Starknet's significant favourable information! Integrating Bitcoin as a stake asset: empowering Decentralized Finance, aiming at the BTC "financial execution layer"

Starknet, as an Ethereum Layer-2 network, has integrated Bitcoin (BTC) as a core component of its ecosystem, allowing users to participate in network transaction validation and earn STRK rewards by staking BTC. This initiative marks Starknet's progression towards the "financialization execution layer of Bitcoin." Developer StarkWare believes BTC is "original capital," but its "over HODL" limits its application in Decentralized Finance. To encourage BTC-related activities, the Starknet Foundation plans to allocate 100 million STRK tokens for incentives. Although Starknet emphasizes that users do not relinquish asset custody during the staking process, its reward mechanism (paying STRK) conflicts with the ideology of Bitcoin maximalists. In the next two years, StarkWare's main goal is to leverage its zk-SNARKs technology to provide optimal services for the Bitcoin ecosystem.

Starknet Embraces BTC: Security and DeFi Empowerment

Starknet integrates BTC into its network security mechanism, aiming to unlock the potential of Bitcoin:

• BTC staking enabled: Starknet users can now delegate BTC to the network to validate transactions and earn rewards, whereas previously only its native token STRK could be staked.
• Security and Accomplice: StarkWare emphasizes that BTC staking does not require users to relinquish custody of their assets, thus avoiding trade-offs in security.
• Financialization goal: Eli Ben-Sasson, co-founder and CEO of StarkWare, believes that BTC is "primitive capital," but its use in Decentralized Finance is limited, and Starknet's goal is to become "the financialization layer and execution layer for Bitcoin."
• Institutional Participation: London-based investment firm RE7 is building Bitcoin-denominated yield products on Starknet.

Incentives and Vision: STRK Incentives and zk-SNARKs

The Starknet Foundation is promoting the integration of BTC through substantial incentives and core technology:

• 100 million STRK incentives: The Starknet Foundation plans to use 100 million STRK Tokens to incentivize Bitcoin-related activities on the network to promote its liquidity and usage.
• Controversy over the rewards mechanism: Users who stake BTC will receive STRK (the native token of Starknet) as rewards. This diverges from the philosophy of Bitcoin maximalists who insist that rewards should only be paid in BTC.
• zk-SNARKs: Starknet uses a specific zk-SNARKs system introduced by Eli Ben-Sasson in 2018. Ethereum co-founder Vitalik Buterin has stated that this advanced cryptography may be key to balancing privacy and regulatory compliance.
• Future Focus: Ben-Sasson stated that while they will not leave Ethereum, the main goal for 2025 and 2026 is to "serve Bitcoin in the best way possible."

Current Status and Market Background of STRK Token

• Market Performance: As of Monday, the market cap of STRK is $498 million, with a price of $0.122, down 74% over the past year. The token reached an all-time high of $4.41 within a month after its debut in 2024.
• Industry Trends: Major cryptocurrency exchanges are also connecting customers with lending protocols on Ethereum Layer-2, such as the Morpho protocol on its Base network, which has facilitated nearly 1 billion dollars in loans, demonstrating the immense potential of Layer-2 networks in financialization.

Conclusion

Starknet incorporates Bitcoin into its staking mechanism, representing an important development in the DeFi space, aimed at bringing the massive "dormant capital" of BTC into more vibrant financial activities. Although the STRK rewards mechanism has friction with the purism of some Bitcoin communities, StarkWare is firmly moving towards its goal of becoming the "execution layer" for Bitcoin, leveraging its advanced zk-SNARKs technology. This focus on Bitcoin's scaling and financialization suggests that the BTC ecosystem will experience explosive innovation in the next two years, potentially redefining its role as a core asset in DeFi.

Do you think that Starknet's strategy of using STRK instead of BTC as staking rewards will become the biggest obstacle to attracting Bitcoin maximalists to participate?