StarkWare, the company developing Layer-2 Starknet, has made a strategic move by transferring part of its treasury to Bitcoin to establish a BTC reserve fund. Not stopping there, StarkWare has also announced plans to turn Starknet into a Layer-2 on Bitcoin, opening the potential to merge the two largest blockchains in the world.

StarkWare Establishes Bitcoin Reserve Fund

StarkWare confirms that they will continue to accumulate Bitcoin over time, however, the company did not disclose the amount of BTC currently held or plans for future purchases. CEO and co-founder of StarkWare, Eli Ben-Sasson, emphasized:

"We don't just talk the talk; we walk the walk. I believe every blockchain company should and will hold Bitcoin."

With this move, StarkWare has joined the ranks of cryptocurrency companies accumulating Bitcoin, alongside major names like Strategy, MARA, and Galaxy Digital. Notably, this decision was made just days after U.S. President Donald Trump signed an executive order to establish the U.S. strategic Bitcoin reserve fund, managing 198,000 BTC (equivalent to 18 billion USD) seized from criminal cases.

As both businesses and governments begin to view Bitcoin as a strategic reserve asset, this trend could propel BTC to become a crucial pillar in the global digital economy.

Ambition to Make Starknet a Layer-2 on Bitcoin

Not stopping at accumulating BTC, StarkWare has revealed plans to expand Starknet to support Bitcoin, with three initial initiatives:

  1. Integrate Bitcoin wallet Xverse: Allows users to transact and store BTC while supporting important token standards on Bitcoin such as Ordinals, Runes, BRC-20, and Stacks.

  2. The "BTCFi Season" program: Offers financial products such as staking, lending, and borrowing using Bitcoin directly on Starknet.

  3. Bitcoin payments via Lightning Network: The Braavos wallet on Starknet now supports BTC payments through the Lightning Network, speeding up transactions and reducing costs.

Starknet – A Layer-2 Solution for Bitcoin

Starknet aims to become a Layer-2 that accelerates Bitcoin from 13 TPS to thousands of TPS, while also deploying smart contracts on Bitcoin, something that was previously nearly impossible.

This could help Bitcoin not only become a "digital gold" but also a powerful DeFi platform, where users can stake, lend, borrow, and yield farm directly on BTC. The STARK proofs technology will help reduce transaction fees to nearly zero while still ensuring security and quantum resistance.

OP_CAT – The Key to Merging Bitcoin and Starknet?

To realize this ambition, StarkWare is also sponsoring and advocating for OP_CAT, a soft fork proposal for Bitcoin aimed at bridging Bitcoin and Starknet without intermediaries.

What is OP_CAT?

  • OP_CAT (OPcode Concatenate) allows the concatenation of two data segments in a Bitcoin transaction.

  • Initially, it was integrated into the Bitcoin source code by Satoshi Nakamoto but was later disabled due to security concerns.

  • If reactivated, OP_CAT could enable Bitcoin to support smart contracts without relying on solutions like RSK or Stacks.

However, the deployment of OP_CAT depends on the consensus of the Bitcoin community and may take years to achieve. In the meantime, StarkWare is exploring two alternative solutions:

  1. Federated Bridge: Uses a multisig model to manage the BTC locked on Bitcoin and issue an equivalent amount of tokens on Starknet. This solution is fast but poses centralization risks.

  2. BitVM Bridge: A decentralized bridge that uses cryptographic proofs to verify BTC ownership, ensuring higher security.

Is Starknet Shaping the Future of Bitcoin?

In the upcoming period, Starknet is expected to launch a series of products and initiatives related to Bitcoin, including:

  • Collaborate with wallet providers to expand Bitcoin support on Starknet.

  • Deploy products for the general public to broaden the customer base.

  • Conduct deeper research on Bitcoin's scalability using STARK proofs.

These steps not only enhance the usability of Bitcoin within the Starknet ecosystem but also lay the groundwork for connecting the two largest blockchains in the world – Bitcoin and Ethereum – on a single platform.

Currently, the STRK token price of Starknet has increased by 7.4% following this announcement, marking a slight recovery after a series of downturns in the crypto market.

Will StarkWare succeed in making Starknet a Layer-2 on Bitcoin? If this plan succeeds, it could completely reshape the future of Bitcoin. But if it fails, StarkWare will face greater challenges than ever.