Ornella Hernandez

<div id="highlights-block_62fa8973e8a28" class="highlights">
 <ul>
 <li>Recursion process promises reduced gas fees and improved speed on layer-2 chains for NFT and DEX transactions</li>
 <li>“We’re creating capacity for the future,” says StarkWare president</li>
 </ul>
 
</div>



The <a href="https://cms.blockworks.co/ethereum-steps-closer-to-pos-as-goerli-testnet-merge-goes-live/" target="_blank" rel="noreferrer noopener">transition to proof-of-stake</a> has been the focus of Ethereum’s development efforts for much of the past year. Now that the Merge has an official target date of roughly Sept. 15, investors are asking, what comes next? 



Blockworks spoke to Ethereum scaling solutions developer <a href="https://cms.blockworks.co/tag/starkware/" target="_blank" rel="noreferrer noopener">StarkWare</a> on the importance of scaling efforts on layer-2s — specifically a separate but complementary development that intends to boost throughput: recursion.



StarkWare announced its new recursive validity proof technology during a presentation at the ETH Seoul developer conference last week.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Scale 👏 rinse 👏 repeat &#8211; Recursion! The SHARP prover switched on Recursion and hyper-scaling just became a reality! Every proof of many txs can be rolled up with others into a single proof What is it and how does it lead to better scaling, L3, and other improvements? 🧵&mdash; StarkWare (@StarkWareLtd) <a href="https://twitter.com/StarkWareLtd/status/1556670209414635521?ref_src=twsrc%5Etfw">August 8, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Recursion is a method in computer science being used to generate proofs on blockchains. By repeatedly compressing layer-2 transactions, this process promises to drive down gas fees and improve speed. The method takes several zero-knowledge proofs that have already been compressed once and then compresses them again and again at faster speeds.



Another up-and-comer, the <a href="https://cms.blockworks.co/ftx-ventures-three-arrows-capital-lead-92m-raise-for-mina-blockchain/" target="_blank" rel="noreferrer noopener">Mina blockchain</a>, is based around the same idea.



<a href="https://www.linkedin.com/in/eli-ben-sasson-9b7959/?originalSubdomain=il" target="_blank" rel="noreferrer noopener">Eli Ben-Sasson</a>, president and co-founder at StarkWare, offered the example of multiple checkout lanes at the supermarket. Instead of all customers waiting in line to buy their groceries with one cashier, customers can go through different checkout counters and transact at the same time. 



Similarly, when it comes to transactions on Ethereum, instead of all transactions for a proof waiting for a single prover, several provers work in parallel. Via recursive proofs, multiple transactions are processed at the same time, all compressed into a single proof. This results in reduced latency.



<h3>Recursion can boost capacity for processing NFTs&nbsp;</h3>



NFTs are one example of how recursion can benefit Ethereum’s transaction capacity, according to Ben-Sasson.&nbsp;



“We now have the ability to fit tens of millions of NFT [non-fungible token] mints into a single recursive proof, and therefore into a single Ethereum transaction,” Ben-Sasson said, adding that the technology is in place to “prevent tomorrow’s bottleneck.”



<a href="https://www.linkedin.com/in/kaempfer/?originalSubdomain=il" target="_blank" rel="noreferrer noopener">Gideon Kaempfer</a>, StarkWare’s head of core engineering, gave another illustration: “It’s like finding a way to comfortably fit thousands of passengers in a jet instead of a few hundred.”



The result is “many millions” of NFTs minted on Ethereum rolled up in a single STARK proof, he added.



NFTs are notorious gas guzzlers, and one of the promises of recursive proofs is to amortize gas cost per transaction by allowing more transactions to be contained in each STARK proof written to Ethereum mainnet.



When asked if blockchain networks and validators will still be able to earn money and sustain themselves with lower gas fees, Ben-Sasson said: “Absolutely.”



<blockquote class="wp-block-quote">“What we&#8217;re seeing now on blockchain is a fraction of the traffic that we are going to be seeing in the future,” he said. </blockquote>



The most significant gas guzzler by a wide margin are DEXes, namely, <a href="https://cms.blockworks.co/tag/uniswap/" target="_blank" rel="noreferrer noopener">Uniswap</a>. According to <a href="https://gasguzzlers.wtf/" target="_blank" rel="noreferrer noopener">data from Nansen</a>, Uniswap consumes the most ether on a daily basis and accounts for 37% of all gas consumed.



StarkWare stated that recursion could also “drastically” reduce fees associated with DEXes (decentralized exchanges). It may also mitigate issues associated with the <a href="https://ethereum.org/en/developers/docs/mev/" target="_blank" rel="noreferrer noopener">maximal extractable value</a> (MEV) or miner extractable value — as it’s known prior to the Merge — referring to Ethereum miners who make extra profits from organizing transactions within a block.



Another concern on users’ minds in a <a href="https://cms.blockworks.co/what-to-expect-from-ethereum-security-and-privacy-after-the-merge/" target="_blank" rel="noreferrer noopener">post-Merge</a> world is privacy and the risk of hacks. According to Ben-Sasson, privacy and security using StarkWare’s approach is as good as rollups. &#8220;In terms of security structure, it&#8217;s exactly the same,&#8221; he said.



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Can New Recursion Tech Tackle High Ethereum Fees?

<div id="highlights-block_628e515430c32" class="highlights">
 <ul>
 <li>StarkWare quadruples valuation in six months</li>
 <li>Investors bet big on layer-2 solutions</li>
 </ul>
 
</div>



StarkWare Industries, Ethereum (ETH) layer-2 scaling solutions developer, <a href="https://www.prnewswire.com/il/news-releases/building-tech-to-make-crypto-mainstream-starkware-quadruples-valuation-to-8b-301555008.html" target="_blank" rel="noreferrer noopener">announced</a> that it has raised $100 million, bringing its valuation to $8 billion from $2 billion. Six months ago, StarkWare <a href="https://cms.blockworks.co/starkware-valuation-hits-2b-after-50m-series-c-round/" target="_blank" rel="noreferrer noopener">raised</a> $50 million in a Series C funding round led by Sequoia Capital.



The Series D was led by venture capital firm Greenoaks Capital and by investment management company Coatue. Tiger Global and other undisclosed investors participated as well. There is also a secondary transaction to the round, in which employees sell their stocks, according to the company.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We are thrilled to announce our $100M Series D at an $8B valuation. We would like to thank Greenoaks and Coatue &#8211; our lead investors, Tiger Global, and many of our existing investors, for their vote of confidence in the technology, products, and ecosystem that we’re building. <a href="https://t.co/0R1e1h31HK">pic.twitter.com/0R1e1h31HK</a>&mdash; StarkWare (@StarkWareLtd) <a href="https://twitter.com/StarkWareLtd/status/1529454921451458560?ref_src=twsrc%5Etfw">May 25, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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StarWare’s latest funding takes place in the middle of a bear market and follows the crash of LUNA and TerraUSD (UST) cryptocurrencies. Despite this, StarkWare co-founder and chief executive officer Uri Kolodny said the raise was “a vote of confidence” in StarkWare’s tech stack.



StarkWare has established itself as a prominent Ethereum layer-2 scaling protocol and depends on its STARKs technology to reduce the amount of information sent to the Ethereum blockchain and alleviate blockchain congestion.&nbsp;



It recently launched its StarkNet Alpha 2 scaling solution. As a permissionless validity rollup, or zero-knowledge rollup, StarkNet uses basic compression technology to boost the production and security benefits of Ethereum layer-1 (L1).



According to Kolodny’s partner, Eli Ben-Sasson, co-founder and president at StarkWare, the goal is to make blockchain apps as mainstream as smartphone apps. “Anyone who ever built a website can use StarkNet to construct a blockchain app that will be part of the Web3 revolution, pioneering new and exciting uses for blockchain,” Ben-Sasson said.



StarkWare&#8217;s scaling engine, StarkEx, compresses transactions through STARKs before adding them to the Ethereum blockchain network. About half a trillion dollars have been reportedly traded on StarkEx.



For example, gaming company Immutable X, has been using StarkEx to mint its NFTs on Ethereum for the past two years. The StarkEx engine scaled up the throughput and reduced gas costs associated with NFT minting for its Gods Unchained blockchain game.&nbsp;



Immutable X <a href="https://immutablex.medium.com/immutable-starknet-cross-rollup-nft-liquidity-b32df88cda02" target="_blank" rel="noreferrer noopener">announced</a> on Wednesday that it will integrate building on the StarkNet protocol in order to become a cross-rollup liquidity platform for NFTs. This will enable players to directly trade any asset matched across multiple Ethereum layer-2 and layer-3 rollups, and facilitate projects migrating from L1 smart-contract based games to Immutable instantly. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The biggest games in the world will use Ethereum NFTs. Immutable will let those games build on different rollups tailored to their needs without fragmenting their assets or orders, and with full access to our platform. Next stop: StarkNet. <a href="https://t.co/7TUPQPs82D">https://t.co/7TUPQPs82D</a>&mdash; Alex Connolly (@0xConnolly) <a href="https://twitter.com/0xConnolly/status/1529430344994557953?ref_src=twsrc%5Etfw">May 25, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Ethereum Layer-2 Developer StarkWare Valued at $8B Following $100M Raise

Jacquelyn Melinek

<div id="highlights-block_622a36a4be63d" class="highlights">
 <ul>
 <li>“Since StarkNet was launched, interest from devs and investors has gone through the roof,” an anonymous company source told Blockworks</li>
 <li>In an interview with Blockworks in November 2021, one of the four co-founders said that they “didn’t need the money” from its Series C, but the funds helped them grow their operations even faster</li>
 </ul>
 
</div>



Ethereum layer-2 developer StarkWare is raising at least $100 million, for a valuation of $6 billion, Israeli newspaper Calacalist <a href="https://www.calcalistech.com/ctechnews/article/rjm00s7wbq">reported</a>.



StarkWare declined to comment Thursday. However, a company source, who spoke under anonymity to Blockworks, said they couldn’t confirm it, “but it sounds entirely plausible.”



“Since StarkNet was launched, interest from devs and investors has gone through the roof,” the source said.



The new valuation is triple its previous $2 billion valuation from just four months ago, when the company raised <a href="https://cms.blockworks.co/starkware-valuation-hits-2b-after-50m-series-c-round/" target="_blank" rel="noreferrer noopener">$50 million</a> in a Series C round led by Sequoia Capital.



<blockquote class="wp-block-quote">“It seems to be the idea of letting anyone build Web3 that&#8217;s caught the imagination of venture capital,” the source said. “So, while the numbers cited are high, if I arrive at work and hear it&#8217;s accurate, I won&#8217;t be surprised.”</blockquote>



StarkWare is a four-year-old startup — created by four co-founders Eli Ben-Sasson, Alessandro Chiesa, Uri Kolodny and Michael Riabzev — that offers blockchain scaling services through “STARK” proofs, which are Ethereum-based products using rollups technology invented by Ben-Sasson and Riabzev.



The StarkWare-based solutions include its two products — StarkEx, a permissioned validity rollup, and StarkNet, a permissionless decentralized zero-knowledge rollup  — which aim to increase speed and reduce the cost of Ethereum gas fees.



The largest dApp on StarkEx, by total-value-locked (TVL), is decentralized derivatives exchange <a href="https://cms.blockworks.co/?s=dydx" target="_blank" rel="noreferrer noopener">dydx</a>, with roughly $1 billion in TVL, <a href="https://defillama.com/protocol/dydx" target="_blank" rel="noreferrer noopener">according to DeFi Llama</a>.



Two weeks ago, StarkNet began deploying decentralized apps, or dApps, with zero-knowledge rollup technology to help alleviate the blockchain’s scaling problem.&nbsp;



In an interview with Blockworks in November 2021, Kolodny said StarkNet “didn’t need the money” from the Series C, but the funds helped them grow their operations faster.



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Ethereum Scaling Startup Reportedly Triples Valuation in 4 Months

<div id="highlights-block_6193fdb0c2f5f" class="highlights">
 <ul>
 <li>This funding round comes just seven months after the layer-2 developer protocol raised $75 million in a Series B round</li>
 <li>“The more that blockchain technology is available, to everyone from a lone farmer in the developing world to a businessperson in New York, the more we’ll discover its transformative potential,” Eli Ben-Sasson said to Blockworks</li>
 </ul>
 
</div>



Ethereum-based Starkware has raised $50 million in a Series C round led by Sequoia Capital, bringing its valuation to $2 billion. 



This funding round comes just seven months after the layer-2 developer protocol raised $75 million in a Series B round. Existing investors also participated in the round, including Paradigm, Alameda Research, Three Arrows Capital and Founders Fund.&nbsp;



Starkware is a four-year-old <a href="https://cms.blockworks.co/the-rise-of-dexs-begins-move-to-l-2s-like-starkware/" target="_blank" rel="noreferrer noopener">startup</a>, created by four co-<a href="https://starkware.co/about-us/" target="_blank" rel="noreferrer noopener">founders</a> Eli Ben-Sasson, Alessandro Chiesa, Uri Kolodny, and Michael Riabzev, that offers services for blockchains to scale through ‘STARK’ proofs, which are Ethereum-based products using rollups technology that were invented by Ben-Sasson and Riabzev. 



“The truth is, we didn’t need the money. Our StarkEx scaling engine is profitable and is thriving, powering such crypto success stories as dYdX and Sorare. You get a sense of the size of the operation when you consider that we’re minting all the NFTs for the new Immutable X NFT platform,” said Kolodny in an interview with Blockworks.&nbsp;



“But the funds help us to grow our operation even more quickly than we have until now and enable us to give the best mainnet launch imaginable to our new platform StarkNet. This will be fully deployed on mainnet in the coming weeks, and it will be a game-changer, starting a building boom on blockchain,” Kolodny added.&nbsp;



The Stark-based solutions include its two products StarkEx, a permissioned validity-rollup, and StarkNet, a permissionless decentralized ZK-rollup, which aim to increase speed and reduce the cost of Ethereum gas fees.&nbsp;



<blockquote class="wp-block-quote">“The more that blockchain technology is available, to everyone from a lone farmer in the developing world to a businessperson in New York, the more we’ll discover its transformative potential,” Ben-Sasson said to Blockworks. “And the more we advance our scaling technology and make it more efficient, the lower the carbon footprint of each blockchain transaction will become. Given that blockchain use will inevitably rise, this is important for future generations,” Ben-Sasson added.&nbsp;</blockquote>



Prior to this funding, Starkware’s technology was only available to clients through its scaling Engine StarkEx. But the new capital raised will support the deployment of its StarkNet layer-2 platform, which will allow anyone to build blockchain applications with its technology, the company said.



“Via StarkNet, it will open up a brave new world where all the dApps that people have dreamed about but which weren’t viable because of high gas fees will start to be built,” Ben-Sasson said.&nbsp;



“Our plans for the future focus on scaling more, and more efficiently, and really seeing our technology making a difference. We want to see it helping companies to succeed, also helping the general public and the environment,” Ben-Sasson added.



<hr class="wp-block-separator"/>



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