, offering flexibility and potentially reducing costs for network interactions. By enabling STRK as a means to cover transaction fees, StarkNet aims to streamline user experience and encourage wider adoption of its platform.

Holding STRK grants users the right to participate in governance decisions affecting the StarkNet protocol. This includes votes on various issues that shape the network’s development, policy, and future direction. Through governance, STRK holders can influence decisions regarding upgrades, parameter adjustments, and the implementation of new features, ensuring that the network evolves in a way that reflects the community’s needs and priorities.

STRK will be used within a proof-of-stake (PoS) model that underpins the network’s security and decentralisation. By staking STRK, users can support the network’s operation, contribute to its security, and in return, receive rewards. This staking mechanism is designed to select among a decentralised network of sequencers, ensuring that StarkNet remains secure, efficient, and resistant to centralization.

Conclusion

  • Starknet is an Ethereum layer 2 scaling solution that uses a zk-rollup to transfer processing of transactions off-chain in an effort to increase their speeds and decrease their cost.
  • The zk-STARK mechanism involves sequencers and provers who are responsible for ensuring off-chain computation is verifiably accurate, and “bad’ data does not reach the Ethereum mainnet.
  • The STRK token facilitates transactions by providing a means for paying fees on the network, and it can also be used in governance and in staking.

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