Starknet Launches Bitcoin Staking with $12M STRK Incentive

Starknet has introduced what it describes as the first trustless way for Bitcoin to be staked on a Layer 2 network, allowing holders to stake their BTC without relinquishing custody while earning rewards and contributing to network security. The staking mechanism cleverly avoids altering Bitcoin’s base layer, which utilizes a Proof-of-Work consensus mechanism and does not natively support staking. Instead, Starknet’s solution uses wrapped versions of BTC including WBTC, tBTC, Liquid Bitcoin, and SolvBTC, which can be delegated on Starknet and participate in the network’s consensus alongside the STRK token following an on-chain vote.

The technical implementation leverages zk-STARK cryptography to secure tokenized holdings, providing post-quantum security that enhances the overall safety of the staking process. StarkWare CEO and co-founder Eli Ben-Sasson emphasized the significance of this development, stating: “Last year, I said Starknet would unleash Bitcoin’s power. Today we’re making good on that promise… bringing value to bitcoin holders with no loss in trust. For me, it’s two dreams converging. The ZK-tech that I willed into existence, merging with Satoshi’s vision that you own your life, now you get real yield, real consensus powered by your own bitcoin.”

The Starknet Foundation has allocated 100 million STRK tokens, valued at approximately $12 million, to support the growing BTCFi ecosystem on Starknet. This substantial incentive program focuses on making Bitcoin borrowing more accessible and cost-effective while supporting various yield strategies. The funding aims to position Starknet as the premier platform for using Bitcoin as collateral in decentralized finance applications, potentially unlocking billions of dollars in currently idle Bitcoin value.

Ben-Sasson elaborated on the strategic thinking behind the initiative, noting: “Bitcoin is the best form of collateral. Everyone from Saylor to Wall Street now realizes this, but I want you to be able to borrow against it and then invest what you’re borrowing.” This perspective highlights the growing recognition of Bitcoin’s potential as collateral in financial markets and Starknet’s ambition to capture this emerging market segment through its Layer 2 infrastructure.

Digital asset investment firm Re7 Capital has announced plans to launch a BTC-denominated yield product on Starknet in October, signaling growing institutional interest in the network’s Bitcoin capabilities. The strategy is designed to generate returns directly in BTC through a sophisticated combination of off-chain derivatives trading, curated DeFi yield strategies, and participation in BTC staking on Starknet. The fund will also be available in a tokenized format, making it accessible beyond professional investors to a broader range of market participants.

The involvement of Re7 Capital, described as having “a strong on-chain track record,” represents a significant validation of Starknet’s technical capabilities and market positioning. As noted in the announcement, “When an investment firm with a strong on-chain track record of Re7’s calibre brings its bitcoin product to Starknet, it’s a clear declaration of the network’s great promise.” This institutional participation underscores the maturation of the BTCFi ecosystem and suggests growing confidence in Starknet’s ability to support sophisticated financial products.

The March 2025 product rollouts represent the culmination of a development path that began with Starknet’s June 2024 announcement that it would scale Bitcoin. As the project’s statement explained: “Bitcoin doesn’t change. But what you can do with it is just what you did. From the June 2024 announcement that Starknet would scale Bitcoin to the product rollouts of March 2025, the path has been clear. BTCFi on Starknet is where that momentum now leads.” This progression demonstrates a deliberate strategy to expand Bitcoin’s functionality while respecting its core design principles.

The integration of Bitcoin staking and BTCFi capabilities on Starknet represents a significant milestone in the evolution of both Bitcoin and Layer 2 technologies. By enabling Bitcoin holders to participate in network security and earn yield without compromising custody or altering Bitcoin’s fundamental properties, Starknet has created a bridge between Bitcoin’s store-of-value narrative and the growing demand for yield-generating opportunities in the cryptocurrency space. This development potentially opens new use cases for the billions of dollars in Bitcoin holdings that have traditionally remained dormant in wallets.