Starknet Plans to Bridge Bitcoin and Ethereum on a Unified Layer 2

While Bitcoin offers deep liquidity and strong security, its limited programmability has hindered decentralized finance (DeFi) development. Starknet seeks to address these challenges and create new opportunities for DeFi on the Bitcoin network.

To achieve this vision, Starknet is advocating for OP_CAT, a proposed Bitcoin upgrade designed to enable users to set specific spending conditions for BTC while leveraging zero-knowledge proofs — cryptographic methods that verify transactions without revealing personal data. This enhancement would create a trustless bridge between Bitcoin and Starknet, significantly advancing the network’s DeFi capabilities. Until OP_CAT is implemented, Starknet plans to rely on alternative solutions like BitVM, a verification method that allows Bitcoin to execute smart contract logic without altering its base layer.

To support this transition, the Starknet Foundation has introduced BTCFi Season — a dedicated program to expand Bitcoin’s financial use cases. The foundation has partnered with Bitcoin wallet Xverse to strengthen its efforts, which has been actively working to integrate Bitcoin DeFi functionalities into its platform.

In a March 11 X Space, Ethereum co-founder Vitalik Buterin expressed his support for a highly secure Bitcoin Layer 2 solution, emphasizing that it could “make crypto payments great again.” He pointed out that scaling issues have hindered Bitcoin’s original goal of being a peer-to-peer cash system, noting that current solutions like the Lightning Network must address limitations.

Notably, Buterin has highlighted the importance of wallet security to prevent cryptocurrency loss, not just theft. In a recent social media exchange, he pointed out that many users lose crypto due to forgotten passwords, software failures, lost devices, or inadequate backup practices before hardware upgrades. Unlike theft, these incidents often go unreported, as victims may feel ashamed or see no one to blame.

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