Starknet launches strkBTC, bringing "Private Bitcoin" and DeFi transactions

Starknet, a Layer 2 network on Ethereum developed by StarkWare, is preparing to launch strkBTC—a Bitcoin-based asset designed to support shielded balances and private transfers, while maintaining full interoperability and composability within the DeFi ecosystem.

According to information from StarkWare and Starknet Foundation, strkBTC allows Bitcoin holders to participate in DeFi on Starknet without publicly revealing transaction amounts or transfer counterparts on the blockchain.

The issuance mechanism for strkBTC is designed to be deterministic, automatically minting tokens corresponding to verified on-chain Bitcoin deposits, eliminating discretionary intervention in the supply creation process. Security layers are integrated directly at the protocol level, rather than relying on custodians, wallets, or intermediary applications. The development team states that this structure helps preserve privacy while ensuring auditability and compatibility with risk management mechanisms.

Notably, strkBTC is also eligible for Bitcoin staking on Starknet, enabling users to generate yields while optionally hiding their balances if desired.

Eli Ben-Sasson, co-founder of StarkWare and board member of Starknet Foundation, said that strkBTC aims to address the long-standing trade-off between privacy and programmability in blockchain systems.

“There is usually a trade-off between performance and privacy,” he said. “We are breaking that model with a completely different solution.” He emphasized that with strkBTC, exposure to Bitcoin can flow through DeFi with private balances and transactions without sacrificing composability or liquidity isolation, viewing privacy as “a fundamental requirement for market participation.”

James Strudwick, CEO of Starknet Foundation, noted that Bitcoin capital has long been underutilized due to limitations in usability and trust. He believes that for Bitcoin to become a truly profitable financial asset, a clear roadmap toward minimizing trust and increasing transparency is necessary. These efforts could transform Bitcoin from a “sleeping capital” into an integrated, actively managed financial asset within the ecosystem.

The launch of strkBTC reflects Starknet’s long-term strategy to expand Bitcoin’s role within its ecosystem. Previously, the network has implemented staking products and yield generation for Bitcoin, allowing users to earn rewards while maintaining self-custody, along with incentive programs to activate idle BTC and support use cases such as lending, collateralization, and other financial services. All of these efforts aim to deepen Bitcoin’s integration into DeFi and extend its functionality through zero-knowledge cryptography technology.

According to StarkWare, strkBTC inherits lessons from earlier privacy-focused systems but extends security beyond simple payment transactions to support complex financial operations. Anat Veredgorn, product lead at StarkWare, said the system combines efficient user proof mechanisms with verification speeds capable of scaling globally, emphasizing that “this is not just privacy, but privacy that can operate in practice.”

Damian Chen, Vice President of Growth at Starknet Foundation, believes privacy could play a key role in attracting institutional capital that remains cautious about public blockchain markets.

“Public blockchains expose sensitive positions, trading partners, and proprietary strategies, creating numerous compliance and competitive challenges,” he said. “Integrating privacy at the infrastructure level will eliminate a significant barrier to broader blockchain adoption.”