What is StarkNet?
StarkNet is a permissionless layer 2 network developed by Israel software company StarkWare. StarkNet operates as a ZK-rollup over Ethereum, helping dApps achieve greater scale for computation at lower transaction costs using STARK proofs. The network allows for smart contracts interaction with other contracts deployed on the blockchain, promoting composability amongst protocols.
When attempting to analyze the value of StarkNet, it is important to view the entire StarkWare tech stack as a whole. Together, StarkNet, StarkEx and Cairo deliver a powerful package of solutions for developers, offering desirable traits of Ethereum like security and decentralization while increasing transaction speeds and reducing costs. Here are some reasons why we think StarkNet could emerge as one of the biggest winners of the layer 2 scaling solutions race.
Heavy Focus on Decentralization
The first big plus for StarkNet is its heavy focus on decentralization. The usage of STARK-proofs grants more users the ability to verify the full chain with low hardware requirements and the permissionless layer of sequencers and provers ensures the network is censorship-resistant.
On the growth and development side, StarkNet foundation has dedicated 50.1% of the initial Token supply to ecosystem development, with one of its development goals to further StarkNet decentralization by developing governance mechanisms, and instituting decentralized sequencing and proving. This focus on decentralization helps to attract the kind of builders we want to see in Ethereum — those focused on building open networks which align with the core principles of decentralized technology. We see this as a positive push for ecosystem development.
Sophisticated projects have more tools in StarkEx
The second value proposition for StarkNet is the availability of StarkEx, the heavy-duty layer 2 scalability engine powering some of the big boy networks like perpetual trading platform dYdX, layer 2 scaling solution immutableX and dApps like NFT game Sorare. One of the reasons for the success of StarkNet’s launch was the batcher used in StarkEx that played the crucial role of sequencing for StarkNet. Having been tested in dYdX and other platforms, it gave developers confidence in the sequencer of StarkNet, despite it being launched in a semi-complete state.
This proprietary engine is another reason why StarkNet is attractive to developers considering to build on the network. Complex applications can leverage on the benefits of both StarkNet and StarkEx through vertical integration. StarkNet acts more like a decentralized blockchain with a gas fee mechanism that offers more general functionality at the cost of throughput. StarkEx is like a giant computer suited for ubiquitous cases like massive payments, trading, and minting of NFTs at scale. As Web3 applications increase in complexity and features, it may be necessary to deploy parts of a project on different rollups to optimize efficiency.
Tailwinds from Ethereum
With the completion of the recent Ethereum Merge, the focus now shifts to other tracks in the new, updated Ethereum roadmap as laid out by Vitalik. ‘The Surge’ is the speed-focused second track, with the goal of achieving beyond 100,000 transactions per second through rollups. And not just any rollups, but a future-proof, quantum safe SNARKed/STARKed Ethereum. Investors have been happy to go with the flow, seeking opportunities in ZK technologies and making big bets on the future of Ethereum scaling.
StarkNet has certainly benefited from this surge in investor interest, raising $100 million at an $8 billion valuation in a Series D funding round led by Greenoaks Capital and Coatue with Tiger Global among other investors. The capital will be channeled towards product and business development, engineering and growing the ecosystem, according to CEO Uri Kolodny.
With ample ammo at its disposal, we expect StarkWare to start ramping up business development to accelerate the growth of its ecosystem to match other layer 2 competitors like Polygon.
Different programming language could slow adoption
Possibly the largest hurdle for adoption would be StarkNet’s programming language Cairo. While powerful and optimized for provable computation, Cairo is more challenging to learn and Cairo developers are far fewer than Solidity developers at the moment. There is the additional friction in onboarding developers to StarkNet if they don’t already know Cairo, slowing adoption for StarkNet.
Nevertheless, with the ZK movement generating large momentum, we expect to see more developers picking up Cairo. It helps that the team at StarkWare led by Eli Ben Sasson and Uri Kolodny are extremely competent and provide excellent support for developers. The Nubia team at Nethermind has also released a Solidity to Cairo transpiler, letting developers deploy smart contracts written on Solidity quickly on StarkNet.
Current and future state of the ecosystem
Since the launch of StarkNet’s mainnet in November 2021, the StarkNet ecosystem has grown to include a multitude of dApps with good breadth across different areas. There are infrastructure, wallets, tools and dev tools, DeFi, GameFi and NFT projects building on StarkNet. The ecosystem is expanding and becoming more vibrant with plenty of potential to mature into one of the front runners of the layer 2 race.
StarkNet has been a quiet contender in the layer 2 race so far, focusing on building the foundations of its fledging ecosystem since launch. However, quiet does not mean incompetent. We have seen what StarkWare can do with StarkEx and now, with its chest of ammunition, StarkNet looks ready to enter a period of explosive growth and become a top contender in the race for scalability.
APP 
