Starknet, a layer-2 network built on Ethereum, has launched Shadow Accounts, a new wallet privacy feature aimed at decentralized finance (DeFi) users. Developed by StarkWare, the company behind Stark, the tool lets users interact with DeFi applications without publicly linking that activity to their main wallets. The launch gives applications a way to offer privacy as an optional mode, letting users switch between public and private settings.

The feature speaks to a long-standing property of public blockchains: transactions are pseudonymous but fully public, meaning anyone can follow an address's history through block explorers and link its activity across protocols. For DeFi participants, that traceability has meant positions in lending, trading, and other applications are generally visible to any observer. Shadow Accounts are built to separate application-level activity from a user's main wallet.

StarkWare announced the launch on X on October 13, 2026. According to the announcement, Shadow Accounts are now live on the network as a new STRK20 privacy primitive that lets applications offer a Public → Private switch:

1/ Every app should have a private mode. So we shipped it

Introducing Shadow Accounts, now live on Starknet.

A new STRK20 privacy primitive that lets apps offer a Public → Private switch, without publicly linking users' activity to their main wallets pic.twitter.com/YjKbHX1i0d

— StarkWare (@StarkWareLtd) October 13, 2026

How Shadow Accounts Work

Shadow Accounts create separate addresses for individual applications, and these addresses are persistent, meaning they stay in place over time. Because the addresses persist, a Shadow Account can serve as a user's ongoing identity within a single application, even as the main wallet stays unlinked from the account's activity.

Users fund their Shadow Accounts with shielded balances held in the network's STRK20 privacy pool. This setup allows users to keep lending, trading, or other DeFi positions under different onchain identities, with each application able to have its own account tied to the same user.

The feature hides the connection between a Shadow Account and the wallet that funds it, making it harder to trace the account back to its owner's main wallet.

The privacy has limits. According to Starknet, the balances, transactions, and positions of Shadow Accounts remain publicly visible onchain. In other words, observers can still see what a Shadow Account holds and what it does; what is hidden is which main wallet sits behind it.

Once a DeFi application integrates the feature, users can connect their wallets and switch from public mode to private mode. They can then deposit assets into a vault, and the Shadow Account holds their positions until they withdraw. At that point, the funds move back into a shielded balance.

Plans to Expand the Feature

For now, the feature centers on vaults. StarkWare said it could eventually extend the capability to other parts of DeFi, including liquidity provision, lending, borrowing, and staking. The company also listed derivatives trading, prediction markets, and NFT marketplaces as potential areas.

Part of a Broader Privacy Push

The launch forms part of a wider privacy effort by StarkWare this year, with several privacy tools released in recent months. In June, the company introduced its STRK20 privacy framework, which allows private transfers and shielded token balances on Starknet. The STRK20 privacy pool that funds Shadow Accounts is part of this framework and serves as the base for the new feature.

Later in June, StarkWare demonstrated a Private Know Your Customer (KYC) system that lets users verify personal information without revealing their full identity documents.

Shadow Accounts are now the newest tool in that lineup. The rollout reflects StarkWare's stated view that every app should be able to offer a private mode. Users can access the feature through DeFi applications that choose to integrate it. Which applications add the Public → Private switch, and how quickly they do, will show how far the feature reaches beyond its initial vault focus.