Starknet announces plan to bridge Bitcoin and Ethereum on a unified layer 2

Starknet plans to use Bitcoin as a settlement layer alongside Ethereum, aiming to connect the two largest blockchains on a single layer 2 network.

The Starknet Foundation’s Bitcoin roadmap, published on Mar. 11, outlined how the network could scale Bitcoin (BTC) from its current 13 transactions per second  to thousands of tramsactions. Although Bitcoin provides deep liquidity and security, decentralized finance development has been difficult due to its limited programmability. Starknet (STRK) wants to change that.

To achieve this, Starknet is pushing for OP_CAT, a proposed Bitcoin update that would allow users to set spending conditions for BTC and enable zero-knowledge proofs, which are cryptographic techniques for verifying transactions without revealing personal data. This would allow a fully trustless bridge between Bitcoin and Starknet.

Until OP_CAT is adopted, Starknet will use alternatives like BitVM, a verification method that lets Bitcoin execute smart contract logic without changing its base layer. 

To support this shift, the Starknet Foundation has launched BTCFi Season, a program focused on expanding Bitcoin’s financial use cases. It has also partnered with Bitcoin wallet Xverse. Xverse has been pushing to integrate Bitcoin DeFi into its wallet.

Meanwhile, StarkWare, Starknet’s core technology provider, has moved part of its treasury into Bitcoin, creating a Strategic Bitcoin Reserve.

In a Mar. 11 X space, Ethereum co-founder Vitalik Buterin backed the idea of a highly secure Bitcoin layer 2 with strong security. Buterin noted that it might “make crypto payments great again.”

He pointed out that scaling problems have slowed down Bitcoin’s initial objective of acting as a peer-to-peer cash system and that current solutions, such as the Lightning Network, have limitations. 

The Lightning Network, for example, has faced issues with liquidity constraints, routing failures, and the need for always-online nodes, which limit its efficiency for large-scale payments.