StarkNet launched a Bitcoin deposit service with a deposit power of 0.25
And in support of multiple Bitcoin tokens.
The deposit cancellation period has been reduced from 21 to 7 days, allowing users faster access to funds.
The upgrade was passed with community support of 93.6%, highlighting strong user confidence and potential adoption.
The introduction of Bitcoin (BTC) deposits represents a key integration of Bitcoin's security with decentralized finance (DeFi) innovations on Starknet, Ethereum's layer two scaling solution. Stakeholders will be able to deposit Bitcoin and earn network rewards for it on the mainnet, which is typically launched on September 30.
In this new framework, the weight of Bitcoin deposits has been set at a quarter, meaning that Bitcoin contributes 25% of the network's weight, while the native Starknet token, STRK, provides the remaining 75%. It is a hybrid model to enhance decentralization and security, giving Bitcoin a clear role in network governance.
Starknet has also expanded access by supporting various wrapped Bitcoin tokens, including WBTC, LBTC, tBTC, and SolvBTC, enabling a wide range of Bitcoin holders to participate.
One of the main improvements is reducing the deposit withdrawal period from 21 days to just 7 days, allowing investors faster access to their funds while maintaining network security.
The importance of this matter
The decentralized finance (DeFi) space has significantly expanded with the launch of the Starknet platform for Bitcoin trading, bridging two major ecosystems in the cryptocurrency world. For the first time ever, Bitcoin holders can trade on the Starknet platform without having to give up their assets, combining Bitcoin's reliability with the flexibility of Ethereum's layer two.
This development may attract both individual and institutional investors seeking new ways to yield returns from their Bitcoin investments. Faster withdrawal times, enhanced security, and low-risk participation make this offering extremely appealing.
The upgrade was approved through the governance proposal SNIP-31, with overwhelming support from the community at 93.6%. The high approval rate reflects the community's trust in this upgrade and reaffirms Starknet's commitment to decentralized decision-making.
Benefits for Bitcoin holders
Bitcoin deposits on the Starknet platform feature multiple advantages:
Earn rewards without sacrificing Bitcoin ownership.
Accessibility with a short withdrawal period of up to 7 days.
Enhanced security, as Bitcoin contributes to strengthening the consensus process.
Participation in decentralized finance (DeFi), allowing Bitcoin users to benefit from Ethereum's layer two innovations.
Challenges and considerations
Despite its promising potential, the new staking model is not without challenges. Users will need to exercise caution while staking to maintain accuracy and avoid missing rewards. Additionally, accumulating Bitcoin on Starknet could negatively impact the network's stability and security.
Regulatory scrutiny remains a key factor. Staking frameworks may face changes depending on judicial rules, which could impact adoption rates in the future.
Starknet's move to integrate Bitcoin deposits may serve as a model for other layer two networks. Successful implementation could accelerate broader Bitcoin adoption in decentralized finance, opening up new opportunities for its holders and enhancing blockchain technology development.
By overcoming obstacles and encouraging participation, Starknet enables Bitcoin users to enter the world of decentralized finance while simultaneously contributing to securing its own network. This is an important step in developing both Bitcoin solutions and layer two solutions.