Key Takeaways:

• Starknet has unveiled a new framework named Shieldnet, which aims to provide privacy in on-chain transactions by leveraging the new Starknet STRK20 standard.
• Running on top of STRK20, shielded balances and private asset transfers are possible even for ERC-20 assets, without sacrificing DeFi composability and compliance options.
• This marks Starknet as one of the first major Layer-2, Ethereum scaling solutions to embed privacy into the protocol itself, as opposed to standalone applications.

Undoubtedly, one of the most significant issues in the crypto space remains privacy. Starknet is trying to do just that with their new privacy-focused initiative “Shieldnet”, which will allow the launch of confidential transactions and shielded assets right inside Starknet’s Layer-2 ecosystem.

Shielded mode is on.

Join us.https://t.co/wgZT1idhML pic.twitter.com/Cx4P21sjgZ

— StarkWare (@StarkWareLtd) June 8, 2026

Shieldnet Introduces Native Privacy to Starknet DeFi

Starknet’s approach in launching Shieldnet is a significant milestone in its ongoing journey towards integrating privacy into the core of its operations, not an afterthought. The core of the project is a new token framework, STRK20, which will allow the issuance of encrypted balances and private transfers of assets on the network.

STRK20 is not the same as many other previous privacy solutions which would push the user to transfer funds to isolated systems or dedicated privacy pools; instead, it’s designed to run on Starknet’s current DeFi ecosystem. It enables users to utilize lending, trading, and other decentralized applications without having to share their financial data on-chain.

The protocol-level improvements, which enabled native support for proof verification, a crucial element for enabling confidential transactions at scale, have paved the way for the framework. According to Starknet, the changes make it possible to implement privacy features efficiently without compromising network performance.

Read More: Ethereum Validator Exit Queue Hits 439K ETH After DeFi Exploit Sparks Rush

STRK20 Aims to Solve a Long-Standing DeFi Problem

Fragmentation has been one of the greatest challenges to cryptocurrencies that prioritize privacy. In the past, users were forced to decide between privacy and liquidity since the privacy systems were not integrated into the mainstream DeFi.

In contrast, STRK20 adopts a novel strategy where privacy becomes a feature that can be utilized directly on Starknet. Shielded assets can be part of the larger ecosystem, maintaining composability between protocols, instead of building isolated liquidity pools.

Selective disclosure mechanisms are also a priority for Starknet, enabling users to disclose transactions only when necessary by law. The design aims to solve that issue without compromising on transparency and privacy as far as users are concerned.

strkBTC Serves as the First Real-World Test

The first asset launched on the privacy framework is a token backed by Bitcoin, and it has the ability to provide optional protection for balances and transfers, strkBTC. The asset gives Bitcoin miners the opportunity to use DeFi while maintaining the privacy of their transactions when necessary.

Starknet is particularly impressed by the ability of strkBTC to achieve privacy while still enabling on-chain finance. The users can switch between transparent and shielded modes while maintaining access to trading, lending and yield-generating opportunities throughout the network.

Read More: Chainlink Powers CBTC on Canton, Unlocking Verified 1:1 BTC Collateral

Key Takeaways:

• Starkware revenue fell from close to $6 million in 2023 to $48 in April 2026, forcing layoffs and restructuring.
• EIP-4844 cut Starknet fees, compressing income despite $242 million TVL, reshaping L2 economics.
• CEO, Eli Ben-Sasson plans pivot to apps unit in 2026, aiming to build sustainable revenue streams.

Starknet Revenue Declines as Starkware Shifts Strategy

Starkware is cutting jobs and reorganizing its business after a steep collapse in revenue from its Starknet network, underscoring mounting pressure on blockchain infrastructure firms to generate sustainable income.

The company said it will split into two independent units as part of a broader shift away from a pure scaling focus toward developing its own revenue-generating products. The changes were outlined by Chief Executive Eli Ben-Sasson during a company-wide address.

Revenue from Starknet, a layer two ( L2) network built to scale Ethereum, has dropped sharply from a peak of nearly $6 million in a single month in late 2023 to about $48,000 so far in April 2026, according to data from Defillama. The decline reflects both company-specific challenges and wider industry trends.

A key factor has been Ethereum’s EIP-4844 upgrade, introduced in March 2024, which significantly reduced transaction costs on Layer 2 networks. While the change improved efficiency for users, it also compressed fee revenue across the sector, affecting Starknet and its competitors alike.

Despite the revenue drop, Starknet continues to hold nearly $242 million in total value locked, suggesting that user activity has not disappeared but is generating less income.

Ben-Sasson said the company now needs to convert its technical strengths into meaningful usage and revenue. He indicated a shift toward building proprietary applications, rather than relying solely on infrastructure that depends on external ecosystems.

Stakeware to Launch New Applications Unit

As part of the restructuring, Starkware will establish a new applications unit focused on developing high-impact products. The division will be led by researcher Avihu Levy, who was recently promoted.

Levy’s work includes a proposal known as Quantum Safe Bitcoin, which aims to protect bitcoin transactions from potential quantum computing threats. The approach relies on hash-based proofs instead of traditional signatures, though it carries higher computational demands and significantly higher transaction costs.

While the company has not confirmed whether this technology will form part of its commercial strategy, Ben-Sasson said future products would focus on areas where Starkware can offer unique capabilities with minimal reliance on external blockchains or partners.

The restructuring comes at a time when many blockchain firms are reassessing their business models. A prolonged market downturn and declining transaction fees have exposed the limits of relying solely on infrastructure revenue.

Ben-Sasson, who has worked in the field for over a decade, described the current environment as a period of weak leadership across the industry, adding to the challenges facing companies. Further details on the company’s new direction are expected in the coming weeks.

The shift highlights a broader transition in the crypto sector, where firms are increasingly under pressure to move beyond technical innovation and demonstrate clear paths to profitability.

Starknet will launch Bitcoin staking capabilities on its mainnet on September 30, featuring support for multiple wrapper options and reduced unstaking periods.

The Layer 2 scaling solution’s new staking functionality will enable users to stake Bitcoin through various wrapper tokens on the platform.

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Starknet announced today its plan to become the first layer 2 network that settles transactions on both Bitcoin and Ethereum. The firm aims to unify the two dominant blockchain ecosystems and expand its DeFi capabilities.

1/ Bold new narrative: Scaling Bitcoin + Ethereum together

Starknet will become the first L2 to settle on both Bitcoin & Ethereum, bringing the two largest blockchain ecosystems on a single layer, unlocking new DeFi opportunities and greater liquidity.

Read our vision & plan pic.twitter.com/JzWo7OzoIs

— Starknet (@Starknet) March 11, 2025

The plan targets addressing Bitcoin’s limitations. The flagship crypto asset’s utility beyond holding and trading remains limited, largely due to network limitations, high transaction costs, and reliance on custodial solutions for DeFi activities.

Starknet seeks to transform Bitcoin into a productive asset capable of generating yield and engaging in DeFi activities without compromising its core values of security and decentralization.

To ensure the smoothest Bitcoin integration, Starknet is focusing on building federated bridges, BitVM-powered Bridge, and a future trustless bridge. The firm said it is working with both current and future technologies to build the best Bitcoin bridging solution.

In addition, Starknet shared that it has already partnered with leading Bitcoin projects to build innovative products, including Xverse, Bitcoin staking and other DeFi solutions.

Key improvements

As noted, the platform aims to reduce transaction fees from $2 to $0.002 and decrease block confirmation times from 10 minutes to 2 seconds.

Regarding transaction throughput, Starknet promises to dramatically increase transaction throughput from seven transactions per second (TPS) to thousands.

The firm also targets enhancing user experience with a seamless web2-like user interface with features such as 2FA/3FA-powered wallets and session keys.

Starknet expects to achieve full decentralization by early 2026, eliminating central authority control over transactions.

StarkWare’s Bitcoin and Ethereum reserves

Starknet also revealed that StarkWare, its core contributor, is establishing strategic Bitcoin and Ethereum reserves and will continue accumulating both digital assets over time.

To accelerate Bitcoin integration, the Starknet Foundation is introducing a targeted incentive program. This initiative aims to establish Starknet as a premier destination for BTC holders seeking yield generation, offering a compelling alternative to traditional, centralized platforms.

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