How do you view Starknet's announcement of entering the BTC layer2 field?

Author: Haotian

Starknet, as an important Layer2 solution in the Ethereum ecosystem, has recently turned its attention to Bitcoin, hoping to break existing limitations through technological innovation and enter the BTC Layer2 market. Researcher Haotian published an article discussing his views on Starknet's announcement to venture into the BTC layer2 field. Below is the full text.

How to view Starknet's announcement to enter the BTC layer2 field? In short:

• The prerequisite for Starknet to expand Bitcoin is the prior approval of the OP_CAT proposal, which carries uncertainty;
• Starknet's entry into BTC layer2 may break the awkward situation where the BTC ecosystem shines in the East but not in the West;
• The trend of layer2 moving towards layer1 is strengthening, and high performance may become Starknet's differentiated advantage?

Next, let me share my thoughts:

1) OPCAT can achieve the combination and linking of multiple UTXO unlocking script byte strings, greatly enhancing the programmability of the BTC mainnet. OPCAT allows script fragments to be combined, and STARK proofs provide a minimalistic and efficient method of computational verification. With the foundation of OP_CAT, Starknet naturally possesses the capability to batch transactions to the BTC mainnet and perform ZK Validity verification through STARK proofs.

However, it is still uncertain whether OPCAT will be approved. Even if OPCAT is approved, there are many unknown challenges in perfectly handling the combination verification for large-scale layer2 transactions. Therefore, Starknet's venture into BTC layer2 can only be considered a narrative direction.

Theoretically, as long as OP_CAT is approved, not only Starknet but also other Ethereum layer2s with ZK-Rollup capabilities can line up to enter. Other BTC scaling solutions like BitVM, AVM, RGB, RGB++, and the Lightning Network will also receive a "boost," and it remains to be seen whether Starknet's scaling solution will hold an advantage.

2) I actually believe that whether it's the narrative or the ambitious expansion of market application scenarios, Starknet's choice of the BTC layer2 direction is a significant benefit for the overall BTC ecosystem. At the very least, it can bring more Western capital attention to the BTC ecosystem and provide stronger support for the rationale behind the existence of BTC layer2.

Moreover, a project like Starknet at this level being able to catalyze the implementation of OPCAT may increase the likelihood of its success, and this high-profile approach may involve some capital operations. (Although Bitcoin Core member Peter Todd has publicly criticized that Starknet's entry provides new reasons to oppose OPCAT, arguing that it could have a destructive impact on Bitcoin.)

From a positive perspective, the capital behind Starknet is bullish on BTC layer2, connecting developers in the ecosystem that Starknet radiates, while also refining Starknet's exploration of relevant technical standards and new technologies to align with the BTC ecosystem. This has "flagship" significance for enhancing Starknet's comprehensive capabilities and attracting more capital and developers to the BTC layer2 direction.

3) I previously wrote an article stating that as the modular approach separates and recombines the DA layer, execution layer, and even settlement layer, layer2 projects are gradually becoming layer1. Now, with even Ethereum's most loyal layer2 project Starknet announcing its "defection," it's not that the child has grown up and is hard to manage, but rather that taking a step forward opens up vast possibilities.

Everyone can certainly notice that with the introduction of OP-Rollup and ZK-Rollup's Stack strategy, the lightweight deployment services of "one-click chain creation" and "Rollup as a Service" have driven the costs and efficiency thresholds for launching layer2 chains to unprecedented lows. The question arises: with more chains, what happens if the growth of ecological applications and users doesn't keep up?

We can only further delve into technology and expand the narrative. Starknet recently stated that it is now the chain with the highest TPS, with fees reduced to $0.01, and it also supports parallel transaction processing. The upcoming Volition will further lower DA costs, etc. However, who cares? These do not bring new growth expectations to the market. In contrast, if Starknet can extend its applications to Bitcoin, it would be different.

Because once the shackles of the Ethereum mainnet are broken, Starknet's imaginative space will no longer be limited to layer2. Its underlying ZK technology, along with parallel transactions and the Cairo language, provides a high-performance foundation that distinguishes it from other layer2 solutions.

For layer2 to become layer1, it must be based on ultra-high-performance technology, and Starknet does not lack technology. Clearly, from this perspective, market expectations for Starknet are unlikely to diminish. Who knows, one day Starknet might announce its intention to become a ZK unified layer, aiming to be the ZK infrastructure for the entire chain environment.

Anyway, once the narrative constraints of layer2 are broken, Starknet's imaginative space will be vastly different.