☄️ _{Starknet: Past, Present and Future} ☄️ 

Despite its current imperfections, I strongly believe that Starknet has the greatest potential among all Layer 2 (L2) solutions. There are several objective reasons for this belief, and I am planning to publish a highly comprehensive article on this topic, scheduled for release at the end of February.

However, I also believe that currently (January - February) is your last opportunity to be truly early in the ecosystem. Afterward, the opportunities will still be there and always lucrative, but not at the same scale, as there will be a lot more people who will be looking for them and positioning themselves. For example, it is currently very easy to be among the top 100-200 users of each dApp. Therefore, now is the best time to conduct your research, follow the right people, and position yourself (NFA - DYOR).

That's why I'm publishing this article today, with a more comprehensive one to come next month.

This article covers the following three topics 👇️ 

I. Starknet and StarkWare track record 🌃

II. The Current State of Starknet 💁‍♂️

III. How Starknet plans to address its main issues and what is coming in the near future ✨

I. Starknet and StarkWare's Track Record 🌃 

Starknet is a Validity Rollup (ZK) built on top of Ethereum. It combines ZK technology with STARK proofs to achieve its mission of scaling Ethereum.

Starknet is notably the first general-purpose ZK Rollup to be deployed in production, and its technology has been tested in Mainnet since 2020 through StarkEx.

As a reminder, StarkEx is the centralized and permissioned version of Starknet. It provides a Software as a Service solution with the goal of enabling the creation of production-ready applications for limited use cases (such as trading and NFT). On the other hand, Starknet is the permissionless version of StarkEx and has no limitations.

StarkEx has notably demonstrated the efficiency of STARK proofs since 2020, and it's quite impressive 👇

These metrics have been achieved with less than 10 dApps.

Furthermore, the Starknet/StarkEx technology currently powers a significant portion (over 38%) of the volume of the entire Perp DEX landscape 👇

So, in addition to being the first general-purpose ZK Rollup launched on the market, Starknet also stands out for utilizing the technology with the most extensive track record in the ZK field.

Speaking of tech, we cannot overlook Eli Ben-Sasson, co-founder of StarkWare, the company behind Starknet and StarkEx.

Eli is the co-inventor of STARK proofs, which are used by Starknet and StarkEx. These proofs have been proven to be the most effective technology for scaling Ethereum and have been adopted by many competing ZK solutions such as Polygon and zkSync. They have also been highlighted on multiple occasions by Vitalik himself.

Eli is also the person who founded the first crypto project based on ZK technology to be actually used: Zcash.

Overall, StarkWare was the first L2 to introduce and explain their scaling vision through L3/appchain, well before the numerous L3 projects announced by other L2 solutions.

To optimize performance to the maximum, StarkWare has also developed its own programming language specifically designed for ZK proofs: Cairo. Cairo is notably the first provable language capable of writing smart contracts and therefore the one with the most seniority.

So, looking back, we can see that Starknet has the strongest track record in the ZK field, with a team that has been working in this sector for over a decade. Even the founders of competing L2s praise the team behind Starknet 👇

Thus, Starknet positions itself as a leader in several areas:

• ✅ First general-purpose ZK Rollup to hit the market.

• ✅ Technology has been thoroughly tested in production since 2020

• ✅ Pioneer and creator of STARKs, which are now being used by competitors.

• ✅ I did not mention it earlier, but Starknet is also the only chain (alongside zkSync) to have a native Account Abstraction.

• ⌛ Will Starknet be the first ZK Rollup of this size to release its own token? We will have our answer very soon.

In short, Starknet is well positioned in the hottest topics of the coming years: Ethereum scaling, ZK, extreme modularity (fractal scaling), and Account Abstraction.

II. The Current State of Starknet 💁‍♂️

Currently, Starknet is ranked 9th among all general-purpose L2 solutions in terms of TVL. It is significantly behind Arbitrum and Optimism, and its TVL is three times lower than that of zkSync, the first ZK of this list.

And also the 45th network (taking into account all L1s) in terms of TVL lock on its ecosystem's dApps.

Before describing why Starknet lags behind, these numbers show how huge the expansion potential of Starknet is: we are only at the beginning of the network and we are still VERY early.

In comparison to other L2 solutions, aside from the fact that Starknet is the only L2 that is not compatible with the EVM (hmm, this reminds me of Solana in 2020-2021, which was the only non-EVM compatible L1 in the top 😏), it is interesting to note that:

• Arbitrum and Optimism, besides being the first Rollups to launch, have their own tokens and heavily incentivize users and developers to use/build on their networks.

• Manta, Metis, and Mantle have their airdrop campaign (Manta), ecosystem boost program (Metis), and community campaign (Mantle).

In the list, only Base, zkSync, and Starknet have not yet taken any action to incentivize the use of their network.

Except incentives, what are the other reasons for this lag?

• 1️⃣ Starknet is not EVM compatible, so it had to build an ecosystem from scratch and attract developers to learn a new programming language (unlike other ecosystems where you can simply copy pasta/fork with a few clicks)

• 2️⃣ Few dApps and lack of diversity

• 3️⃣ Few real users

• 4️⃣ High fees

It is also worth noting that:

• Cairo 1.0, which brings many optimizations and is a completely new language compared to Cairo 0, was only released in January 2023.

• Not long ago, the network was... terrible to use (the true ones remember 😆). But since Starknet v0.12 (July 2023), Starknet's performance has been among the market leaders.

Before diving into how Starknet plans to solve its problems, let's look at two key aspects that make Starknet unique.

Firstly, because Starknet has its own programming language, it is the ONLY L2 of the market with the majority of its dApps being native. In fact, over 90% of the dApps on Starknet are native.

The challenge with EVM-based L1/L2 chains is that all L1/L2s compete for the same pool of dApps and developers. Consequently, there are limited native builders on each chain, resulting in fewer individuals dedicated to improving and expanding the specific L2 they operate on. These teams deploy their projects on multiple networks simultaneously, launch marketing campaigns, and observe which network garners the most success. So, there is a high number of projects who act as mercenaries, frequently jumping from one ecosystem to another.

In contrast, Starknet boasts over 90% of its projects being native dApps. This signifies that more than 90% of projects are fully committed to Starknet and actively collaborate to foster its growth. They share a common goal of enhancing the network, attract users, and improve the overall ecosystem. A very good thing for the long-term health of the ecosystem.

Secondly, Starknet fully embraces the innovation brought by Account Abstraction: it is the only L1/L2 solution that offers true native Account Abstraction, exclusively supporting smart accounts. For those who don’t know, Account Abstraction is one of the most important innovation of the crypto space, as it has the potential to bring the UX and security of Web 2.0 to Web 3.0. Here are some possible use cases:

• Implementing security measures for transactions above a certain amount, such as signing via face-ID or email, similar to what banks offer.

• Setting spending limits on wallets for daily, weekly, or monthly usage.

• Automatic recurring payments or actions, such as automatically staking 0.1 ETH every month.

• Social Recovery, which allows for the recovery of funds in a wallet even if the seed phrase and wallet access are lost.

This vision is already being realized, with many builders working on it. Currently, Starknet is at the forefront of showcasing these innovations. Here are some features found on Starknet:

• Multicall, which allows multiple operations to be grouped into a single transaction. For instance, this eliminates the need to send 2/3 transactions to approve assets and confirm a swap, as they are consolidated into one transaction on Starknet.

• Paymaster, coming soon, enables the payment of gas fees in the asset chosen by the user, eliminating the exclusive use of ETH.

• 2FA and 3FA from @argentHQ and @myBraavos, with the latter allowing transaction confirmation with a fingerprint.

Okay, despite its recent technical improvements and advantages, Starknet is still far behind. That's true. So, let's see now how Starknet plans to solve its current problems and catch up with the competition.

III. How Starknet plans to address its main issues and what is coming in the near future ✨

1. Starknet is not EVM compatible, so it had to build an ecosystem from scratch and attract developers to learn a new programming language

Developers are the foundation of any ecosystem.

Without developers, there are no interesting dApps, and without interesting dApps, there are no users. On the other hand, when a large number of developers are present, interesting dApps emerge, naturally attracting users. This, in turn, increases the TVL and the economic interest of the network, further attracting more developers. Thus, a virtuous cycle is formed.

Therefore, having more teams within an ecosystem increases the likelihood of having good dApps within it. That is why ecosystems invest significant amounts of money in onboarding developers through events like hackathons, grants, business development, and other initiatives.

Additionally, it is important to note that unlike its competitors, Starknet is not EVM compatible. This means that developers from other ecosystems cannot simply migrate to Starknet by copying and pasting their existing projects. Instead, they need to learn how to code in Cairo and completely rewrite their dApps in this new language. This poses a significant barrier to entry, but StarkWare has successfully overcome it.

According to the superb analysis conducted by Electric Capital (as of October 1, 2023), it is clear that Starknet is one of the most dynamic ecosystem in terms of developers.

Starknet notably stands out as one of the few ecosystems, and the only one among the top 10 largest ecosystems, to have experienced growth in its number of developers (both full-time and total) over the past year (between September 2022 and September 2023).

In contrast, all other ecosystems have seen a decline.

To provide some context, the number of developers in the entire crypto market has decreased by 27% during the same period. Here are the figures for other L2s:

• Polygon: -34% full-time developers, -43% total developers

• Optimism: -16% full-time developers, -13% total developers

• Arbitrum: -30% full-time developers, -17% total developers

• zkSync: -2% full-time developers, +6% total developers

On a global scale, it is worth noting that among ecosystems with more than 70 developers, only 6 ecosystems have experienced growth, and Starknet stands out as the ecosystem with the highest number of active developers.

Furthermore, Starknet has experienced significant growth over the past two years. While its competitors are mostly losing developers, and others are satisfied with single or double-digit growth rates, Starknet has seen a tremendous increase of 622% in the number of full-time developers and 356% in the total number of developers.

These are significant metrics, particularly considering that Starknet is, once again, not EVM compatible and that it is a relatively new ecosystem, with its programming language only recently becoming stable.

Based on these metrics, we can say that StarkWare has successfully managed its arduous task of onboarding developers to learn its new programming language.

2. Few dApps and lack of diversity

Let's be honest, the ecosystem on Mainnet is currently not diverse and mature.

It mainly consists of AMMs (mostly v2, with 2 v3 and 1 v4), aggregators, and money markets. There are no Perp DEX, exotic products, yield aggregators, DEPIN projects, or others.

However, in relation to the previous point, with the stability and maturity of the Cairo language now established, as well as the performance improvements of Starknet and the increasing economic interests surrounding it (points 3 and 4 below), the most challenging part is behind us. This growth will now only continue to amplify over time. This is evident through the numerous hackathons organized by the Starknet ecosystem, where many high-quality projects are starting to emerge 👇

• Starknet Hacker House Istanbul

• Starknet Hacker House India

• Holiday Game Jam

When examining the evolution of the ecosystem in 2023, we can observe that it has grown by 71%, going from 69 to 118 between March and December.

Furthermore, developers are currently receiving strong support, particularly through:

• Only Dusk

• Devonomics

• ECMP (also for ‘simple contributors)

• The project incubator, Hito Studios

So, I anticipate a Cambrian explosion of dApps in 2024, which will double the number of dApps highlighted just above.

The door is now open to incentive users.

3. Few real users

The maturity of the Cairo language and the strong support provided to developers will naturally attract more users. These two factors are already attracting an increasing number of developers, who are enhancing the tools of the ecosystem and building more projects. With the growing number and diversity of projects, there is a natural increase in DeFi activity for users and more opportunities available to them.

Ok, I know what you're thinking: it's not enough, and why do we incentivize developers and not users? This is a legitimate question because, without users, ecosystem projects would not have a viable long-term business. On the other hand, the more users there are, the easier it will be for projects to raise funds, generate revenue, improve their dApps, and ultimately attract even more users. This will further increase their income and the stability of their business. It's another virtuous cycle!

Well, there are many things that are finally coming very soon for us, simple users and traditional contributors. Notably, the STRK token is coming with its airdrop, which will also be distributed to users 👇️ 

Through the airdrop and token distribution, many investors will have the opportunity to expose themself to the growth of the ecosystem. Furthermore, the token will be probably listed on all CEX, allowing new users to discover Starknet. Consequently, Starknet will gain increased visibility and attract a larger user base.

The challenge for most ecosystems is to make the most of the increased interest generated by the airdrop to strengthen the ecosystem, while ensuring that it is not just a fleeting and random hype. In this regard, I believe Starknet has an advantage and shares similarities with Solana in certain aspects: Starknet has its own community and protocols.

As we have seen, on EVM ecosystems, developers and users are not strongly tied to a single ecosystem (except for a few exceptions like GMX). After benefiting from the hype of one ecosystem, it is easy for them to jump to a new one.

However, on Starknet, there is a greater incentive to stay, notably because developers have invested time in learning and building in a new language, reducing the incentive to abandon the ecosystem.

In addition to the airdrop, there are also:

• The ECMP program (with 50M STRK tokens), which also rewards more traditional ecosystem contributors, in addition to developers and projects.

• An upcoming on-chain incentive program (with 50M STRK tokens): Just look at the explosion of TVL happening on Sui since the implementation of such a program 😉

Overall, 18% of the supply is intended to be redistributed directly to the community.

Our share of the pie is coming soon frens 😏 

Other points to note:

• The token release will bring a massive increase in liquidity on Starknet.

• Many new opportunities will arise for DeFi users.

• Projects will have more marketing budget and will likely take advantage to release their own tokens (and airdrop).

4. High fees

The fees on Starknet, and even on all Rollups in general, are currently too expensive for widespread adoption. Users are reluctant to pay $0.5 or more for a simple transaction, while developers struggle to build a stable business due to the unpredictable and high fees. However, starting from Q1 of this year, several improvements will significantly reduce these fees.

From a global perspective, EIP-4844 (also known as Proto-Danksahar) will enable a reduction of over 90% in fees of all Rollups (the numbers below are likely too optimistic, but I mention them to provide an idea of the scale) 👇

I will not go into the technical details of this update in this article. What you need to know is that currently, 90% of rollup fees occur because L2 sends data to L1 and has to pay for the blockspace used. With EIP-4844, Ethereum will introduce a new storage space called BLOB, specifically designed for this data. This will lead to a significant reduction in costs. The launch of this EIP on Mainnet is scheduled for the end of Q1 2024.

Specifically for Starknet, there are currently a major improvement underway, with another one coming soon.

The first improvement, called Volition, is scheduled for early 2024. It will enable developers to choose the source of data availability for each component of their applications. They will have the option to select:

• On-chain storage on Ethereum, which provides greater security but is more expensive.

• Off-chain storage on Starknet or other solutions (possibly including @CelestiaOrg, @AvailProject, @NEARProtocol, and DA solutions), which is cheaper but compromises slightly on security.

The second improvement is Starknet v0.13, which has already been live on the Mainnet since last week (with a new improvement since yesterday), reducing fees by approximately 30%. This reduction is achieved through optimizations in Cairo steps and additional network configuration optimizations.

Therefore, the issue of fees is about to be resolved in Q1.

Conclusion

Although Starknet may have imperfections and is currently lagging behind some competitors, I am confident that these issues are about to be addressed.

In particular, starting in Q1 2024, there will be a series of community campaigns, including the ECPM, the STRK airdrop, and the first on-chain incentive campaign.

So, hold on, deepen your engagement, continue/start your farming activities, and enjoy these final moments as true early adopters of Starknet.

Our time to shine is coming soon ✨