Over 7,000 decentralized applications (dapps) are currently running on the Ethereum (ETH) network. However, the Ethereum network was not originally designed for such a workload. Ethereum dapps have suffered from on-chain scalability issues, which have slowed transaction speeds and skyrocketed gas fees.
Layer 2 scaling solutions are deployed to address these issues. Starkware is one of the most promising.
What is Starkware?
StarkWare, founded in January 2018 by Eli Ben-Sasson, Uri Kolodny, Michael Riabzev and Alessandro Chiesa, is a developer of Layer 2 scaling services that enable high throughput and low transaction fees on blockchains from layer 1.
Layer 1 (L1) is the base protocol (the Ethereum blockchain), while Layer 2 (L2) is any protocol built on top of Ethereum.
In addition to improving scalability, Starkware is also bringing increased privacy to Ethereum through its STARK technology, which includes products like StarkEx and StarkNet.
StarkEx is a Layer 2 scaling engine built with Cairo and SHARP that helps scale crypto-asset exchanges and non-fungible token (NFT) platforms via ZK-Rollups (Zero -Knowledge Rollups). It can handle spot and derivative transactions, payments and NFT minting. DiversiFi, dYdX, So rare, and X immutable have all deployed StarkEx on their platforms.
According to the Starkware website, StarkEx has $1.1 billion in total value locked (TVL), settling $426 billion in transactions and facilitating approximately 123 million transactions. These transactions were processed for a nominal fee.
StarkNet is a decentralized, trustless Layer 2 STARK-based ZK-Rollup that allows developers to create and run smart contracts on its platform. Decentralized applications can be deployed independently on StarkNet just like on Ethereum for extremely low fees with increased speed and high throughput. StarkNet also aims to be interoperable with the Ethereum mainchain and other layer 2 solutions, enabling liquidity for the general layer 2 crypto market.
Beyond scalability, the technology behind Starkware products aims to maintain security even when quantum computing becomes mainstream. This addresses concerns raised about the security of public-key cryptography used in many crypto-assets in the face of an attack from the immense power of quantum computing. Starkware uses lightweight cryptographic hash functions, which makes its products fast and quantum-secure.
How does Starkware work?
To understand how Starkware works, we must first explore how the technology behind its two main products, namely StarkEx and StarkNet, works.
StarkEx and StarkNet are based on ZK-STARK (Zero-Knowledge Scalable Transparent Arguments of Knowledge) and ZK-Rollups.
ZK-STARKs allows users to publicly share and prove the authenticity of a data calculation without revealing the data content. It’s like allowing third parties to verify your banking information without revealing it to them. ZK-STARKs are an improvement on so-called zk-snarks, since the latter require a trusted third party to set up the proof system, thus leaving the possibility for this trusted third party to compromise the confidentiality of the system.
ZK-STARKs, on the other hand, remove the need for a trusted third party to set up the proof system, allowing data sharing to be decentralized and trustless.
One of its benefits for blockchain systems includes improved scalability by taking smart contract computation and storage off-chain for the STARK system to generate evidence with lighter cryptographic hash functions. These proofs are then sent on-chain to the blockchain network for verification, increasing transaction speed and reducing costs for users.
ZK-Rollups are layer 2 scaling solutions used by StarkEx to increase throughput and speed on the Ethereum network. ZK-Rollups aggregate/bundle hundreds of off-chain transactions into a single transaction and generate a SNARK (succinct non-interactive argument of knowledge) proof that is posted to the mainchain for verification. This reduces the number of transactions being processed on the Ethereum mainchain and, in turn, reduces gas fees.
However, the ZK-Rollup used on Starkware generates a STARK proof instead of SNARK which is sent to the mainchain for validation.
How is Starkware different from other Ethereum Layer 2 scaling solutions?
Starkware’s difference from other Ethereum Layer 2 solutions can be seen in the combination of ZK-Rollups and its coined ZK-STARKs.
The three Layer 2 scaling solutions used by most Web 3 platforms are Plasma, Optimistic Rollups, and ZK-Rollups. Both Plasma and Optimistic Rollups scale the Ethereum network using evidence of fraud. However, evidence of fraud usually takes a long time to confirm user withdrawal requests. Their computation is complex and comes with large data sizes.
ZK-Rollups – zk-SNARKs in this case – meet this challenge, thanks to validity proofs that allow instant withdrawals and reduce data size. Although this has a downside.
So far, typical Layer 2 ZK-Rollups are not able to execute smart contracts, which facilitates decentralized applications. However, the emergence of Starkware’s STARK is beginning to change the outlook.
ZK-SNARKs reduce data size and use elliptic curve cryptography for privacy, Starkware solutions use cryptographic hash functions, making them quantum-resistant and trustless. But his STARK-based proofs usually have larger proof sizes, making them more expensive to verify.
Who already uses Starkware?
Many notable dapps are already using StarkWare’s scaling solutions to provide a better product for their users.
DiversiFi: a decentralized exchange that allows you to invest, trade and trade tokens on Ethereum without paying expensive gas fees demanded by the network. DiversiFi uses the innovative StarkEx scaling solution to deliver high-speed, low-latency, gas-free self-service transactions.
dYdX: one of the most popular decentralized exchanges (DEX) in the crypto market, offering autonomous derivatives trading. dYdX offers layer 2 perpetual smart contracts through the StarkEx scalability engine, allowing traders to benefit from lower gas and trading fees, more trading pairs, lower minimum trade size , instant trade settlements, higher leverage and reduced liquidation penalties.
So rare: a fantasy football NFT gaming platform on the Ethereum network that allows users to buy, sell, trade and manage a virtual football team with digital players. StarkEx enables instant deals, rewards, claims, and transfers on Sorare while lowering fuel costs.
To learn more about how to reduce Ethereum gas fees using an L2 solution, check out the first piece of our Layer 2 scaling solution covering Arbitrum.
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