Starknet unveiled plans to become the first Layer 2 network to settle transactions on both Bitcoin and Ethereum, marking a major step toward unifying the two largest blockchain ecosystems.
Bridging Bitcoin and Ethereum
Bitcoin is often seen as digital gold but is primarily used for storing value. Starknet intends to change this by introducing scalability, smart contracts, and lower fees to the Bitcoin network. As an L2 solution, Starknet will process transactions off-chain, bundle them into STARK proofs, and then settle them on both Bitcoin and Ethereum.
Overcoming Bitcoin's Challenges
Despite its dominance, Bitcoin faces several limitations that hinder its broader adoption in DeFi. Limited functionality, security risks, and high fees with slow transactions are major challenges that need to be addressed.
Starknet's Plans to Address Issues
Starknet will act as Bitcoin’s execution layer, enabling faster and cheaper transactions. Key measures include Layer 2 scaling, the use of STARK proofs, and smart contracts on Bitcoin. This will allow for the development of staking, lending, and trading applications on Bitcoin.
Starknet is paving the way for a new era for Bitcoin, aiming to make it more functional within the DeFi ecosystem. Plans include integration with Xverse Wallet and launching the BTCFi Season program to expand DeFi opportunities for Bitcoin users.
