Starknet to deploy STRK20 framework enabling privacy-focused stablecoins and other assets

Starknet is developing a new privacy capability designed to allow teams to launch shielded stablecoins and other assets while maintaining regulatory compliance.

The capability, known as the STRK20 framework, is being developed by StarkWare and is expected to deploy on Starknet later this year.

The framework is designed to enable token-level privacy for assets issued on Starknet, an Ethereum Layer 2 network, allowing transactions and balances to remain confidential while preserving compatibility with decentralized finance applications. According to the team, Starknet's solution is expected to work across ERC-20 tokens — the standard used for most fungible assets on Ethereum.

"This will enable Ethereum and ERC20s to leverage this privacy capability, including for private DeFi," StarkWare said in a statement shared with The Block, adding that the system aims to support use cases that require confidentiality without sacrificing speed, cost efficiency, or compliance features.

The framework requires no additional infrastructure because the privacy capability is embedded directly at the token level, the team said. Transactions using the system are expected to settle in under five seconds and cost less than $0.20, performance targets the developers say are intended to make privacy features practical for financial applications.

Eli Ben-Sasson, CEO of StarkWare and co-founder of Zcash, said the capability could help accelerate institutional adoption of stablecoins "up about five gears" by providing privacy for transfers, swapping, staking, and other DeFi activity.

Token-level shielding aims to balance DeFi privacy with regulatory compliance

STRK20 embeds confidentiality directly into token contracts rather than relying on external tools such as mixers. Under the framework, transaction data is shielded by default, hiding sender, receiver, token type, and transfer amount from public view while preserving composability across decentralized finance applications, according to StarkWare.

"Privacy shouldn't be an afterthought or a compromise to functionality," Ben-Sasson said, adding that the solution provides token teams with "a turnkey framework that turns privacy into a token-level attribute." The approach avoids fragmenting liquidity because privacy features operate within the token itself rather than separating assets into isolated pools, he said. "This, rather, is the DeFi we know, but anonymous."

The framework also includes viewing keys designed to support compliance requirements. These keys enable authorized parties, including regulators and law enforcement, to access transaction data when legally required, while keeping the activity private from the public.

Potential use cases include privacy-enabled stablecoins that protect users from front-running while remaining auditable, corporate payments that shield balances and salary information, and institutional DeFi activity where firms may want to prevent strategies from being publicly visible on blockchain ledgers, the firm said.

The technology is also expected to underpin strkBTC, a bitcoin-based asset Starknet announced last month that aims to enable shielded balances and confidential transfers while maintaining composability across decentralized finance applications. Starknet said the asset forms part of its broader effort to expand bitcoin's role in decentralized finance by allowing holders to participate in financial activity while protecting transaction details from public view.