Is the ecological value of StarkNet overestimated?

Author: Kyle Liu, Investment Manager at Bing Ventures

Introduction: StarkNet is at the forefront of technology with its unique technical features, such as zk-STARK technology and a custom development environment. This gives StarkNet advantages in handling high throughput, low costs, and privacy protection. Therefore, StarkNet is expected to become a leader among Layer 2 solutions and attract more developers and users.

StarkNet is a Layer 2 solution designed to alleviate network congestion by increasing the throughput of the Ethereum network and reducing transaction fees. It utilizes zero-knowledge proof (zk-STARK) technology to achieve scalability and privacy. With StarkNet, developers can build, deploy, and run high-performance smart contracts in a decentralized environment without worrying about high transaction costs or the security of smart contracts, especially in scenarios that require high performance and low transaction fees, such as DeFi, NFTs, and GameFi.

The StarkNet ecosystem offers developers many interesting development directions. By leveraging the flexibility and advanced features of the Cairo language, developers can create innovative applications. Additionally, developers can take advantage of StarkNet's high throughput transaction capabilities and customization features to achieve high-performance and personalized application development. Meanwhile, the ZK-EVM projects based on StarkNet provide developers with more options, allowing them to deploy and run smart contracts in a more secure and efficient environment.

Advantages of a Custom Development Environment

StarkNet employs unique technical features such as zk-STARK technology, the custom development language Cairo, and the Cairo-VM virtual machine. The custom development environment brings higher performance, better security, and richer functionality. Developers can utilize the Cairo programming language and STARKs verification mechanism to build secure and reliable smart contracts while enjoying high-performance transaction processing. Although there may be some friction, this friction is temporary, and developers can gradually adapt and benefit from it.

StarkNet uses a custom development language, Cairo, and the Cairo-VM, which differs from other Layer 2 solutions that borrow components from Ethereum. Cairo is a custom programming language for the StarkWare ecosystem. The StarkWare ecosystem is optimized for itself, while other Layer 2 projects are more focused on optimizing for Ethereum. Although this choice sacrifices the network effects of being fully compatible with Ethereum, it is hard to argue against the rationality of this design choice, especially now that the author has clearly seen that Cairo's own network effects have reached "escape velocity."

In future developments, these technical characteristics and innovations will bring potential value. As the importance of privacy protection and data security grows, the powerful privacy protection mechanisms offered by StarkNet will attract more users and applications. At the same time, StarkNet's scalability capabilities and decentralized features make it an effective solution for addressing high throughput and security needs. As the blockchain ecosystem evolves and demand increases, StarkNet's technical characteristics in providing high performance, security, and privacy protection will endow it with significant potential value and help it stand out in competition.

Source: Bing Ventures

Projects Under Development in the Ecosystem

At the core of StarkNet's application ecosystem is the construction of high-performance, low-cost, privacy-protecting decentralized applications based on zero-knowledge proof technology. StarkNet's advantages lie in its ability to provide high throughput, low transaction costs, and privacy protection, making it widely applicable in areas such as decentralized exchanges and NFT markets. Here are some noteworthy StarkNet ecosystem projects:

DeFi:

JediSwap is a permissionless and composable AMM protocol built by the Mesh Finance community. The project has launched on the StarkNet mainnet, with a current total locked value (TVL) of approximately $5 million. JediSwap received a grant of 150,000 STARK. JediSwap is highly innovative on StarkNet, providing a more flexible and decentralized trading experience as a permissionless and composable AMM protocol. Since it has launched and attracted a certain TVL, it has potential market influence and contributes to the DeFi applications in the StarkNet ecosystem.

Morphine is a DeFi lending protocol with primary use cases including passive and active lending. The protocol allows users to provide liquidity and earn yields through basic and advanced strategies, offering active lending features that enable users to borrow up to 15 times their collateral and access LSD, LP, ERC4626, and set automation. Morphine is highly innovative on StarkNet, providing diverse lending strategies and features. Its flexibility and automation appeal to DeFi users. The project has the potential to make an impact in the market and drive the development of the StarkNet ecosystem.

[Orbiter Finance](https://www.rootdata.com/zh/Projects/detail/Orbiter Finance?k=MjExMQ==) is a cross-chain solution whose infrastructure, Orbiter Bridge, allows for asset transfers between various Rollups such as StarkNet and zkSync. Orbiter Finance is also developing zkProver, a middleware that aggregates transactions using zero-knowledge technology to increase TPS and cross-Rollup transaction volume. Orbiter Finance's cross-chain solution is innovative on StarkNet and facilitates asset transfers between StarkNet and other Rollups. The project's development contributes to building multi-chain interoperability and scalability, benefiting StarkNet's growth.

DeversiFi: DeversiFi is a decentralized exchange aimed at achieving faster and safer trading through StarkNet while maintaining a connection to Ethereum.

NFT/Game/Metaverse:

Realms (Bibliotheca DAO) was initially a Loot derivative project and is now a large-scale multiplayer on-chain game on StarkNet. Realms has received a rating from the StarkNet Foundation, totaling 150,000 STARK. As a multiplayer on-chain game, Realms offers an innovative gaming experience on StarkNet. Its rating and STARK rewards demonstrate its importance and contribution to the StarkNet ecosystem.

RYG.Labs is an NFT creative agency building interactive dynamic NFTs and providing NFT marketing solutions. RYG.Labs is innovatively constructing interactive dynamic NFTs on StarkNet and offering NFT marketing solutions, which is notable in the NFT field. Its presence on StarkNet provides more options for the NFT market and promotes the development of the StarkNet ecosystem.

The Ninth is a metaverse game on StarkNet, featuring gameplay elements such as land purchasing, upgrading, and staking. As a metaverse game based on StarkNet, The Ninth offers diverse gameplay and interactive experiences. Its innovations in the gaming and metaverse fields have potential market influence and contribute to the development of the StarkNet ecosystem.

Other Web3 Innovations

Argent X: Argent launched the first wallet supporting StarkNet, utilizing StarkNet's native account abstraction to achieve multi-signature and no seed phrase, while also enabling lower transaction fees and faster confirmation times.

Bravvos: Aims to provide a seamless Web2.0 user experience, available on iOS, Android, and various browsers;

Carbonable is a carbon tracking system based on StarkNet that has completed seed round financing and attracted investments from several venture capital firms. Carbonable's carbon tracking system is innovative on StarkNet and can help track and manage carbon emissions. The project's development is significant for environmental protection and sustainability, playing a driving role in the StarkNet ecosystem.

[Dolven Labs](https://www.rootdata.com/zh/Projects/detail/Dolven Labs?k=NDA2MA==) is a DAO-based ecosystem Catalyst and a permissionless DeFi tool center within the StarkNet ecosystem. They have also built projects like Starknet Social and StarkGuardians. Dolven Labs plays an important role in the StarkNet ecosystem, providing permissionless DeFi tools and other related projects. Its innovations and contributions in fields such as DeFi and social networks positively impact StarkNet's development.

Herodotus is building a cross-chain data access solution for storage proofs, allowing smart contracts on StarkNet to access current and historical Ethereum on-chain data without trust. Herodotus's cross-chain data access solution is significant for achieving interoperability between StarkNet and Ethereum. The project's development helps expand StarkNet's capabilities and provides broader data access for the blockchain ecosystem.

Overall, the key to the success of StarkNet's application ecosystem lies in its technical advantages, developer support, application scenarios, and ecosystem support. The development of StarkNet also requires broad community support. If StarkNet can attract more developers, investors, and users, and gain more attention and recognition, its ecosystem potential will be even greater.

Source: StarkNet

Growing Pains and Prospects

One of the biggest challenges and bottlenecks StarkNet's application ecosystem may face in the future is competition, as many other Layer 2 scaling solutions are also striving to develop and may even have advantages over StarkNet in certain aspects. Therefore, continuous technological innovation and improvement are necessary to attract more developers and users. Another potential issue is the network effect; since StarkNet is a newer technology, it requires a large number of developers and users to join in order to establish a strong network effect, necessitating effective marketing and promotion.

Another challenge facing StarkNet is ensuring the sustainability of the ecosystem. With the emergence of competitors and technological advancements, StarkNet needs to continuously innovate and provide attractive features to maintain user loyalty and appeal. At the same time, StarkNet must establish solid relationships with developers and partners to promote the development and growth of the ecosystem. Other challenges include:

1. The adoption of the Cairo language limits developer participation: Since Cairo is a completely new language, developers need to learn and adapt to this new programming language. This may present an additional learning curve for many developers, limiting their ability to participate in the StarkNet ecosystem. In contrast, Ethereum's EVM has a broader developer community, making it easier for developers to get started and quickly build applications.
2. High throughput and low transaction costs only have advantages in specific use cases: Although StarkNet has demonstrated advantages in high throughput and low transaction costs in specific use cases, this does not apply to all application scenarios. For certain applications, especially those that do not require processing a large number of transactions, these advantages may not be significant. Therefore, the widespread adoption of StarkNet across various industries may require more validation and empirical evidence.

The author believes that StarkNet is technology-driven at its core and has a clear positioning of its business model. They focus on providing solutions that users truly need, rather than merely pursuing flashy new technologies. We also see some developers beginning to flock to Cairo and STARK, recognizing their potential and scalable solutions. Some projects are developing zkEVM based on StarkNet, such as Warp and Kakarot. These projects deploy zkEVM on StarkNet, further showcasing the strengths of Cairo and StarkNet. Based on this, we believe that StarkNet has greater potential in areas such as full-chain gaming, contract wallets, cross-chain communication, and on-chain AI, with its technical characteristics and innovations providing key advantages in these fields.

• In the full-chain gaming sector, StarkNet's high throughput and low transaction costs make it an ideal choice for full-chain games. By bundling multiple L2 transactions into a single transaction on Ethereum, StarkNet can distribute transaction costs across other transactions in the same batch, reducing costs. Additionally, StarkNet's high performance and low communication requirements enhance network speed and throughput, bringing better production efficiency and consumer experience to full-chain games.
• In the contract wallet sector, StarkNet's native account abstraction allows contract wallets to achieve functionalities similar to hardware wallets. Contract wallets can enable the mobile device's cryptographic chip/module to directly sign transactions, achieving hardware-level security. Furthermore, StarkNet's signature verification is highly programmable, allowing for optimizations at the wallet layer through techniques such as signature transcription, improving the performance and security of contract wallets.
• In cross-chain communication, StarkNet's decentralized characteristics and security design make it a reliable cross-chain communication solution. By using zero-knowledge proofs, StarkNet can verify and prove transactions without revealing transaction details, protecting data privacy and security. This provides higher credibility and security for cross-chain communication, facilitating data exchange and interoperability between different chains.
• In the on-chain AI sector, StarkNet's technical characteristics allow for off-chain computation, with the generated proofs verified on-chain. This enables AI and machine learning models to compute on-chain without exposing sensitive data and model details. StarkNet's zero-knowledge proof capabilities can be used to verify the correctness of AI computations, increasing user trust in the results. This opens up new possibilities for on-chain AI applications such as gaming, oracles, automated trading profits, anti-witch hunting, and KYC.

For the future of the StarkNet ecosystem, it is foreseeable that with continuous technological development and innovation, StarkNet is expected to maintain competitiveness in expansion and development. However, it needs to address challenges such as sustainability, comparisons with competitors, and attracting user growth. Through continuous innovation and close collaboration with developers and users, StarkNet may continue to evolve and bring diversified application scenarios to the Ethereum ecosystem.