Starknet introduces strkBTC to bring ‘private bitcoin’ and confidential DeFi transactions to its Layer 2 network

Starknet, an Ethereum Layer 2 network developed by StarkWare, is preparing to launch strkBTC, a new bitcoin-based asset designed to enable shielded balances and confidential transfers while maintaining full composability across decentralized finance applications.

The token will allow bitcoin holders to interact with DeFi on Starknet while protecting transaction amounts and counterparties from public view, according to details shared by StarkWare and the Starknet Foundation.

The system issues strkBTC deterministically in response to verifiable bitcoin deposits, avoiding discretionary control in the issuance process. Privacy protections operate at the protocol level rather than through custodians, wallets, or third-party applications, according to the team. Starknet said this structure supports confidentiality while preserving auditability and risk-management compatibility, and that strkBTC will also be eligible for bitcoin staking on Starknet, allowing users to earn yield while shielding balances if they choose.

Eli Ben-Sasson, co-founder of StarkWare and board member of the Starknet Foundation, said strkBTC aims to address longstanding tradeoffs between privacy and programmability in blockchain systems.

“Typically, there is a performance-privacy payoff,” Ben-Sasson said in a statement. “We are breaking that, with an offering that isn’t more of the same.” He added that “with strkBTC, exposure to bitcoin can move through DeFi with private balances and transfers without breaking composability or isolating capital,” describing privacy as “a fundamental requirement for market participation.”

Privacy key to unlocking bitcoin’s financial utility

Starknet Foundation Executive Director James Strudwick said bitcoin capital has historically remained underutilized due to usability and trust constraints. He noted that enabling bitcoin to function as a “productive” financial asset requires an intentional path toward trust minimization and transparency, adding that such efforts could help transition bitcoin from “dormant capital to a fully integrated, active financial asset.”

The move reflects Starknet’s broader strategy to expand bitcoin’s role within its ecosystem. The network previously introduced bitcoin staking and yield products, allowing holders to earn rewards while maintaining custody of their assets, alongside incentive programs designed to activate idle BTC and support lending, collateral, and other financial use cases. These efforts form part of Starknet’s longer-term goal of integrating bitcoin into decentralized finance while scaling its functionality through zero-knowledge cryptography.

StarkWare said strkBTC builds on lessons from earlier privacy-focused systems while extending confidentiality beyond simple payments to support complex financial transactions. Anat Veredgorn, a product team lead at StarkWare, said the system combines efficient client-side proving with verification speeds capable of scaling globally, adding that “it’s not only privacy, it’s actually privacy that works in practice.”

Starknet Foundation VP of Growth Damian Chen said privacy could play a key role in attracting institutional capital that has remained hesitant to participate in public blockchain markets. 

“Public blockchains expose sensitive positions, trading counterparties, and proprietary strategies, which create an assortment of compliance and competitive challenges,” Chen said, adding that enabling privacy at the infrastructure level “removes a critical barrier to broader blockchain adoption.”

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