What is StarkEx and How Does it Work?
Published on: December 21, 2022

What is StarkEx and How Does it Work?

Scaling Ethereum with StarkEx: A Layer-2 Solution for Lightning-Fast Transactions and Low Gas Fees

Ethereum, like many other layer-1 blockchain networks, has been long facing scalability issues resulting in low throughput, long transaction times, and unpredictable gas fees. For decentralized applications that rely on the processing of hundreds of millions of transactions, these scalability challenges discourage users from adopting applications built on Ethereum.

To combat this, StarkWare developed StarkEx, an application-specific layer-2 scalability engine built on top of the Ethereum blockchain.

Designed to dramatically improve Ethereum blockchain scalability, StarkEx offers lightning-fast, low gas fee transactions without compromising security, privacy, or self-custody.

To achieve this, StarkEx uses an advanced cryptographic system called STARK Validity Proofs.

Validity proofs batch transactions off-chain while validating the legitimacy of the transactions through a smart contract on the Ethereum Mainnet. In addition to increasing throughput, the gas fee is split across all transactions in the same batch resulting in lower gas fees for all applications using StarkEx.

How the StarkEx Scalability Engine Works

The beauty of StarkEx lies in the uneven division of labor between the scalability engine’s two key components, the off-chain STARK prover and the on-chain verifier. The Verifier computation is polylogarithmic in the amount of computational work being proved, allowing StarkEx to provide both scale and computational integrity.

But how does it really work under the hood? The process consists of four steps:

  1. Batching
  2. Validating & Updating
  3. Generating a Proof
  4. On-chain Verification

Let’s break each down a bit further.

Batching

An operator (like an exchange) groups together multiple transactions into a “batch” for processing by the StarkEx service. From there, the entire batch is submitted on-chain as a single compressed state update, backed by a proof. This allows for more efficient processing and reduces the overall number of transactions that must be handled on-chain.

Validating and updating

The update is then compressed in the form of a hash on the entire state of the system.

Generating a proof

Once the batch is processed, StarkEx generates a STARK proof to confirm the validity of the transactions. The proof and update are then sent to the on-chain Verifier smart contract to ensure the integrity of the transactions.

On-chain verification

Once the STARK proof is verified, the state update is committed and settled back on the Ethereum mainnet.

All transactions are processed and validated off-chain, while the proof of their integrity is verified on-chain. In addition, all transactions are private and protected by post-quantum secure cryptography. This means the integrity of StarkEx is resistant to attacks from quantum computers, which may soon hold the ability to break traditional cryptographic algorithms.

StarkEx’s Track Record and Use Cases

And StarkEx’s track record is impressive. Since going live on the Ethereum Mainnet in 2020, the battle-hardened, production-ready StarkEx engine has processed over $778 billion in cumulative trading volume across over 294 million transactions, with over 90 million in NFTs minted. A testament to the reliability, security, and trust in StarkEx, over $548 million in value sits locked across all StarkEx platforms.

But perhaps more impressive than the statistics themselves is StarkEx’s flexibility.

With StarkEx’s out-of-the-box implementation and integration through a simple REST API, production-ready applications can be launched onto Mainnet in only a few weeks time. And thanks to Cairo, Starkware’s expressive ZKP programming language, there is more flexibility to add additional features to StarkEx specific logic.

This is perfectly illustrated by the wide range of applications built on the platform.

Sorare

Sorare is an Ethereum blockchain-based fantasy sports game that allows players to collect, trade, and manage a virtual team of digital NFT player cards.

According to Sorare’s Blockchain Architect Pierre Duperrin, Sorare’s integration with StarkEx has finally allowed Sorare to break into the mainstream, while saving the company close to $1 million per week.

“Our vision was always to sell assets at $10 or $5, but gas costs were prohibitive…Today we are paying almost zero gas fees,” he said.

Since its launch in July 2021, StarkEx has powered over $790 million in trading volume across nearly 16 million transactions on the Sorare platform.

ImmutableX

Immutable is a layer-2 scaling solution for NFTs on the Ethereum blockchain. In their mission to power the next generation of Web3 games, Immutable leverages StarkEx to provide users with seamless gameplay, lightning-fast transaction speeds, and gas-free, fully carbon-neutral NFT minting and trading.

To date, StarEx has powered over $361 million in NFT trading volume from 155 million transactions across the entire ImmutableX ecosystem, including top Web3 games and marketplaces like Gods Unchained, Guild of Guardians, and GameStop Marketplace.

dYdX

dYdX is a non-custodial decentralized finance (DeFi) exchange offering perpetual trading options for over 35 top cryptocurrencies. Determined to deliver the best possible trading experience, dYdX has implemented StarkEx to provide users with lower trading fees and trade minimum sizes, cross-margin trading, instant trade settlement, and most importantly, self-custody of all assets.

“Trades are submitted on-chain in validity rollups, reducing the amount of gas required per trade. We’re able to pass on those savings to traders in the form of reduced trading fees across the board,” said dYdX Founder and CEO Antonio Juliano.

This is only the beginning.

As Ethereum’s efficiency and performance improves through sharding, so will StarkEx, further enhancing the experience of both developers and users across our partner ecosystem. In the meantime, our team will continue to innovate behind the scenes, monitoring new advancements and working diligently to deliver the best product possible.

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