Starknet Launches Shadow Accounts for DeFi Wallet Privacy

Ethereum layer-2 network Starknet has launched a wallet privacy feature that lets users interact with decentralized finance (DeFi) apps without publicly linking activities to their main wallets. 

StarkWare, the team behind Starknet, said that its new Shadow Accounts feature creates separate, persistent addresses for individual applications. Users can fund the accounts using shielded balances held in the network’s STRK20 privacy pool. This allows them to maintain lending, trading or other DeFi positions under different onchain identities. 

The new privacy feature obscures the connection between the shadow account and the wallet funding it. However, balances, transactions and positions of these shadow accounts remain publicly visible onchain, according to Starknet. 

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 Accounts then maintain their positions until they withdraw 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. 

The launch follows StarkWare’s broader blockchain privacy push. In June, the company introduced its STRK20 privacy framework, which allows private transfers and shielded token balances on Starknet. 

Later that month, StarkWare demonstrated a Private Know Your Customer system that enabled users to verify personal information without revealing their full identity documents.

Related: StarkWare unveils Starknet quantum roadmap, says industry has no excuse

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