Starknet is set to become the first L2 to settle on Bitcoin and Ethereum - Coinfea

Ethereum Layer-2 network Starknet has announced launching a Bitcoin L2, as moves to unify both platforms ramp up. According to its post on X, the project wants to become the first to settle on Bitcoin and Ethereum networks.

According to Starknet, the move will provide Bitcoin liquidity and unlock new opportunities for users in the DeFi sector. Bitcoin remains the most dominant in the crypto sector, boasting a 61% dominance. However, about 99% of the BTC in circulation are either on exchanges or are held in wallets, with only 1% available for DeFi.

Starknet sees this as an issue. “Most Bitcoin remains HODLed in wallets & CEX due to three main factors: Network limitations, no general-purpose computation, Expensive to transact on the base layer, Most BTC DeFi requires custodial or centralized solutions,” Starknet said.

To address this issue, Starknet is building a Bitcoin L2 that will be reliant on Zero-Knowledge technology and STARK proofs. The platform wants to use this to become the execution layer of Bitcoin, improving its performance, and reducing gas fees, while bringing Bitcoin platforms to Starknet.

“Beyond performance & UX, Starknet is the most battle-tested ZK rollup, operating as a secure public L2 on Ethereum since 2021. And Starknet was built by core contributor @StarkWareLtd, the team that invented STARK proofs, pioneered zkRollups, Validium, L3s, Proof Aggregation, and much more,” it said.

In addition, Starknet mentioned that the L2 could serve as a means to generate more profits for miners, increase adoption, while Ethereum will also enjoy interoperability with BTC and the use of the asset as collateral in the DeFi sector.

Starknet plans integration with the Xverse wallet

Although Starknet has not provided a date that its Bitcoin L2 will go live, the platform has announced an integration with the popular Web3 wallet Xverse at the end of Q2 2025. According to Eli Ben-Sasson, the CEO of StarkWare, the integration is the first step in creating what the company wants to achieve.

He further mentioned that the move into Bitcoin shows how improved their technology has been over the years. He noted that they wanted to bring scalability to all blockchains but they could not start with Bitcoin due to its complexity.

“We are approaching a point where it will be technically possible to verify STARK proofs on Bitcoin. This is a game-changer and is pushing us to prepare ourselves to help Bitcoin evolve, particularly in terms of scalability,” he said. According to Ben-Sasson, the company is also working on a bridge between Starknet and Bitcoin.