Will ‘Bitcoin staking’ on Starknet really make BTC productive?

Starknet has introduced a new feature that enables Bitcoin holders to stake their assets on its Ethereum-based Layer 2 network.

Announced on Sept. 30, the update marks what the team calls the first trustless method of staking BTC beyond its original blockchain. Through the program, participants can delegate tokenized versions of Bitcoin, earn staking rewards, and contribute to Starknet’s security, all without surrendering custody of their coins.

Bitcoin itself was never designed for staking. Its proof-of-work system keeps miners central to validation, leaving little room for holders to earn yield directly. Starknet circumvents this limitation by accepting wrapped representations of Bitcoin, such as WBTC, tBTC, Liquid Bitcoin, and SolvBTC.

These assets can be integrated into Starknet’s consensus process and are protected by zk-STARK cryptography. Notably, the technology is widely recognized for its speed and post-quantum resistance.

This initiative also ties into Starknet’s broader ambition of becoming an execution layer for Bitcoin. In recent tests, the team used Circle STARKs to verify Bitcoin’s full header chain in 25 milliseconds on a Raspberry Pi, demonstrating real-world performance.

Starknet has also launched decentralized sequencers and is collaborating with BitVM researchers to explore next-generation Bitcoin scaling solutions.

Will this make Bitcoin productive?

Starknet stated that the upgrade aims to rectify a glaring imbalance that has left most of Bitcoin’s $2 trillion market capitalization inactive on its base chain.

According to the firm, roughly 98.5% of the supply remains unused, while Ethereum has developed a thriving staking economy that now holds more than $38 billion, or approximately one-third of its circulating supply.

Bitcoin’s equivalent sector is comparatively small, at approximately $2.5 billion, with only 58,500 BTC in circulation.

Bitcoin Staking Market (Source: Coinlaw)

Starknet argued that staking Bitcoin on its network would help redirect part of this dormant value by allowing BTC holders to gain fresh yield opportunities and adding a deeper security base for the Ethereum layer-2.

Since BTC is considered relatively lower-risk than most digital assets, investors typically accept slimmer returns. That dynamic makes BTC an efficient complement to STRK, Starknet’s native token, because securing the network with Bitcoin can be less costly than relying solely on STRK.

Developers argue that this design could initiate a reinforcing cycle as more Bitcoin is transferred to Starknet, thereby increasing liquidity and network security.

This increased liquidity makes Starknet’s ecosystem more appealing to builders and asset holders, which in turn increases STRK participation. At the same time, the higher STRK involvement boosts the overall reward pool, making Bitcoin staking more attractive and drawing even more BTC into the system.