Starknet Launches Bitcoin Staking with 100M STRK Incentives

Starknet began allowing users to stake Bitcoin on Tuesday, fundamentally changing how the Ethereum layer-2 network approaches security and user participation. According to StarkWare, the network’s developers, users can now participate in transaction validation by delegating Bitcoin to earn rewards paid in Starknet’s native STRK token. This represents a significant expansion from the previous system where users could only stake STRK tokens directly.

The innovation lies in Starknet’s custody-preserving approach. Unlike many staking mechanisms that require users to relinquish control of their assets, StarkWare emphasized that Bitcoin staking on Starknet does not require users to give up custody, arguing that this approach maintains security without tradeoffs. This development positions Bitcoin as a core part of Starknet’s ecosystem, transforming the world’s largest cryptocurrency from a passive store of value into an active participant in network security.

The Starknet Foundation is deploying substantial resources to drive Bitcoin adoption on the network, allocating 100 million STRK tokens specifically to encourage Bitcoin-related activity. This massive incentive program underscores the strategic importance of Bitcoin integration to Starknet’s future development roadmap. The foundation’s commitment represents one of the largest dedicated Bitcoin incentive programs in the layer-2 ecosystem.

Institutional interest is already materializing, with London-based investment firm RE7 building a Bitcoin-denominated yield product on Starknet. This development suggests growing confidence in Starknet’s ability to serve as a platform for sophisticated Bitcoin financial products. The move comes amid broader industry trends, with crypto exchange Coinbase recently connecting its customers with lending protocol Morpho on its Ethereum layer-2 network Base, where nearly $1 billion worth of loans have originated according to Dune analytics.

StarkWare co-founder and CEO Eli Ben-Sasson articulated a clear vision for Bitcoin’s future on Starknet, telling Decrypt that Bitcoin’s primary flaw is that it’s being ‘too much hodled’ – using the popular cryptocurrency community misspelling of ‘hold’ that has become a rallying cry for long-term investors. Ben-Sasson described Bitcoin as ‘pristine capital’ but noted its limited use within decentralized finance (DeFi) due to centralized exchanges historically offering superior scale, user experience, and lower costs.

As Bitcoin’s use in borrowing becomes more commonplace, Ben-Sasson believes Starknet is ‘perfectly aligned to make Starknet the financialization layer and the execution layer for Bitcoin,’ describing this scenario as potentially ‘winner-takes-most.’ This strategic positioning acknowledges the growing demand for Bitcoin utility beyond simple storage and speculation, particularly as the cryptocurrency matures and institutional adoption increases.

Starknet’s technical foundation rests on a specific zero-knowledge proof system that Ben-Sasson introduced in 2018. Ethereum co-founder Vitalik Buterin has previously noted that this form of advanced cryptography could be crucial for balancing privacy against regulatory compliance. Ben-Sasson revealed that he’s been interested in using zero-knowledge proofs to scale Bitcoin since discovering it in 2013, though Ethereum initially provided the easiest blockchain to start with.

The STRK token itself has experienced significant market volatility since its debut. According to crypto data provider CoinGecko, STRK had a market capitalization of $498 million as of Monday, with its price falling 74% over the past year to $0.122. The token reached an all-time high of $4.41 in 2024, just one month after its initial launch. Starknet’s approach to Bitcoin staking rewards in STRK rather than Bitcoin distinguishes it from other projects like GOAT Network, which pay rewards primarily in Bitcoin while still using native tokens for additional incentives.

Starknet’s Bitcoin integration represents a deliberate strategic shift for the Israeli-based company. Last June, StarkWare announced it was raising $1 million to enter the Bitcoin-scaling space and expressed support for restoring OP_CAT, a command within Bitcoin’s programming language that some believe could unlock significant innovation. This move positions Starknet at the intersection of two major cryptocurrency ecosystems.

Ben-Sasson made the company’s priorities clear, stating: ‘I think there’s a much higher need for this stuff on the Bitcoin side. We’re not leaving Ethereum, but definitely our main goal in 2025 and 2026 is to service Bitcoin the best possible way that we can.’ This balanced approach allows Starknet to maintain its Ethereum compatibility while aggressively pursuing Bitcoin scaling opportunities, leveraging zero-knowledge proof technology that Ben-Sasson has championed for over a decade.