StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

1. StarkWare has long established a technology-centric business model, and StarkEx is its main source of profit

2. The StarkNet ecosystem is still in the early stage of development, with many native and innovative projects, and technological progress is the main bottleneck

3. NFT and GameFi may become StarkWare’s dominant track.

Ethereum Layer2 has obvious security and decentralization advantages over alt L1. Competing public chains are often exposed to downtime and security incidents, and Layer2 rarely has such news.

Among all Layer2s, the Layer2 of the ZK Rollup system is the most orthodox among the Ethereum branches. It is the safest of all Layer2. Moreover, as the number of transactions increases, the transaction fee allocated to each person will be reduced, which has a better expansion effect.

For these reasons, ZK Rollup is widely supported for Layer 2. For example, the wallet project Argent has expressed its preference for the ZK series. Argent said that it will not support the Optimistic Rollup ecosystem because it will focus on zkSync and StarkNet of the ZK series.

Everyone’s expectations for ZK Rollup Layer 2 are mainly pinned on zkSync and StarkWare. Bibi News has studied more than 100 projects in these two ecosystems. This article will analyze the status, characteristics, challenges, development directions, and future prospects of the StarkWare ecosystem.

StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

46 StarkWare Ecological Projects Source: Beep News

Overview of StarkWare

1 Introduction

StarkWare is a technical team dedicated to solving the Ethereum scaling problem through Zero Knowledge Proofs (ZKP).StarkWare has successively given two ZK Rollup Layer2 solutions – StarkEx and StarkNet.

StarkEx is a scalability engine that earns service fees by way of to B. The well-known Immutable X, dYdX, DeversiFi, and Sorare are all built on StarkEx.

**StarkEx has played a big role in improving performance and reducing gas fees. **It is reported that the gas fee of dYdX used to account for 90-100% of the income. StarkEx helped dYdX reduce the gas fee to 1/50, saving dYdX nearly 300 million US dollars and promoting the business growth by 500 times.

However, the projects on StarkEx are independent of each other and cannot be combined. Probably because of this reason, StarkWare has launched StarkNet with better openness. StarkNet is Layer 2 in the true sense, any DAPP can be deployed on it, and applications can be combined.

With the successful case of StarkEx, the market is generally optimistic about StarkNet. From the perspective of data, StarkEx is undoubtedly successful, while StarkNet is still in the early stage of ecological development. Developing the StarkNet ecosystem should be the focus of the StarkWare team.

2. Team

The StarkWare team is known for their “technical abilities”.

Eli Ben-Sasson: Co-founder and Chief Scientist. He is the world’s top cryptography scientist. At present, the two most mainstream zero-knowledge proof systems, SK-SNARKs and ZK-STARKs, were jointly invented by him. He is also the founding scientist of the Zcash project and a professor of computer science at the Technion-Israel Institute of Technology.

Alessandro Chiesa: Co-founder and chief scientist, professor of computer science at UC Berkeley. He is also the co-inventor of ZK-SNARKs and the co-founder of Zcash.

Michael Riabzev: Co-founder and Chief Architect, Ph.D., Technion-Israel Institute of Technology.

StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

Michael Riabzev, EliBen-Sasson, Uri Kolodny Source: Alpha Rabbit Research Notes

In addition to technical capabilities, the StarkWare team also has strong PR capabilities, and has a clear positioning for profitability and business models from the very beginning. This is largely thanks to co-founder and CEO Uri Kolodny, a serial entrepreneur who is at the helm of StarkWare both commercially and externally.

StarkWare made clear its strategic line as early as 2018 in the blog “To build a business with sustainable income, based on the requirements for cash and income, the strategy made by the founding team is to first develop technology that can meet the demand” . That is to say, taking technology as the core, by developing technical solutions and providing technical services to ensure the continuous income of enterprises.

StarkWare continues to use their “technical” features to build a “technical” image. The team started building technical blogs very early, to synchronize their understanding of what to do and scientific research results with external users at all times. Vitalik often gives suggestions to StarkWare papers.

3. Financing

It is precisely because of its technical expertise and ability to deal with venture capital institutions that StarkWare is favored by investment institutions. Vitalik is their seed round investor. In addition to Vitalik, the list of investors also includes repeat investors such as Paradigm, Sequoia Capital, Pantera Capital, Founders Fund, etc.

Up to now, StarkWare has completed 6 rounds of financing, namely seed round, Grant, A round, B round, C round, D round, with a total financing of 273 million US dollars. Especially with the latest round of financing, which reached $100 million, StarkWare’s valuation quadrupled to $8 billion. Valuation ranks first among all Layer2s.

4. On-chain data

From the data dimension, StarkEx has been successful. There are a total of 4 projects in the StarkEx ecosystem – Immutable X, dYdX, DeversiFi, Sorare. The lock-up volume and transaction data of each project can be used independently in Layer 2.

As of July 6, the StarkEx ecological TVL was $696 million, with a total of 196 million transactions processed, a total transaction volume of $635 billion, and a total of 60.5 million NFTs minted. StarkEx is StarkWare’s main source of profit.

In contrast, the StarkNet ecosystem is still in its infancy.

**Number of unique addresses: **Less than 20,000. The number of independent addresses of StarkNet has dragged down the four major OP and ZK Rollup projects (Arbitrum, Optimism, zkSync, StarkNet). The number of independent addresses is an order of magnitude smaller than the other three ecosystems.

From the perspective of daily active users and daily transactions, StarkNet’s data in the past month is close to zkSync, with only a few hundred daily active users and only a few hundred daily transactions.

StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

StarkNet Daily Transactions and Daily Active Address Source: Dune Analytics

So overall, in terms of ecological development progress and ecological activity, the ZK series Layer 2 lags behind the OP series, and the progress of StarNet and zkSync is close. It may be because zkSync has promised to have an ecological native token, so it surpasses StarkNet in the number of independent addresses.

**Gas fee: **In the past month, the gas fee generated by the StarkNet network is lower than that of Ethereum, and the overall TPS is also lower than that of Ethereum.

Although StarkNet has better performance than Ethereum (Ethereum can process 7 transactions per second, and the StarkWare ecosystem can process thousands of transactions), the actual number of transactions per second that StarkNet processes and the resulting gas fees are lower than Ethereum.

This shows that the utilization rate of the StarkNet network is low, which can be attributed to the fact that the network development is still in the early stage, and there are not many ecological projects that have not been fully launched.

StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

StarkNet and Ethereum Gas Fee, TPS Comparison Source: Dune Analytics

StarkWare Ecosystem Application

Overall, the StarkNet ecosystem and zkSync have similar ecosystems in their infancy. Not many projects have been launched in StarkNet. However, each track of StarkNet is relatively balanced, unlike zkSync, which is inclined towards DeFi.

Including StarkEx, Bibi News counts 33 projects that have been launched in the StarkNet ecosystem. DeFi, DEX, GameFi, NFT, bridge, and infrastructure are 5, 3, 6, 6, 4, and 5 respectively.

1,DEX

Similar to zkSync, projects on StarkNet are mostly native projects. There are 5 DEXs counted by Beep News, all of which belong to the StarkNet ecosystem. Among them, the three DEXs that have been launched are JediSwap, MySwap, and StarkSwap.

They are all AMM DEXs with a little innovation. For example, the “ZAP” function of JediSwap can convert a single token into LP for farming. The StarkSwap interface has added a “faucet” function. All aim to improve the user experience.

2,DeFi

StarkNet has more innovation than zkSync, which is more obvious on the DeFi track. In addition to the basic functions of lending and staking, there are some projects that are experimenting in the direction of portfolio management and DeFi strategies, and have been launched on testnets, such as Starcombo and Magnety.

StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

Source of DeFi projects on StarkNet: Beep News

Stark DeFi is the DeFi Hub on StarkEx. It is the fifth project to adopt StarkEx after dYdX, Immutable X, Sorare, and DeversiFi. It will be launched soon and deserves attention. Also, Brine Finance, which provides order book DEXs, is of decent quality.

3,GameFi

Compared with other tracks, there are more GameFi projects on StarkNet. Among them, there are 3 games that combine building blocks to split games, or games that are similar to logic.

The Ninth, Dope Wars, and Philand are the most mentioned GameFi projects in the StarkNet ecosystem. Among them, The Ninth is a Metaverse game that supports the sale, upgrade, and pledge of land. On the whole, the GameFi projects on StarkNet are relatively elementary and of low quality.

4,NFT

There are mainly the following 6 NFT projects on StarkNet. Among them, Immutable X and Sorare are both based on the StarkEx ecosystem. Among the remaining 4 projects, there are 2 NFT trading platforms, namely Aspect (formerly PlayOasis) and Mint Square. The ecological quality of NFT is also average.

StarkWare, the strongest Layer2 technical team: StarkNet has to rely on technology to break the game

Source of NFT projects on StarkNet: Beep News

5. Infrastructure

Like zkSync, StarkNet has the uniqueness of ZK Rollup Layer 2 in terms of bridge and wallet infrastructure. Universal wallets and bridges are not applicable to these two ecosystems.

In StarkNet, the widely used wallets are Argent and Braavos. The bridge uses Orbiter, LayerSwap, Kubri, Stargate. Among them, Kubri supports ERC 1155 standard NFT minting, and also supports ERC 1155 cross-chain between StarkNet and Ethereum.

StarkWare Ecosystem Features and Benefits

1. There are many native projects, NFT and GameFi can be used as a breakthrough

Because StarkNet is not compatible with EVM (Ethereum Virtual Machine), few projects of the Ethereum ecosystem are deployed in it, so the applications in the ecosystem are mostly native applications.

**Different from zkSync, each track of StarkNet develops relatively evenly. **For zkSync, the NFT and GameFi tracks are relatively barren, but there are many projects on StarkNet. However, StarkNet also has a common problem with the Rollup ecosystem in the NFT and GameFi fields, that is, the project quality is generally not high.

Considering that Immutable X (focusing on the ecology of NFT and GameFi) and Sorare (digital football NFT collection platform) on StarkEx have developed well, NFT and GameFi may be a breakthrough for StarkNet.

Since open ecosystems such as GameFi involve some complex interactions, the technical progress of ZK Rollup is also the primary problem faced by the StarkWare team.

2. Institutions are relatively conservative in their investment in ecological projects

Although in the two ecosystems of StarkNet and zkSync, investment institutions focus on investing in infrastructure and high-quality, just-needed projects with a multi-ecological layout, investment institutions in DeFi, NFT, and GameFi seem to be relatively conservative in the StarkNet ecosystem.

According to the statistics of Bibi News, investment institutions’ investment in StarkNet is mainly concentrated in 4 projects in the StarkEx ecosystem and the wallet Argent. Some DeFi innovation projects in the ecosystem, as well as NFT and GameFi projects, have not found financing information. In contrast, the zkSync ecological project has more financing information.

3. StarkEx proved the success of the to B model

StarkEx’s business model of providing capacity expansion solutions for customers has been verified. Although only 4 projects have adopted StarkEx, the data of these 4 projects can stand alone.

The StarkEx scheme is effective for the project side, on the other hand, StarkWare has obtained continuous income through StarkEx.

But StarkEx is also facing some changes. dYdX announced that it will transfer to the Cosmos ecosystem to make its own application chain. According to the founder of dYdX, the StarkEx experience (actual TPS) is not as good as imagined. In addition, some strong customers may indeed try to develop their own scaling solutions to capture the value of the underlying protocol by themselves.

In addition, StarkNet is currently not compatible with EVM, which has caused great resistance to ecological development.

4. High valuation and strong investment lineup

StarkWare currently ranks first in Layer 2 both in terms of total funding and valuation. The total financing amount reached 273 million US dollars, and the valuation was as high as 8 billion US dollars.

In addition, StarkWare has also received investment from Vitalik, Paradigm, Sequoia Capital and others. Therefore, StarkWare has sufficient funds, technical capabilities, and authoritative recognition to support the development of the Layer 2 ecosystem.

StarkWare’s Challenges and Future Outlook

As mentioned earlier, the first challenge facing StarkWare comes from the ZK Rollup technical difficulties.

The progress of ZK Rollup is slow, and cases like dYdX show that the actual expansion effect of StarkWare Layer 2 is still limited. For the StarkWare team, the pursuit of technological breakthroughs remains a top priority.

At the same time, the OP system Layer 2 is aggressively expanding its ecology and expanding its first-mover advantage. Arbitrum has launched Odyssey activities, and Optimism has launched OP. This puts more pressing demands on StarkWare’s technological breakthrough.

In terms of EVM compatibility, StarkNet is currently the only ecosystem that is not compatible with EVM among the four major Layer 2s. This will bring great resistance to the ecological development of StarkWare. (The zkSync 2.0 testnet is already compatible with EVM, which may be related to technical difficulty. zkSync uses ZK SNARK technology, StarkWare uses ZK STARK, and the latter is an improved version of the former)

At present, StarkWare has established enough technical barriers. The way they combine technology and business model – StarkEx has also been proven. StarkEx is a roadmap that StarkWare can continue to adopt.

In the development of the StarkNet ecosystem, in addition to the technological breakthroughs mentioned above, NFT and GameFi may become StarkWare’s advantageous track compared to other Layer 2s.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/starkware-the-strongest-layer2-technical-team-starknet-has-to-rely-on-technology-to-break-the-game/
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