The Ethereum Layer 2 scaling network Starknet has officially announced the launch of strkBTC, a new Bitcoin-based asset designed to bring confidential transactions and shielded balances into the decentralized finance (DeFi) ecosystem. This initiative is a core part of Starknet's broader BTCFi strategy, aimed at attracting Bitcoin liquidity into scalable Layer 2 infrastructure while preserving user privacy.
strkBTC is a Bitcoin-backed asset issued on Starknet in response to verifiable BTC deposits. The minting process is deterministic, meaning tokens are created strictly against confirmed Bitcoin collateral to maintain a 1:1 peg and eliminate discretionary issuance risk. Unlike privacy tools that rely on external mixers, strkBTC integrates confidentiality directly at the protocol level using zk-STARK cryptography.
A key innovation is its dual operational design. Shielded Mode allows users to conceal balances, transaction amounts, and counterparty identities using zero-knowledge proofs, ensuring data remains hidden while transactions stay verifiable. Non-Shielded Mode functions like a standard ERC-20 token with publicly visible transfers, supporting transparency for bridging or regulatory needs.
Despite its privacy features, strkBTC remains fully composable within Starknet’s DeFi ecosystem, usable in lending markets, staking protocols, and decentralized exchanges without exposing portfolio details. To address regulatory concerns, Starknet introduced a Viewing Key system, allowing users to generate encrypted keys for selected third parties like auditors or regulators to reconstruct transaction histories when necessary.
The Starknet Foundation has confirmed the announcement, with mainnet availability expected in the coming weeks of Q1 2026. Future upgrades include enabling private swaps directly to and from strkBTC and further decentralizing the bridging infrastructure. The launch aligns with Starknet’s broader BTCFi push, which includes native Bitcoin staking initiatives and a 100 million STRK incentive program to draw Bitcoin capital into its network.
