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Ethereum is the largest blockchain network in terms of the number of users; however, being monolithic (where consensus, execution, and data availability happen on-chain) is the biggest hindrance to scaling. Multiple scaling solutions have been created, and the most popular ones are optimistic rollups and zero-knowledge (ZK) rollups.
How it works
STARKs are cryptographic proofs that are transparent and scalable. These STARKs use lightweight cryptographic hash functions, making them fast and post-quantum secure. STARKs are created to provide trustless verification of computational integrity.
StarkWare’s vision is to provide future-proof systems by developing products such as StarkNet, and StarkEx to fit varying needs.
StarkNet is a permissionless decentralized STARK-based ZK-rollup that operates on top of the Ethereum blockchain. StarkNet moves the transaction computations off-chain but stores the transaction data on the Ethereum main chain. However, this rollup still benefits from Ethereum’s composability and security.
The data sent to Ethereum has cryptographic proof that can be used to prove the validity of the transactions. Only after batching and executing transactions are they posted on Ethereum and proved valid.
Unlike Optimistic rollups, ZK-rollups do not have a dispute period for transactions as they can be verified as valid without proof, making ZK-rollups faster. Even though there are tons of ZK-Rollups out there, StarkNet is unique as it is EVM compatible.
StarkNet uses Cairo as its programming language for executions and deployments. EVM compatibility is through a Solidity-to-Cairo compiler or programming decentralized apps in Cairo. StarkNet is fully composable with general smart contracts. Decentralized apps can coordinate, interconnect and build on top of each other.
What can you achieve with StarkNet?
Nodes, developers, and users can do everything you expect in a typical L2 rollup solution on StarkNet.
- As a developer, you can build applications, implement your business logic and deploy them on StarkNet.
- StarkNet participants and nodes are crypto-economically incentivized to ensure that the network operates fairly and efficiently.
- Regular users can send transactions to the StarkNet network similar to what they do on Ethereum.
All transactions on StarkNet are batched periodically, their validity proven in a STARK proof and then verified by Ethereum. The computational effort required to verify STARK proofs is small compared to the computation proven, which will scale Ethereum to higher bits.
All StarkNet state transitions will be STARK-proven, and Ethereum will only accept the valid ones. All the data needed to reconstruct a full StarkNet state will be published on-chain. It is also worth noting that anyone can run a StarkNet node.
StarkWare and dYdX (case study)
dYdX is a decentralized exchange for spot and margin trading, lending, and borrowing. StarkWare announced the partnership with dYdX a while back. Members from both teams collaborated and enabled dYdX’s perpetual contracts trading platform to run on StarkEx.
StarkEx is an Ethereum Layer 2 scalability solution based on validity proofs. This solution can operate either in Validium or ZK-rollup data-availability modes. Developers can build on top of StarkEx, define their business logic, and then run the app on StarkEx. This system has an on-chain and off-chain component. The off-chain component is tasked with holding the state of orders, executing transactions, and transferring the state updates to the on-chain component.
The on-chain component enforces the validity of state transition as it holds the state commitments and the system assets. StarkEx also comes in handy during spot trading, where it manages on-chain accounts that are useful on Layer 1 for DeFi pooling and dApp interoperability.
StarkEx has various components:
- Application (system operator). An off-chain component that receives users’ transactions and defines the business logic and execution order. The application then passes the transaction to StarkEx Service.
- StarkEx Service. This is an off-chain component that is tasked with coordination and batching. It then updates the state of the system according to the operations.
- SHARP. A shared proving service for Cairo programs. To attest to the validity of Cairo executions, SHARP receives proof requests from applications and outputs proof.
- STARK Verifier. An on-chain component that receives state updates validity proofs and verifies that those proofs are valid.
- StarkEx Contract. The contract has two functions. The first is updating the system’s state after the validity conditions are met. The second is managing withdrawals and deposits from and to StarkEx in a non-custodial manner. A user can withdraw funds in any scenario.
StarkEx and Immutable X-Gods Unchained (case study)
Gods Unchained was Immutable X’s first blockchain game to be embraced by many. However, as users and demand rose, so did the transaction fees. Immutable X was forced to do gas optimizations but still spent about $6 million in gas fees. A solution that could handle the trading of low-value assets and minting was needed. StarkEx was the solution that Immutable X was seeking as it enabled minting of NFTs directly on Layer 2 and fast withdrawals.
StarkWare was founded in 2018 by Eli Ben-Sasson, Uri Kolodny, Michael Riabzev, and Alessandro Chiesa. The company has undergone several equity rounds, raising $111 million, and attracted Venture Capitalists in the crypto space. The Ethereum Foundation also granted the company $12 million to help scale Ethereum.
Eli Ben-Sasson — Co-Founder, President
Eli is the Chair of the Board of Directors. His primary areas of research are cryptographic and zero-knowledge proofs of computational integrity. He received his Ph.D. in Theoretical Computer Science from the Hebrew University in 2001. Eli is the co-inventor of protocols such as STARK, FRI, and Zerocash.
Uri Kolodny — Co-Founder, CEO
Uri is a serial entrepreneur who holds a B.Sc. in Computer Science from Hebrew University. He also holds an MBA from MIT Sloan and co-founded technology companies such as Mondria and OmniGuide.
Michael Riabzev — Co-Founder
Michael is a software developer with a Ph.D. in Computer Science from the Technion Israel Institute for Technology. The focus of his Ph.D. was the development of practical systems for computational integrity in zero-knowledge, culminating in the development and implementation of the zk-STARK system.
Alessandro Chiesa — Co-Founder
Chiesa is a faculty member in Computer Science at UC Berkeley whose research is centered around cryptography, complexity theory, and security. He is an author of libsnark and the Zerocash protocol’s co-inventor.
StarkWare is competing with other major players such as Optimism and zkSync, and we cannot ignore The Scalability Wars, but at the end of it all, Ethereum users will be the winners. A close look at every scaling solution shows that they all come with their strengths, weaknesses, and trade-offs. With StarkWare’s STARKs, scaling is completely trustless and can be deployed in either Validium or Rollup mode, depending on the use case.