The Layer 2 Guide: Starkware
By: @0xLayerTwo
Starkware is an Israel-based company building Layer 2 scaling solutions for the Ethereum ecosystem using zk-STARKs for computational security, technology that was invented by co-founders Eli Ben-Sasson and Michael Riabzev. Additionally, Alessandro Chiesa, another co-founder, is credited with being the first person to theorize zk-SNARKs in 2012.
Other zk-Rollups that this guide has discussed previously have implemented zk-SNARK technology in their rollups. zk-SNARK stands forZero-Knowledge Succinct Non-Interactive Argument of Knowledge," and refers to a proof architecture where one can demonstrate ownership of specific knowledge, such as a secret key, without disclosing that knowledge and without interacting with either the prover or the verifier.
zk-STARKs (Zero-Knowledge Scalable Transparent Arguments of Knowledge) are scalable and transparent cryptographic proofs that, put simply, it is a proof system that claims to be fast and highly scalable, while depending on less cumbersome but safer cryptographic assumptions.
The chart above, created by 101Blockchains.com highlights some of the key differences between the two Zero Knowledge schools of thought.
Starkware is building two main products: StarkNet and StarkEx.
What is StarkNet?
StarkNet is a permissionless and decentralized ZK-Rollup Layer 2 solution. Like other zk and optimistic rollups, StarkNet executes transactions and relays the transaction data back to the Ethereum mainnet in batches, secured by STARK proofs. StarkNet thus benefits from the high security, decentralization and composability of Ethereum but can scale transactions on Ethereum thanks to its EVM-compatibility. The StarkNet Alpha went live on Ethereum mainnet on Nov. 29, 2021, although it is currently only available to whitelisted contracts.
What is StarkEx?
StarkEx is a Layer 2 scaling solution that is tailored for specific DApps particularly DeFi trading applications like dYdX (the largest perpetuals DEX), rhino.fi (formerly DeversiFi) accessableDeFi opportunities from one wallet on multiple L2s on Ethereum), Sorare (a global fantasy football game where you can play with officially licensed digital cards and earn prizes every week), and Immutable X (Layer 2 for NFTs promising zero gas fees, instant trades and scalability for games, applications and marketplaces).
Broadly speaking, StarkEx is a permissioned version of StarkNet meaning it is tailored-made to be used by protocols, while StarkNet is a decentralized zk-rollup that will allow anyone to deploy their smart contracts on it without permission.
StarkEx can be used in three data availability modes currently:
DApps can choose to roll up their data on-chain by using their standard zkRollup , process data off-chain by using a solution called a Validium, or use a hybrid of the two called Volition. For instance, dYdX relies on the zkRollup mode to offer fast and cheap transactions to its traders, while rhino.fi, Immutable X and Sorare use the Validium.
This optionality is made possible by Cairo, the programming language used by Starkware products. Furthermore, Shared Prover (SHARP) technology ensures that gas cost between transactions in a batch can be shared, resulting in very low gas fees on Starkware.
According to Starkware's website at the time of writing, StarkEx has $648 Million USD in total value locked (TVL) across its applications, USD $657 Billion settling worth of trades and facilitating about 205 Million transactions and 61.7 Million NFTs minted.
Starkware’s website offers a strong sales pitch. Any Use Case, Any Size.
Whatever your idea, the programming tools to realize it already exist. Cairo, the Turing-complete programming language, can be quickly deployed for any use case. It facilitates L2 solutions which offer full interoperability with L1.
Whatever the project size, STARK technology can power it. Today’s STARK solutions give you even greater scaling ability than before; The first generation of STARK solutions radically scaled blockchain and reduced gas costs by batching thousands of transactions from a single application, and processing them via just one proof. Now, STARK solutions also pack together batches from several disparate applications into a single proof. This is the blockchain equivalent of sharing a cab with others, for efficiency.
Not financial, legal or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. All opinions expressed are solely those of the individual author. This newsletter is not legal advice and does not create an attorney-client relationship. This newsletter does not constitute tax advice. Talk to your independent attorney and/or accountant for any questions specific to you. Always do your own research and use caution when interacting with smart contracts or the blockchain.