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Starknet, an Ethereum Layer 2 solution, is working on enabling the settlement of transactions on both Bitcoin and Ethereum to integrate the two largest blockchains into one unified layer.
In its Bitcoin roadmap released on March 11, the Starknet Foundation said its goal of make Starknet Bitcoin’s execution layer. This would scale Bitcoin from just 13 transactions per second to thousands, reducing block sizes and gas fees, and improving the overall user experience.
The foundation highlighted that a significant portion of Bitcoin today remains inactive in wallets and exchanges due to the network’s original design, which limits scalability and doesn’t natively support more complex applications beyond simple transactions.
While many investors consider Bitcoin as "digital gold," the Starknet Foundation believes there’s a demand for Bitcoin to serve additional purposes.
StarkWare’s CEO, Eli Ben Sasson, mentioned that the OP_CAT opcode—a feature from the Satoshi-era for unlocking programmability on Bitcoin, which was disabled due to security concerns—could enable Starknet to settle transactions on the Bitcoin blockchain.
If successful, Starknet would allow developers to build decentralized applications on Bitcoin using smart contracts, enabling use cases like staking, borrowing, lending, leveraged trading, and yield farming.
As part of this initiative, StarkWare revealed it is joining other firms in creating a Bitcoin reserve and holding a growing portion of its treasury in cryptocurrency.
Starknet is also partnering with Xverse, a Bitcoin Web3 wallet, with integration plans set for Q2 2025. Xverse’s CEO, Ken Liao, emphasized that this partnership would mark Bitcoin’s “DeFi take-off moment.”
He stated that wallets should not merely act as storage but should also facilitate access to Bitcoin’s expanding utility. Liao stressed that the future of Bitcoin lies in its utility, which is why Layer 2 solutions must be accessible through the wallets people actually use.
During a March 11 X-space discussion on Starknet’s plans, Ethereum co-founder Vitalik Buterin shared that a proper Bitcoin Layer 2 solution could address the necessary security properties and make crypto payments more efficient, unlocking various use cases.
Buterin also emphasized the value of enabling trustless asset flow between the Bitcoin and Ethereum ecosystems, which could streamline decentralized exchanges. He noted that Bitcoin was originally intended to be a peer-to-peer electronic cash system, and while Layer 1 is insufficient for this purpose, Layer 2 solutions can help overcome its limitations.