Ethereum-based layer 2 network Starknet has launched its new Bitcoin-backed asset, strkBTC. This developed asset aims to offer confidential transactions and protected balances in the decentralized finance (DeFi) ecosystem. StrkBTC was introduced as part of Starknet’s vision to protect user privacy while pulling Bitcoin liquidity onto its scalable layer two infrastructure.
Functioning and technical structure of strkBTC
strkBTC was developed as a digital asset produced on Starknet in exchange for Bitcoin deposits. Printing operations occur completely deterministically; That is, new tokens are produced only against verified Bitcoin collateral and at a one-to-one ratio. Thus, strict control is ensured against arbitrar practices and the aim is to maintain stable value in the market.
Privacy modes and technological innovations
strkBTC aims to ensure privacy without the need for external jamming tools with zk-STARK cryptography integrated at the protocol level. This asset can be used in two different modes. In protected mode, users can keep both their balance and transaction details private. Thanks to zero-knowledge proofs, transactions can be verified while the details remain hidden from the public. In open mode, the asset works with standard ERC-20 token logic; In this case, transfer and address information can be monitored transparently. Users can switch between privacy or transparency as needed.
This flexible approach aims to bring advantages in terms of both compliance with regulations and personal privacy for those who operate in the DeFi environment.
Full integration with the DeFi ecosystem
Another striking feature of strkBTC is that it provides full compatibility with decentralized finance applications on Starknet, although it offers the advantage of privacy. Users can use strkBTC on lending platforms, staking protocols, and decentralized exchanges. In this way, it is possible to access DeFi products without disclosing portfolio or trading strategies. StrkBTC emphasizes both privacy and interoperability, unlike most Bitcoin assets on the market to date.
Compliance and regulatory response
Developers deployed the Viewing Key system to counter regulatory audit requirements. With this mechanism, users can provide an encrypted key to certain third parties (for example, auditors, institutions or public authorities) and ensure transparent review of their transaction history. In other words, instead of full anonymity, selective disclosure is offered upon request.
Development plan and next steps
It is stated that strkBTC is planned to be available on the main network in the first quarter of 2026. In the future stages, direct confidential swap transactions with strkBTC and further decentralization of the bridge infrastructure are aimed.
As part of its BTCFi growth strategy, the Starknet Foundation is trying to attract Bitcoin capital to its layer 2 network with native Bitcoin staking applications and a 100 million STRK incentive program. It is emphasized that the StrkBTC initiative is an important starting point in this context.
