Starknet Aims to Unify Bitcoin and Ethereum with Smart Contract Integration

Starknet’s Vision to Connect Bitcoin and Ethereum Blockchains

Starknet, the Ethereum Layer 2 network, is on a mission to bridge the gap between Bitcoin and Ethereum by enabling smart contract functionality on Bitcoin. The Ethereum scaling solution, developed by StarkWare, recently unveiled its roadmap on March 11, which details plans for Starknet to become the execution layer for Bitcoin, significantly enhancing Bitcoin’s capabilities. The goal is to scale Bitcoin’s transaction throughput from its current limit of 13 transactions per second to thousands, while also reducing block times and gas fees. This would improve the user experience and unlock new use cases for Bitcoin beyond simple transfers.

The Starknet Foundation explained in its Bitcoin roadmap that Bitcoin, while widely regarded as "digital gold," is limited by its original design, which lacks the scalability and programmability needed to support complex applications. “Most Bitcoin today sits static in wallets and exchanges,” the foundation noted, adding that many Bitcoin users are constrained by the network’s current limitations, such as its inability to natively support decentralized finance (DeFi) and other advanced applications.

Bringing Smart Contracts to Bitcoin

A core aspect of Starknet’s plan is to enable developers to build decentralized applications (dApps) directly on the Bitcoin blockchain through the use of smart contracts. This would allow Bitcoin to support more advanced features, including staking, borrowing, lending, leveraged trading, and yield farming—use cases that are traditionally reserved for more programmable blockchains like Ethereum.

Eli Ben Sasson, CEO of StarkWare—the company behind Starknet—has previously discussed the potential of using the OP_CAT opcode, originally part of Bitcoin's code but disabled due to security concerns. This opcode could unlock programmability on Bitcoin, giving developers the ability to build complex applications on the Bitcoin network, similar to what is already possible on Ethereum.

By bringing smart contracts to Bitcoin, Starknet aims to expand Bitcoin's utility, enabling new financial opportunities on the network. Starknet’s integration would provide scalability and functionality that the Bitcoin network’s base layer currently cannot support.

Collaboration with Xverse to Drive Bitcoin’s DeFi Adoption

In addition to its technical roadmap, Starknet has formed a strategic partnership with Xverse, a Bitcoin Web3 wallet provider. Xverse plans to integrate Starknet’s Layer 2 solution in the second quarter of 2025, which will significantly enhance Bitcoin’s DeFi ecosystem. Xverse’s CEO, Ken Liao, believes that this collaboration will mark a key turning point for Bitcoin’s DeFi adoption, calling it the “DeFi take-off moment” for Bitcoin.

Liao emphasized the importance of expanding Bitcoin’s utility beyond just a store of value. “In today’s environment, there is a temptation for wallet teams to say, ‘let’s just focus on making it easier for people to use Bitcoin as a store of value,’” Liao said. “But the long-term future of Bitcoin also includes utility, and that’s why layer 2 solutions must reach the public via the wallets they actually use.”

Vitalik Buterin Backs Bitcoin’s DeFi Future

Ethereum co-founder Vitalik Buterin also expressed support for the idea of a proper Bitcoin Layer 2 that could meet the necessary security properties. In a recent discussion on Starknet’s plans, Buterin noted that such a solution would be transformative for the cryptocurrency space, particularly for crypto payments. “If you go back to the white paper, Bitcoin was meant to be a peer-to-peer electronic cash system, and obviously, Layer 1 is not nearly scalable enough for that,” Buterin explained.

Buterin also pointed to the limitations of Bitcoin’s current scaling solution, the Lightning Network. “I think we’ve also seen some of the limits of the Lightning Network and that kind of approach,” he said, indicating that Starknet’s Layer 2 solution could offer a more viable way to scale Bitcoin for a wider range of use cases, including decentralized exchanges (DEXs) and cross-chain asset flows.

Starknet Joins the Bitcoin Reserve Movement

As part of its broader strategy, StarkWare—along with other major players in the crypto industry—has started to hold a portion of its treasury in Bitcoin. This move aligns with the growing trend of companies creating Bitcoin reserves, signaling a strong belief in the asset’s long-term value and its potential role in the future of decentralized finance and beyond.

Conclusion

Starknet’s initiative to connect Bitcoin and Ethereum through smart contract integration represents a bold step in expanding the utility of the two largest blockchains in the crypto ecosystem. By enabling the development of decentralized applications on Bitcoin, Starknet is not only addressing Bitcoin’s scalability limitations but also helping to bring decentralized finance (DeFi) to the world’s most established cryptocurrency.

With backing from key figures like Vitalik Buterin and strategic partnerships with companies like Xverse, Starknet’s vision could help propel Bitcoin into a new era of functionality, providing a bridge between Bitcoin’s store of value and Ethereum’s programmable capabilities. The coming years may see Bitcoin's DeFi “take-off” as Starknet leads the charge in unifying these two dominant blockchain ecosystems.