Starknet Launches Shadow Accounts to Shield DeFi Activity From Main Wallets
Key Takeaways
- •Starknet launched Shadow Accounts, a feature that creates separate, persistent addresses for individual applications so DeFi activity is not publicly linked to a user's main wallet.
- •Users fund Shadow Accounts with shielded balances from Starknet's STRK20 privacy pool, and the accounts' balances, transactions and positions remain publicly visible even though the funding link is obscured.
- •Once a DeFi application integrates the feature, users can switch to private mode and deposit assets into a vault that maintains their positions until funds are withdrawn back into a shielded balance.
- •StarkWare said the functionality could eventually extend beyond vaults to liquidity provision, lending, borrowing, staking, derivatives trading, prediction markets and NFT marketplaces.
- •The launch builds on StarkWare's June rollout of the STRK20 privacy framework and a Private KYC demonstration, and differs from mixer-style services such as the U.S. Treasury-sanctioned Tornado Cash by keeping balances visible while unlinking them from main wallets.
Ethereum layer-2 network Starknet has launched a wallet privacy feature that lets users interact with decentralized finance (DeFi) applications without publicly linking that activity to their main wallets.
StarkWare, the team behind Starknet, said the new Shadow Accounts feature creates separate, persistent addresses for individual applications. Users can fund these accounts using shielded balances held in the network's STRK20 privacy pool, allowing them to maintain lending, trading or other DeFi positions under different onchain identities.
Shadow Accounts obscure the connection between the shadow address and the wallet funding it. However, the balances, transactions and positions of these shadow accounts remain publicly visible onchain, according to Starknet.
The design reflects a core property of public blockchains: every wallet's history is open by default, so anyone tracing onchain data can link a user's DeFi positions back to their primary address. Rather than concealing amounts, Shadow Accounts break that attribution link while keeping the activity itself auditable.
How it works
Once integrated into a DeFi application, the feature allows users to connect their wallets, switch from public to private mode and deposit assets into a vault. Their Shadow Account then maintains their positions until they withdraw the funds back into a shielded balance.
StarkWare said the functionality could eventually extend beyond vaults to liquidity provision, lending, borrowing, staking, derivatives trading, prediction markets and NFT marketplaces. Because the feature takes effect only once an application integrates it, which DeFi venues add support will shape how widely it is used.
StarkWare announced the launch in a post on X.
Background
Starknet is a zero-knowledge rollup developed by StarkWare. It executes transactions off Ethereum mainnet and settles validity proofs back to Ethereum using STARK cryptography, which allows the validity of computations to be proven without revealing the underlying data. The network's native token, STRK, is used to pay transaction fees.
The launch follows StarkWare's broader blockchain privacy push. In June, the company introduced its STRK20 privacy framework, which enables private transfers and shielded token balances on Starknet. Later that month, StarkWare demonstrated a Private Know Your Customer (KYC) system that allows users to verify personal information without revealing their full identity documents.
Privacy tools occupy a contested corner of the industry — the U.S. Treasury sanctioned the crypto mixer Tornado Cash in 2022, citing its use in laundering stolen funds. Starknet's approach differs from mixer-style services by keeping balances and positions visible while unlinking them from a user's main wallet.
Source: Cointelegraph
