Safeheron Discovers Security Flaw in MPC Wallets

MPC wallets are becoming more popular among financial institutions and developers of Web3 apps as a means of securing cryptocurrency assets. This trend may be attributed to the growing concern about the security of cryptocurrency holdings. These wallets are able to perform their intended functions as a result of the production of pieces of a private key that are owned by a number of different signers. In order for a transaction to take place, each fragment must have a certain amount of signatures in order for them to be considered genuine. In contrast to conventional multisig wallets, MPC wallets do not need the addition of any particular smart contracts to the blockchain in order to function properly. Moreover, MPC wallets are able to be blockchain-agnostic, which results in lower gas rates. This is a significant advantage.

Despite the fact that MPC wallets are generally considered to be more secure than single signature wallets, Safeheron discovered a security flaw in MPC wallets when they were used with Starknet-based applications. This flaw was discovered despite the fact that MPC wallets are compatible with Starknet. Some programs have the capability of obtaining a stark key signature and/or an api key signature, which enables them to sidestep the precautions that are imposed on the private keys that are held in MPC wallets. It’s possible that this will lead to illegal operations, such as the placement of orders, the completion of layer 2 transfers, or the cancellation of orders.

The exposure of this security flaw highlights how critical it is for the bitcoin community to continually test and enhance its security procedures. [Citation needed] [Citation needed] Since more and more financial institutions and Web3 app developers rely on MPC wallets to keep their funds secure, it is very essential that any flaws be discovered and repaired in order to prevent any security breaches. This is due to the fact that such vulnerabilities might lead to breaches in security. The exposure of Safeheron ought to serve as a lesson for anybody who uses cryptocurrencies, encouraging them to be vigilant and to put a priority on security in the transactions that they conduct.


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Decentralized Oracle Empiric Network Raised $7M Led by Variant

Decentralized oracle on StarkNet, an Ethereum Layer 2 network (a scaling solution) – Empiric Network has secured $7 million in funding led by Variant.


Empiric Network integrates smart contracts with data from cryptocurrency exchanges and large market makers, connecting them to retrieve or send information.

Unlike traditional centralized oracles that lack data transparency, Empiric Network acts as a decentralized oracle, and users can audit the data aggregated from the blockchain on its own blockchain.

Empiric’s oracle helps communicate data using smart contracts connecting the real world and blockchain. The oracle finds and verifies events and gives this information to the smart contracts on the blockchain.

The funds raised will be used primarily to expand the current talent team.

Other investors include Alameda, CMT, Flow Traders, crypto exchange Gemini, and Polygon co-founder Sandeep Nailwal, among others.

Zero-Knowledge (ZK) sidechain StarkNet helps solve the problems of its native Ethereum environment by bridging decentralized finance (DeFi) metrics such as risk, volatility, and yield metrics onto the platform for a cheaper and faster network. cost and congestion issues.

Karl Oskar Schulz, the co-founder of Empiric Network, said the blockchain oracle is designed to give DeFi the data it needs to really mature and get better.

In like manner, DeFi protocol Morpho Labs has secured $18 million funding, co-led by Andreessen Horowitz (a16z) and Variant.

In 2020, Blockchain monitoring and automation platform PARSIQ has integrated Chainlink price oracles to trigger off-chain actions and trading decisions.

Image source: Shutterstock


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MakerDAO Adds Layer-2 Network StarkNet to Address DAI Transaction Costs

MakerDAO, a major DeFi protocol and the creator of the DAI stablecoin cryptocurrency, announced on Wednesday that it has integrated StarkNet, an Ethereum Layer 2 network (a scaling solution), on its platform.

With the integration, MakerDAO said that StarkNet would enhance the multichain capabilities of its dollar-pegged stablecoin DAI and the related functions of Maker Vaults to reduce transaction costs and improve throughput speed on its platform. Maker Vaults is a core component of the Maker Protocol, which helps to facilitate the generation of Dai stablecoin against locked up collateral.

Ethereum’s higher price gas fees have been a nightmare and have driven more activities and users to other blockchains. MakerDAO stated that the deployment of StarkNet, the zero-knowledge (ZK) side chain, will help address the cost and congestion of its native Ethereum environment by bridging to a cheaper and faster network on this platform.  

The rollout, which is planned to start on April 28, is expected to take place in four phases. The deployment is expected to become fully operational in the third quarter of this year (between July to September) as highlighted in the protocol’s roadmap.

Louis Baudoin, the core unit facilitator at StarkNet engineering, talked about the development and said, “as we see unsustainable gas fees drive more activity and users to a wider variety of blockchains, security challenges that come with bridging will continue to grow.”

He further elaborated: “Projects must move on to Layer-2 to continue to serve users, and MakerDAO is partnering with StarkNet to do exactly that. With this strategy, we are positioned to cement the Maker’s Protocol’s position as the leading decentralised lending protocol in the industry and the status of DAI as the most decentralised, secure stablecoin.”

Unlocking Global Financial Access to All

Founded in 2014 by Danish entrepreneur Rune Christensen, MakerDAO was formed to govern and maintain Dai stablecoin cryptocurrency.

Headquartered in Santa Cruz, California, the decentralised autonomous organization (DAO) is made of the owners of its governance token, MKR, who may vote on changes to certain parameters in its smart contracts to ensure stability Dai whose value is pegged to USD.

Anyone can use MakerDAO platform to open a Vault, lock in collateral such as ETH (Ether), Basic Attention Token (BAT), Wrapped Bitcoin, and USD Coin, and generate Dai as debt against that collateral. The decentralised finance platform enables borrowers to use volatile crypto coins as collateral for loans of stablecoins (called Dai) pegged to the U.S dollar. 

Image source: Shutterstock


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Ethereum at 100,000 TPS: StarkWare Discusses the Future of Layer 2 Scaling

Key Takeaways

  • StarkWare uses Zero-Knowledge Rollups to develop scaling solutions for Ethereum.
  • StarkWare’s STARKs allow scaling to be completely trustless and can be deployed in either Rollup mode or Validium depending on the use case.
  • Layer 2 projects like StarkWare could help Ethereum achieve 100,000 transactions per second with significantly reduced gas costs.

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StarkWare co-founders Eli Ben-Sasson and Uri Kolodny sit down with Crypto Briefing to discuss how their project’s STARK-based technology will bring down the cost of using the Ethereum network.  

What Is StarkWare?

StarkWare is one of several crypto projects that leverages Zero-Knowledge Rollups to help scale Ethereum. Unlike other Layer 2 scaling solutions, it uses ZK-STARK proofs, otherwise known as zero-knowledge, scalable, transparent arguments of knowledge. StarkWare’s President Eli Ben-Sasson and Chief Architect Michael Riabzev co-invented STARKs. 

StarkWare’s has an application-specific scaling solution called StarkEx that uses STARKs to achieve scalability. StarkEx powers several major platforms including the decentralized exchanges dYdX and DeversiFi. Over the past six months, it has settled over $250 billion worth of transactions and with significant gas fee savings for users. 

Starkware is currently developing a multi-app Ethereum Layer 2 solution called StarkNet. The product will let users hold their funds in a single wallet and interact with multiple applications on Layer 2. Additionally, StarkWare intends to launch the current StarkEx platforms as so-called “Layer 3s” on top of StarkNet, making it easier and cheaper for users to interact with these applications. 

STARK-based technology offers several key innovations over existing Ethereum scaling solutions. STARKs offer a way to use Ethereum permissionlessly at a high speed and low cost. STARKs are also the first cryptographic technology that allow proofs to be verified without any form of trusted setup. 

Crypto Briefing caught up with StarkWare co-founders Eli Ben-Sasson and Uri Kolodny to hear about their plans to scale Ethereum on Layer 2, and they discussed how the technology offers security for users because it is completely trustless. “The math that we developed prevents anyone from stealing funds—it’s impossible,” Ben-Sasson said. “We can’t steal funds from our customers even if we wanted to, or even if we were hacked.”

“We can give Darth Vader or the Bogeyman access to our servers, and there’s still no harm that they could inflict on users’ ownership and custody of their assets,” Kolodny added.

StarkWare’s goal is to unlock blockchain technology’s true potential. While cryptocurrencies have attracted more mainstream than ever in recent months, blockchains like Ethereum are constrained by high costs and limited data availability. As a result, most newer users are currently priced out of the network. Other Layer 1 chains increase transaction throughput by running fewer yet more powerful validators. However, this method increases centralization as users need to trust a small set of validators for all transactions on the network. StarkWare is aiming to stay true to Ethereum’s founding principles of decentralization and accessibility through its scaling solutions.

Ethereum mainnet currently handles about 15 transactions per second, and more complex smart contract interactions can cost hundreds of dollars at peak congestion. StarkWare says that StarkNet will reduce gas fees by a factor of 100 to 200, while Ethereum co-founder Vitalik Buterin has previously stated that rollups like StarkNet will help the network achieve 100,000 transactions per second. 

Staying True to Ethereum

StarkWare is currently responsible for proving and sequencing all transactions on StarkEx and StarkNet that are sent to Ethereum for confirmation. While this has some benefits, such as limiting the potential for MEV, it doesn’t fulfill the company’s vision of decentralization. 

By the end of 2022, StarkWare plans to make the sequencing and proving software open to the public, allowing anybody to participate and secure transactions made on StarkNet. Ben-Sasson shared his optimism about the shift to community validation, stating:

“I think it will likely look very much like mining on Ethereum in the early days. You’ll have to get off your couch, learn a little bit, install some things, and run a server. But hopefully, you won’t need to build a facility in Iceland next to some geothermal plant or something. It’s going to be within reach.”

Like many other successful crypto projects, StarkWare will need to have an incentive structure in place to get people engaged with proving and sequencing on StarkNet. Similar to how miners receive block rewards and transaction fees for validating transactions, StarkNet will also incorporate similar monetary incentives. “There will be fees that will go to, among others, the operators, provers, and sequencers, and then beyond that, we’re deliberating on other approaches,” says Ben-Sasson. “It will be a fully decentralized network that will require coordination and governance mechanisms,” added Kolodny. 

Crypto projects often issue tokens to achieve decentralization and add governance mechanisms. In 2021, several popular Ethereum projects such as dYdX, Ethereum Name Service, and ParaSwap launched their own tokens with airdrops for early users. Many Ethereum users have speculated that Layer 2 projects such as StarkWare will also issue tokens to encourage adoption, but Ben-Sasson and Kolodny did not shed any light on whether StarkWare was planning to launch one.

One of the key reasons for Ethereum’s success has been its commitment to decentralization and accessibility. Anyone with a few graphics cards can start mining blocks and validating transactions, and even running a node requires simple hardware. By emulating Ethereum’s accessibility, StarkWare is also refusing to compromise on decentralization as it works toward its vision of a secure and public scaling solution.  

Security and Cost

StarkWare’s STARKs can be deployed in one of two data availability modes: Rollup or Validium. The differences between these two modes highlight the compromise between security and cost in Ethereum scaling. 

In Rollup mode, every transaction or change of state on Layer 2 is “rolled up” together and sent to Ethereum mainnet in a validity proof, meaning that they all benefit from Ethereum’s security. As this method uses more data and thus more block space than Validium, it costs more gas.

On the other hand, Validium does not report every change in the Layer 2 data to Ethereum. Instead, it relies on a data availability committee to confirm they all have the same state, before signing off the transactions along with the Merkle root of the new state. The small compromise in security results in substantial gas savings compared to Rollup mode.

Currently, applications such as dYdX run STARKs in Rollup mode to take advantage of its enhanced security. As the dYdX exchange handles billions of dollars in trading volume, it makes sense to pay for extra security. While Rollup mode currently reduces transaction costs by a factor of 100 to 200, savings that will increase as more people use the network due to gas cost amortization, there is still a linear limit to how much they can scale. It’s with Validium, though, that the true potential of Ethereum scaling can be unleashed. 

Validium uses validity proofs, meaning the network only needs to send a proof confirming the difference between two states back to Ethereum mainnet. For example, a proof could capture every transaction in a one hour period and demonstrate that all of the changes within that period are valid. As such, there is no limit to the number of transactions that can technically be included in the proof.As such, there is technically no limit to the number of transactions that can be included in each proof. “We do not know of an upper bound,” Kolodny remarked, explaining how the concept of Validium scaling blew his mind when he first learned of the details.

Additionally, when more transactions take place between the proof updates to mainnet, the gas cost gets split between more users. In other words, the more users Validium attracts, the cheaper the transaction fees become. 

The NFT-based soccer game Sorare already runs STARKs in Validium mode to finalize transactions. As games are likely to be some of the most gas-intensive protocols on blockchains over the next few years, Validium’s limitless scaling offer huge promise for blockchain gaming. Kolodny said that some game developers have already started to see the potential of the technology. He explained: 

“Gamers are telling us, in a very explicit fashion, ‘for the first time as a developer on the blockchain, I can actually focus on the game I want to build, as opposed to the computational resources I’m constrained by, or by the “gas ceiling” that’s hanging over my head. The question of ‘what was that game we wanted to build on Ethereum’ is not the relevant question; the real question is ‘what was that game that we actually dreamed of.””

StarkWare and Ethereum’s Scalable Future

StarkWare’s application-specific scaling solutions are already proving that STARK-based Layer 2 solutions could be a game-changer for Ethereum and the crypto space at large. StarkEx applications are already settling over six million transactions weekly, while the total value of transactions settled has surpassed $300 billion—orders of magnitude higher than other Ethereum Layer 2s such as the Optimistic Rollup solutions Optimism and Arbitrum. 

Ethereum’s roadmap is geared toward building out Layer 2 to help the network scale (on the completion of Ethereum 2.0, it will also add 64 new chains called shards). Vitalik Buterin has long discussed how Ethereum of the future will leverage ZK-Rollups. Kolodny summed up StarkWare’s ambition to help the blockchain achieve scalability, commenting:

“What we’re doing with validity proofs is making the most succinct use of this public utility—the blockchain—that we are aware of, allowing others to use this resource in a far more effective fashion.”

The next step for StarkWare is to bring StarkEx’s scaling power to its multi-application network, StarkNet. Once launched, StarkNet will unlock more possibilities for scaling, including cross-Layer 2 bridges that immediately make funds available to end users. This should help pave the way for shared liquidity across multiple Ethereum Layer 2 instances, improving efficiency and the cost of capital further than any other Layer 2 scaling solution. 

As the crypto space has grown over the last few years, Ethereum has soared in popularity. However, it’s also faced many well-documented scalability challenges. Thanks to StarkWare, the leading smart contract network may finally have a shot at becoming a truly scalable base layer for Web3.

Disclosure: At the time of writing this feature, the author owned ETH, IMX, and several other cryptocurrencies. 

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StarkWare Launches New Product Offering 100x Ethereum Gas Cuts

Key Takeaways

  • StarkWare’s StarkNet Alpha has launched on mainnet.
  • The product aims to cut Ethereum gas fees by a factor of 100 to 200.
  • A member of the StarkWare team said that users would be able to transfer funds to the Layer 2 solution “within the next few days.”

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StarkNet Alpha, a highly-anticipated Layer 2 scaling solution for Ethereum, has launched its alpha version on mainnet. 

StarkNet Alpha Launches

The competition to scale Ethereum is heating up. 

StarkWare, a company aiming to scale Ethereum using Zero-Knowledge Rollups, announced the launch of StarkNet Alpha Monday, allowing developers to start building and launching applications directly on the Layer 2. 

StarkWare’s current scaling solution, StarkEx, is application specific, forcing users to transfer funds to each application they wish to use. With StarkNet, developers can now deploy smart contracts that are interoperable both with other StarkNet contracts and Ethereum mainnet. This means users can interact with various applications built on StarkNet through a single wallet after sending over funds from Ethereum. 

StarkWare is aiming to offer users significant gas savings while leveraging the security and decentralization of Ethereum. The firm has previously stated that StarkNet can reduce fees by a factor of 100 to 200 when deployed in off-chain Validium mode and offer significant savings through its regular ZK-Rollups.

StarkNet is the first Validity Rollup to deploy, improving on the security of previous Optimistic and ZK-Rollups. StarkNet validates transactions using STARKs—scalable transparent arguments of knowledge, a type of ZK-Rollup based entirely on cryptographic proofs. 

While the alpha version currently only supports smart contract deployment and testing, StarkWare Developer Advocate Henri Lieutaud told listeners in today’s StarkNet Alpha launch community call that users will be able to transfer funds over “within the next few days.”

Although the launch is a significant step, the StarkWare team has also stressed that there is still much more that needs to be done before StarkNet becomes a finished product. The blog post announcing the launch states:

“The “Alpha” label is there for a reason. Expect changes, fixes, and improvements to come. StarkNet Alpha has yet to be audited, and we may delay such an audit till the network matures some more.”

StarkNet Alpha is one of Ethereum’s most anticipated scaling solutions to date, but it has many others to compete with. zkSync and Loopring are two other prominent projects that use ZK-Rollup technology, while Optimistic Rollups like Arbitrum and Optimism have also begun to gain traction in recent weeks. 

Disclosure: At the time of writing, the author owned ETH and several other cryptocurrencies. 

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ZK-Rollups and the Path to Scaling Ethereum

Key Takeaways

  • High gas fees on Ethereum have highlighted the urgent need for scaling solutions.
  • While the scaling solutions of today have seen success, they suffer from problems with composability and decentralization.
  • ZK-Rollups improve on existing Layer 2 networks by offering enhanced interoperability and security.

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As the cost of using Ethereum increases, the need to scale the network has become more apparent than ever. Zero-Knowledge Rollup technology promises to lower gas fees without compromising on decentralization and security. 

Ethereum’s Scalability Issues

High gas fees have become a major problem for Ethereum.

As transaction fees are paid in ETH, the cost of using the network rises when the price of the asset does. ETH is up 460% this year, which means the cost of transactions has also increased by 460% in U.S. dollar terms.

Transaction fees also depend on the level of network congestion. As there is huge demand for Ethereum block space today, gas fees are also high.

The high cost of using the network has priced many users out of DeFi, NFTs, and even participating in DAOs. Many crypto enthusiasts have migrated to other Layer 1 blockchains such as Solana and Avalanche because of Ethereum’s expense.

Ethereum: Median Transaction Gas Price (Source: Glassnode)

Over the last few years, several scaling solutions have been developed to help relieve congestion on Ethereum and reduce the cost of transactions. Polygon launched in 2019 and was arguably the first Ethereum scaling solution to gain significant traction. The network uses a scaling solution called Plasma, which offloads transactions from the main Ethereum blockchain into a dedicated sidechain. Many Ethereum-native DeFi applications such as Curve and Aave have launched on Polygon this year. 

While Polygon has successfully attracted users by offering low fees, it is often criticized for not being a true scaling solution. Polygon uses a Proof-of-Stake consensus mechanism governed by its own set of node validators. This means that it doesn’t use Ethereum mainnet to validate transactions so is generally regarded as less secure and decentralized. There are only 100 validators governing Polygon. According to data from Polygonscan, the top validator address accounts for over 27% of the network. 

Top 25 Polygon Validators by Blocks (Source: Polygonscan)

Over the past year, another type of scaling solution called rollups has generated a buzz in the Ethereum community. Currently, every transaction on Ethereum includes all the computational data needed when interacting with a smart contract. As block space is limited, Ethereum can easily become congested, resulting in slow transaction confirmations and high gas fees. 

Rollups offer a way to outsource computational data and send validity proofs back to Ethereum mainnet. This saves block space and allows for transactions to be bundled together, further reducing the amount of data committed to mainnet. When transactions are bundled together, gas fees are split between many users. Rollups offer users near instant transaction speeds and can reduce fees by a factor of 50 to 200 while maintaining the security and decentralization of Ethereum mainnet. 

What Are Zero-Knowledge Rollups? 

Rollups come in two flavors: Optimistic and Zero-Knowledge. Optimistic Rollups assume that transactions sent back to the base chain are legitimate. Transactions only get rejected if someone watching the chain can prove that they are fraudulent by submitting a fraud proof. In other words, Optimistic Rollups take an “innocent until proven guilty” approach to validating transactions. 

Conversely, Zero-Knowledge Rollups, also known as ZK-Rollups, generate cryptographic proofs that demonstrate transactions are legitimate when sent back to mainnet. Transactions are only accepted on Ethereum after the cryptographic proof is validated. Unlike Optimistic Rollups, ZK-Rollups take a “guilty until proven innocent” approach to validation. 

Currently, Optimistic Rollups have seen the most adoption, thanks in part to the ease of developing applications on them. Optimistic Rollups can support full smart contract functionally straight out of the box, and developers can code applications using Solidity, Ethereum’s native programming language. Data from L2beat shows that the biggest Optimistic Rollup today, Arbitrum, has attracted over $2.5 billion of total value locked in DeFi applications. It hosts many of the most popular DeFi applications on Ethereum. 

However, Optimistic Rollups face a few challenges. Because of their approach to validating transactions, funds sent back to Ethereum mainnet are subject to a dispute period of up to a week. This inconveniences users and breaks composability. 

While Optimistic Rollups have improved on Plasma-based solutions like Polygon, they are generally regarded as inferior to ZK-Rollups. Optimistic Rollups have a dispute period and offer scalability improvements up to a factor of 77. ZK-Rollups have no dispute period, and they offer improvements up to a factor of 500.

However, ZK-Rollups have not yet reached the same level of compatibility as their Optimistic counterparts. Because ZK-Rollups have validity proofs accompanying every transaction, their technology is more difficult to construct. ZK-Rollups have been developed to handle simple tasks like direct transfers and trading. While integrating smart contract functionality is possible, it has proven a lot more difficult. 

As recently as this year, Ethereum co-founder Vitalik Buterin predicted that development of fully composable ZK-Rollups would take several years. However, developers are ahead of schedule. Several ZK-Rollups are getting ready to deploy solutions that are mutually composable and interoperable, even across rollups.

The development of ZK-Rollups will allow for a shared communication framework between Ethereum mainnet and multiple Layer 2 networks, where networks can share liquidity and overcome the biggest adoption challenges Layer 1 blockchains face. ZK-Rollup-based networks will not need to compete for liquidity in order to deliver efficient trading through decentralized exchanges, and will instead be able to work cooperatively to scale Ethereum. 

ZK-Rollups also have another unique feature. Transactions become cheaper as more people use them due to the way fees are calculated for each batch of transactions. The cost to send batch isn’t subject to much variance, so gas costs can be split among more users as more transactions are bundled in a batch. ZK-Rollups can bundle an almost infinite amount of transactions, so gas fees for transactions could be reduced to fractions of pennies with enough users. This feature is called validity proof amortization.

While Ethereum is still facing scalability issues, several developers are already in the process of deploying Layer 2 ZK-Rollup networks, promising full composability and compatibility between smart contracts, other Layer 2 solutions, and the Ethereum Virtual Machine. 

Types of ZK-Rollup

There are currently two different types of ZK-Rollup being utilized in Ethereum scaling solutions. 

The first and most widely used type of ZK-Rollup uses ZK-SNARKs—succinct non-interactive arguments of knowledge. SNARKs were the first type of zero-knowledge proof discovered; the early blockchain project Zcash used them as early as 2016. SNARKs form the majority of ZK-Rollup developer libraries and published code and are regarded as a strong option for Ethereum scaling projects. 

One big drawback of SNARKs is that they require an initial creation event of the keys that are used to create the proofs required for transactions. If the keys in the trusted setup event are not destroyed, they could be used to create new tokens out of thin air or falsify transactions.

The most prominent SNARK-based scaling solution today is the Matter Labs’ zkSync project. Launched in June 2020, zkSync is promising 2,000 transactions per second in its current iteration, with hopes of achieving higher throughput in the future. In May, the platform started working toward smart contract deployment in an EVM-compatible environment with the launch of its zkEVM testnet. 

The main focus of zkSync has been making the transition from Ethereum mainnet as easy as possible. Those wanting to develop on zkEVM can write smart contracts using Solidity, Ethereum’s programming language. Matter Labs recently raised $50 million to aid development of zkSync in its Series B funding round led by Andreessen Horowitz. Additionally, the company has partnered with several Ethereum DeFi blue chips such as Curve Finance, Aave, and 1inch. 

The other type of ZK-Rollup uses STARKs—scalable transparent arguments of knowledge. STARKs offer an advantage over SNARKs as they rely completely on hash functions and do not require a trusted setup. This means that STARKs are theoretically more secure than SNARKs, which has made them a favorite of the Ethereum Foundation. 

StarkWare is the first company to use STARKs to scale Ethereum and is currently the main driving force behind the development of STARK-based technology. StarkWare has created a Turing-complete programming language for STARK-based ZK-Rollups called Cairo. It used Cairo to create its first product, the StarkEx protocol. 

StarkEx is an application-specific scaling solution that is currently being used by several Ethereum projects, including dYdX, Immutable X, Sorare, and DeversiFi. StarkWare is about to release StarkNet, a permissionless ZK-Rollup network that lets developers build and launch applications directly on Layer 2. StarkNet is aiming to become a true, decentralized, multi-app scaling solution. 

StarkEx is planets, StarkNet will be constellations (Source: StarkWare)

ZK-Rollups are about to change the way the crypto community uses Ethereum. As high-speed, low-cost networks like zkSync and StarkNet materialize, transactions on Ethereum mainnet will increasingly be outsourced to Layer 2. This should allow Ethereum to move closer to its vision of becoming a scalable, secure, and decentralized blockchain network. 

Disclosure: At the time of writing this feature, the author owned ETH and several other cryptocurrencies. 

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Ethereum ZK-Rollup Developer StarkWare Raises $50M at $2B Valuation

Key Takeaways

  • StarkWare has raised an additional $50 million from investors, valuing the company at $2 billion.
  • The raise comes weeks before the launch of the highly-anticipated StarkNet Alpha.
  • StarkNet Alpha will allow anyone to deploy smart contracts using StarkWare’s ZK-Rollups.

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ZK-Rollup developer StarkWare has raised $50 million in a Series C funding round that values the firm at $2 billion. The company plans to launch StarkNet Alpha on Ethereum mainnet by the end of November.

StarkWare Increases Valuation

Just weeks before StarkNet Alpha’s mainnet launch, investors are doubling down. 

The ZK-Rollup developer announced the end of its Series C funding round Tuesday after raising $50 million from several existing investors. Sequoia Capital led the round, with investment funds Paradigm, Three Arrows Capital, Alameda Research, and Founders Fund also participating. 

StarkWare uses ZK-Rollups to scale Ethereum. ZK-Rollups bundle transactions off-chain and create ZK-SNARKs, which get submitted to the base chain. They allow for faster transactions with significantly reduced gas fees. Rollup technology currently comes in two flavors—ZK and Optimistic. Optimistic Rollups such as Arbitrum and Optimism rely on trust between parties, resulting in a challenge period where anyone can dispute the legitimacy of a transaction. This means it can take up to a week for users to transfer funds back to Ethereum mainnet. However, ZK-Rollups submit proofs to the mainnet continuously, allowing users to transfer funds back instantly. 

Currently, StarkWare has integrated StarkEx, its ZK-Rollup scaling engine, into several crypto projects such as the decentralized exchange dYdX and the fantasy soccer NFT platform Sorare. However, with the launch of StarkNet Alpha planned later this month, developers will be able to independently launch smart contracts on the network, opening up the scaling technology to whoever wants to build on it. 

As gas fees and congestion on Ethereum show no signs of decreasing, competition for effective scaling solutions is heating up. In September, Enya and OMG Network launched an Optimistic Rollup solution called Boba Network, aiming to reduce the challenge period time and streamline withdrawals. 

Earlier today, meanwhile, Layer 2 Polygon unveiled its own ZK-Rollup called Miden, developed under Polygon’s $1 billion fund allocated to ZK-based projects. Miden will compete with existing ZK-Rollups such as zkSync, Loopring, and StarkWare’s upcoming StarkNet to provide scaling solutions for Ethereum dApps. 

Disclosure: At the time of writing this feature, the author owned ETH and several other cryptocurrencies. 

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Ethereum Layer 2 Promising 100x Gas Cuts Live by November

Key Takeaways

  • StarkNet is set to go live in November.
  • StarkNet is a Layer 2 solution built to scale Ethereum and reduce gas fees.
  • As a ZK-Rollup solution, StarkNet will improve on pain points in existing Optimistic Rollup Layer 2s.

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StarkNet, an Ethereum Layer 2 scaling solution utilizing Zero-Knowledge Rollups, is set to launch in November. Testing shows a 100x to 200x reduction of gas fees for end users.

StarkNet Set to Scale Ethereum

The competition for Ethereum scaling solutions is heating up.

StarkWare, the developer behind StarkNet, has announced plans for an Ethereum mainnet launch no later than November. StarkNet aims to scale Ethereum, reducing congestion on the network while lowering the gas fees for transactions.

StarkNet is already being used to help scale transactions on several Ethereum dApps, including perpetual contracts on dYdX, spot trading and payments on DeversiFi, and NFTs on Immutable X and Sorare. StarkWare said that gas fees had seen a reduction by a factor of 100 to 200 when deployed in off-chain Validium mode and substantial gas savings for standard Zero-Knowledge Rollups.

When StarkNet Alpha goes live on Ethereum mainnet, it will initially only support permissioned smart contract deployment to ensure that everything is working as it should be. More complex features will be added at a later date once the developers are confident with deployment. 

Compared to other Ethereum scaling solutions such as Optimism and Arbitrum, which use Optimistic Rollups, StarkNet uses a specialized type of zero-knowledge (ZK) Rollup called STARKs (succinct transparent arguments of knowledge).

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With STARKs, transactions can be settled without needing a trusted setup such as a multiparty ceremony. This preserves Layer 1 security and decentralization while allowing for permissionless interactions. The result is cheap, scalable transactions that don’t compromise on the security and decentralization of Ethereum. 

The biggest benefit of Zero-Knowledge Rollups is that they allow for much faster withdrawals than Optimistic Rollups. ZK-Rollups do not require a challenge period, as the validity proofs are already verified. In contrast, it can take up to a week for users to transfer funds from Optimistic Rollups to Ethereum mainnet. 

Ethereum co-founder Vitalik Buterin has frequently pushed for the adoption of rollups for scaling Ethereum. In an interview on the Lex Friedman podcast in June, Buterin predicted that while Optimistic Rollups will play a role in the short term, ZK-Rollups will make up most of the network activity on Ethereum in the long-term future. 

Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies. 

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