Why is the StarkNet Ecosystem So Explosive Recently?

25 juin 2023

StarkNet is a Layer2 solution that utilizes zkSTARKs to scale Ethereum. It alleviates Ethereum’s network congestion by increasing the throughput and reducing the transaction fee. Availing the zero-knowledge proof technology, it also enhances data security and privacy.

With StarkNet, developers can build, deploy, and run high-performing smart contracts in a decentralized environment without worrying about pricey transaction fees and the security of smart contracts. These features make it especially suitable for building dApps that require high performance and low transaction fees like those in DeFi, NFT, or GameFi.

The StarkNet ecosystem also opens a lot of new possibilities for developers. Leveraging the flexibility and advanced features of the Cairo language, and taking advantage of StarkNet’s high throughput and customizability, developers can build innovative, high-performance, customized dApps on StarkNet. There are also many choices of zkEVM projects in the ecosystem, enabling developers to deploy and run smart contracts in safer and more efficient environments.

All of these have contributed to the StarkNet ecosystem's significant growth lately with a notable increase in its total value locked. In this article, we'll look at the advantageous features of StarkNet, share the innovative projects in the ecosystem, and explore the challenges and future prospects the ecosystem may face.

StarkNet's Advantageous Features
StarkNet has many unique advantages offered by using zkSTARKs, the native programming language Cairo and the Cairo Virtual Machine (VM). Its custom development environment enables higher performance, better security, and richer features. Developers can write secure and reliable smart contracts in Cairo and enjoy the high throughput realized by StarkNet via its STARKs-based validation mechanism. Although there is a learning curve for developers, the effort will be well compensated.

StarkNet employs its own custom programming language Cairo and implements the Cairo VM. This approach is very different from other layer2 solutions which leverage the existing components of Ethereum. While most other solutions focus their effort on Ethereum-oriented optimizations, StarkWare concentrates on polishing its own stack for its ecosystem. Although it sacrifices the network effect of being fully compatible with Ethereum, it’s hard to refute that this choice is reasonable, especially considering it has achieved a network effect around Cairo and the escape velocity needed to expand.

In its future development, these technological features and innovations will provide ongoing value. With the increasing importance of data security and privacy, the robust privacy-preserving capability that StarNet offers will be able to attract more users and applications to the network. At the same time, StarkNet's scalability and decentralized nature make it an effective solution for addressing high throughput and security requirements. As the blockchain ecosystem develops and the demand grows, StarkNet’s superior technological features in terms of throughput, security, and privacy protection will provide significant value to its business, enabling it to win out in the competition.

Various Projects in the Ecosystem
At the core of StarkNet’s dApp ecosystem is its capability for building zero-knowledge-proof based highly performant, low-fee, privacy-preserving decentralized applications. While StarkNet enables various use cases, its advantages of high throughput, low fee, and privacy protection make it especially suitable for areas such as decentralized exchanges (DEXes) and NFT marketplaces.

Below are some projects in the ecosystem that we believe are worth paying attention to.

DeFi:
JediSwap is a permissionless and composable AMM built on Starknet by the Mesh Finance community. The project has launched on Starknet mainnet, with a current Total Value Locked (TVL) of approximately $5 million. They also received a grant of 150,000 STARK tokens from StarkWare. JediSwap is very innovative, enabling lightning-fast, near-gasless exchange of assets in a trustless manner. It has already gained some market influence and is a contribution to the StarkNet ecosystem in DeFi.

Morphine is an innovative DeFi lending and borrowing protocol with two primary use cases: passive lending and active borrowing. Passive lending allows users to provide liquidity and earn yields through junior and senior tranches, catering to different risk appetites. Active borrowing, on the other hand, enables users to deploy sub-accounts, in which they can borrow up to 15 times their collaterals, have access to LSD, LP, ERC4626, and set automations. Globally, Morphine is highly innovative, offering versatile strategies and functionalities for both lenders and borrowers. Its flexibility and degree of automation should be attractive to DeFi users. Therefore, we believe it has the potential to succeed.

Orbiter Finance is a decentralized cross-rollup bridge for transferring the Ethereum native assets. The Orbiter Bridge infrastructure allows for fast and cost-effective transfers of Ethereum-based assets across various rollups like StarkNet, zkSync, etc. The team is also developing zkProver, a middle layer that utilizes zero-knowledge technology to aggregate transactions and increase the TPS and volume of cross-rollup transactions. The project will be able to contribute to StarkNet’s development by enhancing interoperability and scalability.

DeversiFi is a decentralized exchange aiming to achieve faster and more secure trading through StarkNet while maintaining connectivity to Ethereum.

NFT/Gaming/Metaverse:
Realms (Bibliotheca DAO) started out as a Loot project and has evolved into a large-scale multiplayer blockchain game on StarkNet. The project scored 15 out of 18 by the Starknet Foundation and will receive a total of 150,000 SSTRK from the Early Adopter Grant.

RYG.Labs is an NFT creative agency focusing on building interactive dynamic NFTs and providing NFT marketing solutions. It will serve as a launchpad for artists entering the NFT field and promote the development of the NFT market on StarkNet.

The Ninth is a metaverse game on StarkNet offering diverse gameplay such as land purchases and upgrades as well as staking. It balances the fun and integration of tech in gaming, using StarkNet ZK Rollup to secure the overall experience. It will contribute to the ecosystem in Metaverse and gaming.

Other Innovative Web3 Projects:
Argent X is the first wallet for StarkNet built by Argent. Utilizing native account abstraction on StarkNet, Argent X gives users peace of mind with multisig security and no seed phrase and achieves lower transaction fees and faster confirmation times.

Braavos is a friendly smart contract-based self-custodial wallet built on StarkNet. It’s designed to offer a seamless experience for Web2 users and is currently available on Android, iOS, Chrome, Firefox, and many other browsers.

Carbonable is a StarkNet-based system to track carbon contributions. It has completed the seed funding round with the participation of multiple venture capital firms. Its innovative blockchain-based approach helps reduce carbon dioxide emissions and achieve carbon neutrality. It will create a real-world impact on environmental protection and sustainable development, which will in turn be beneficial to the StarkNet ecosystem.

Dolven Labs is a DAO Based Ecosystem Catalyst and a hub for permissionless DeFi tools and innovative projects for the StarkNet ecosystem. The team is also the builder of projects like StarkNet Social and StarkGuardians. Dolven Labs plays a vital role in the StarkNet ecosystem, offering projects accelerator programs and a suite of permissionless tools to allow them to expand their boundaries and achieve their goals.

Herodotus is building storage-proof cross-chain data access solutions. It will allow smart contracts deployed on Starknet to access current and historical Ethereum on-chain data in a trustless manner. Herodotus’ solution will be important for increasing interoperability between Ethereum and StarkNet. It will help expand StarkNet’s capabilities and enhance the data accessibility of the blockchain ecosystem as a whole.

Overall, the success of the StarkNet ecosystem so far lies in its technological advantages, developer support, and ecosystem support for various use cases. For StarkNet to further grow, extensive community support is needed. If it can attract the attention and support of more developers, investors, and users, it will have a better prospect.

Challenges and Future Prospects
One of the top challenges and bottlenecks that the StarkNet ecosystem may face is competition. Many other layer2 scaling solutions in the market are striving to compete with StarNet and they are more advantageous in some respects than StarkNet. Therefore, continuous innovation and improvements are needed to attract more developers and users.

A second potential issue is the network effect. As StarkNet is a relatively new technology, it requires a significant influx of developers and users to establish a strong network effect. Effective marketing and promotion efforts are thus necessary.

Another challenge that StarkNet faces is ensuring the sustainability of its ecosystem. With the emergence of competitors and technological advancements, StarkNet needs to continuously innovate and provide attractive features to maintain user loyalty and attractiveness. Additionally, StarkNet needs to establish solid relationships with developers and partners to foster ecosystem development and growth.

Other challenges StarNet might face include:

• Adoption may be limited by the use of the Cairo language. Since Cairo is a new language, developers need to learn and adapt to this new programming language. This may pose an additional learning curve for many developers, limiting their ability to participate in the StarkNet ecosystem. In contrast, Ethereum's EVM has a larger developer community, making it easier for developers to get started and rapidly build applications.
  
• High throughput and low transaction costs are advantageous only for specific use cases. Although StarkNet demonstrates the advantages of high throughput and low transaction fees in some use cases, these advantages may not be relevant for all application scenarios. For certain applications, especially those that don't require processing a large volume of transactions, these advantages may not be significant. Therefore, whether StarkNet will be able to witness widespread adoption across various sectors remains to be seen.
  

We believe, StarkNet is technology-driven and has a clear positioning for its business model. The team prioritizes providing solutions that truly address user needs than merely chasing flashy new technologies. We are also seeing developers increasingly embracing Cairo and STARK, recognizing their potential as scalable solutions. For example, some projects are developing zkEVM on top of StarkNet, such as Warp and Kakarot, which is a showcase of the strengths of Cairo and StarkNet. Overall, we believe that StarkNet has greater potential in areas such as fully on-chain (FOC) games, contract wallets, cross-chain communication, and on-chain AI because its technical features and innovations bring critical advantages to these fields.

• In the field of FOC games, StarkNet's high-performance and low-cost features make it an ideal choice. By bundling multiple L2 transactions into one transaction on Ethereum, StarkNet can distribute transaction costs among other transactions in the same batch, reducing costs. Furthermore, StarkNet increases network speed, provides high throughput, and minimizes communication requirements. These features will help ensure the efficiency of developing FOC games and a better user experience on FOC games.
  
• In the sector of contract wallets, StarkNet's native account abstraction allows contract wallets to offer security similar to that of hardware wallets by allowing the encryption chips or modules on a mobile phone to directly sign transactions. Additionally, StarkNet’s highly programmable signature verification enables optimization at the wallet layer for enhanced performance and security through techniques like signature transcriptions.
  
• StarkNet's decentralized nature and secure design make it a reliable solution for cross-chain communication. By utilizing zero-knowledge proofs, StarkNet allows for the performance of verification and proof without revealing transaction details, ensuring data privacy and security. With StarkNet, the trustworthiness and security of cross-chain communication can be improved, thus facilitating more data exchange and interoperation among various chains.
  
• In the field of on-chain AI, StarkNet's technical features allow off-chain computation with on-chain verification of generated proofs. This enables compute-extensive applications such as AI and machine learning models to be put on-chain while enjoying the convenience of not exposing sensitive data and model details. Also, StarkNet's zero-knowledge proof capabilities can be used to verify the correctness of AI computations, increasing user trust in the results. Overall, it will open new possibilities for on-chain AI use cases in areas such as gaming, oracles, automated trading, anti-sybil, KYC, and more.
  

In summary, we believe, with continuous technological development and innovation, the StarkNet ecosystem has the potential to maintain its lead in competition. But it will need to stand up to challenges to maintain sustainability and grow the user base. Through continuous innovation and close collaboration with developers and users, StarkNet may continue to evolve and create new use cases for Ethereum.