Starknet, an Ethereum Layer 2 solution, is working on facilitating transaction settlement on both Bitcoin and Ethereum, aiming to merge the two largest blockchains into a single unified layer.
In its Bitcoin roadmap released on March 11, the Starknet Foundation said its vision is to make Starknet the execution layer for Bitcoin. This would scale Bitcoin’s transaction capacity from just 13 transactions per second to thousands, reducing block sizes and gas fees while enhancing the overall user experience.
The foundation pointed out that a large portion of Bitcoin remains dormant in wallets and exchanges due to its original design, which limits scalability and doesn’t support more advanced applications beyond basic transactions.
While many investors see Bitcoin as “digital gold,” the Starknet Foundation believes there is demand for Bitcoin to serve additional functions.
StarkWare’s CEO, Eli Ben Sasson, noted that the OP_CAT opcode—a feature from Bitcoin’s early days that enabled programmability but was disabled due to security concerns—could allow Starknet to settle transactions on the Bitcoin blockchain.
If successful, Starknet would enable developers to create decentralized applications on Bitcoin using smart contracts, paving the way for use cases like staking, borrowing, lending, leveraged trading, and yield farming.
As part of this effort, StarkWare revealed that it is joining other companies in establishing a Bitcoin reserve and increasing its cryptocurrency holdings in its treasury.
Starknet is also collaborating with Xverse, a Bitcoin Web3 wallet, with integration plans set for Q2 2025. Xverse’s CEO, Ken Liao, emphasized that this partnership would be a pivotal moment for Bitcoin’s “DeFi breakthrough.” He explained that wallets should not only store Bitcoin but also provide access to its expanding use cases. Liao underscored that Bitcoin’s future lies in its utility, which is why Layer 2 solutions must be easily accessible through the wallets people use.
In a March 11 X-space discussion on Starknet’s plans, Ethereum co-founder Vitalik Buterin said a proper Bitcoin Layer 2 solution could address security requirements and improve the efficiency of crypto payments, unlocking various use cases.
Buterin also highlighted the importance of enabling trustless asset transfers between the Bitcoin and Ethereum ecosystems, which could enhance decentralized exchanges. He reminded the audience that Bitcoin was originally designed as a peer-to-peer electronic cash system, and while Layer 1 alone is not enough for this goal, Layer 2 solutions could address its limitations.
