Starknet launches strkBTC, shielded bitcoin on Layer 2

Starknet launched strkBTC on its Layer 2 network. The asset is a bitcoin wrapper that uses zero-knowledge cryptography to create a shielded environment for BTC while remaining compatible with decentralized finance applications on Starknet.

strkBTC moves bitcoin into Starknet without changing Bitcoin's base layer. The wrapper places funds in a shielded pool so balances and past transactions are not visible on the public Bitcoin ledger. Transfers inside the shielded environment are confidential but remain composable with smart contracts.

The token supports re-anonymization to bridge back to fresh, unlinked bitcoin addresses. Viewing keys allow users to unshield their own transactions and give independent compliance reviewers limited access for audits or lawful disclosures.

Developers described the design as compliance-ready rather than offering absolute privacy. They said the initial feature set includes asset screening and auditability to allow use cases such as private payroll, commercially sensitive payments, and on-chain lending, trading and yield generation.

Security firms have reported more incidents tied to public blockchain data and the use of AI to link wallet addresses to real-world identities. CertiK recorded 34 verified incidents globally in early 2026, a 41% increase from the same period in 2025, and flagged that AI tools can increase linking accuracy to as much as 90%.

Damian Chen, vice president of growth at the Starknet Foundation, warned: “When you have criminals monitoring the public ledger, using AI to trace wallets, and attacking people for their crypto, privacy is no longer just a lofty ideal. Privacy is both a need as well as a right. We urgently need privacy solutions that close the drapes, meaning that the criminals can’t see through the window to plot against their targets.”

Eli Ben-Sasson, chief executive of StarkWare and a Zcash co-founder, called strkBTC “private digital cash — the way it should be.” He added that shielding balances could help users and institutions protect safety and encourage broader use.

The strkBTC roadmap includes research on quantum-resistant cryptography and work to integrate BitVM to lower trust assumptions with a 1-of-N security model. Engineers listed a longer-term goal of a trustless bridge that would rely on an OP_CAT soft fork allowing Bitcoin to verify Starknet proofs natively.

Planned protocol upgrades aim to add confidential DeFi primitives that run entirely inside Starknet's shielded environment, including shielded lending, trading and yield. The launch follows Starknet efforts to support bitcoin staking and yield programs on the network.