MakerDAO, the largest lending protocol in DeFi with $14.5B in TVL, announced that it will deploy on Ethereum Layer-2 (L2) scaling solution StarkNet on Apr. 28.
StarkNet is MakerDAO’s first foray into zero-knowledge based rollups and follows its deployment of bridges to optimistic rollups Arbitrum and Optimism. As the Ethereum Foundation writes, “There are two different approaches to rollups: optimistic and zero-knowledge – they differ primarily on how this transaction data is posted to L1.”
Zero-knowledge rollups like StarkNet use validity proofs where transactions are computed off-chain and then compressed data is supplied to Ethereum Mainnet as proof of their validity. In the case of optimistic rollups like Arbitrum and Optimism, transactions are assumed to be valid and can be challenged if necessary; if an invalid transaction is suspected, a fault proof is run to check.
StarkNet was created by StarkWare, an Israeli startup backed by the likes of Sequoia, Paradigm, and Coinbase Ventures. StarkNet is a permissionless version of the StarkEx platform that has over $1.16B in TVL, 145M total transactions, and includes clients like dYdX, Sorare, and Immutable.
Regarding the new integration, StarkWare co-founder Eli Ben-Sasson said, “[MakerDAO’s] choice to deploy over StarkNet is another validation of StarkNet’s promise as a validity roll-up and will help make StarkNet decentralized and empowering to developers.”
MakerDAO is responsible for DAI, the world’s first decentralized dollar-pegged stablecoin released in 2017. Thanks to the StarkNet integration and the Maker Wormhole (MakerDAO’s solution to bridge across the Ethereum ecosystem), users will be able to move DAI frictionlessly between L2 protocols and from L2 to L1.
Faster and Cheaper Transactions
Other benefits of the StarkNet integration include faster withdrawals, a reduction in mint time, improvements in the liquidation experience, and a significant reduction in gas costs. According to the Ethereum Foundation, users can reduce gas fees by up to 100x by transacting on layer-2 compared to mainnet.
“StarkWare initially reached out to Maker and proposed working together. It made sense given StarkNet was the first ZK type rollup that had an operational and working testnet,” MakerDAO software developer Maciek Kaminski told The Defiant.
“ZK-Rollups significantly reduce the computing and storage resources required to validate blocks, something that is in high demand across varying disciplines in the blockchain industry. They ensure faster transactions and keep gas fees low, so collaborating with StarkNet to deliver this to Maker seemed a natural fit for both parties,” he continued.
The StarkNet integration marks a major step in MakerDAO’s multichain strategy. The MakerDAO team hopes the integration will increase the number of MakerDAO users while accelerating future bridging to other scaling solutions and sidechains. This move is a piece of their larger plan to grow users and establish MakerDAO’s prominence by making DAI and Maker Vaults available as widely as possible.
In regards to managing risk and security, Kaminski said, “Throughout the process, we are ensuring there is adherence to engineering best practices which are evaluated through various audits. To ensure there is adequate damage control, we have adopted limits on the number of operational bridges along with transaction limits. We have also introduced a circuit breaker. Censorship resistance, deposit cancellation, and forced withdrawals have all been introduced to the integration.”
MakerDAO has already started the multiphase integration by building a bridge with a wallet interface. Next, the team will release the ability to make fast withdrawals, near-instant teleportation of DAI across Layer-2, and finally the implementation of all of MakerDAO on StarkNet.