Mentioned in This Article
1. Starknet STRK20 brings Zcash-style privacy to Ethereum tokens
Starknet, the Ethereum layer 2 network built on zero-knowledge proofs, now offers what its backers describe as programmable private money through its STRK20 framework, reported on October 18, 2026. The framework lets tokens that follow the common ERC-20 format hide balances, transfers, senders, receivers and amounts from public view, while still allowing authorized parties such as auditors to see the details. Its first major asset is strkBTC, a shielded form of Bitcoin.
The idea echoes Zcash, the privacy-focused cryptocurrency that popularized confidential digital cash. Where Zcash built privacy into a separate blockchain, Starknet applies it at the level of the token, so that existing assets on an Ethereum-linked network can gain the same property. This article explains what STRK20 does, how its compliance features work and why the design matters for decentralized finance.
2. What is STRK20?
STRK20 is a token-level privacy framework. It applies to any asset that resembles an ERC-20 token, which is the standard format used by most tokens on Ethereum and its layer 2 networks. Because the standard is so widely adopted, a privacy layer built around it can in principle reach a large range of assets, from stablecoins to governance tokens.
A token that uses STRK20 can keep its balances, transfers, senders, receivers and amounts hidden from the public. On an ordinary public blockchain every one of those details is visible to anyone with a block explorer. Hiding them changes who can watch a wallet and what they can learn from doing so.
Starknet's team has described the framework as embedding privacy directly in the token contract rather than routing funds through a separate mixing service. A mixer pools assets from many users to obscure their transaction history, whereas STRK20 builds shielding into the way the asset itself moves.
3. Can private tokens still be used in DeFi?
Yes, according to the design described for the framework. STRK20 supports swaps, lending and staking while keeping the transaction details private. That is a notable feature, because privacy tools have often worked only for simple transfers and have struggled to connect with the applications where most onchain activity takes place.
Decentralized finance depends on composability, meaning that applications can call one another and users can move assets from one protocol to the next. A privacy layer that breaks this chain forces users to choose between confidentiality and access to the ecosystem. By supporting trading, borrowing and staking, STRK20 aims to remove that trade-off.
4. How do viewing keys and selective disclosure address compliance?
Two mechanisms are intended to make private assets acceptable to regulated institutions. A viewing key lets an authorized party, such as an auditor, see transaction details that remain hidden from everyone else. Selective disclosure lets a user prove particular facts to a particular recipient without exposing their full activity to the public.
The framework includes viewing keys to support disclosure of wallet activity in response to legally binding requests, while transactions remain hidden from the public. In practice, this means a company could keep its payments away from competitors yet still hand records to a regulator or accountant when required.
These features respond to a long-running pressure on privacy coins. Exchanges and financial regulators in many jurisdictions have restricted assets that offer no way of examining a transaction, because such assets are harder to monitor for money laundering and sanctions evasion. A design that offers privacy by default but disclosure on legitimate request is an attempt to meet both concerns.
5. What is strkBTC?
The first major asset built on STRK20 is strkBTC, a shielded form of Bitcoin. It is described as a wrapped version of the asset backed one to one by bitcoin locked on the Bitcoin network and redeemable at any time. Holders can switch between public and shielded modes from their wallet, which gives them flexibility depending on whether a given transaction needs to be visible.
Bitcoin itself is transparent, since every transfer is recorded on a public ledger, and it offers limited native support for confidentiality. A shielded wrapper brings Bitcoin liquidity into an environment where private transfers and private DeFi activity are possible. Like Zcash, strkBTC is designed to be held at either public or private addresses, which provides room to meet compliance needs.
6. Why does the Zcash connection matter?
Zcash is built on zero-knowledge cryptography, which allows one party to prove that a statement is true without revealing the underlying data. Starknet uses a related family of proofs, known as STARKs, to verify computation on its network. The shared foundation explains why developers who worked on privacy for Zcash have been involved in Starknet's efforts.
Eli Ben-Sasson, a StarkWare co-founder and Starknet Foundation board member, helped shape the cryptography behind Zcash, and his involvement links the two projects. The relationship is one of shared ideas and people rather than a merger, but it shows how techniques from one privacy network are being reused on a smart contract platform where more applications can be built.
7. Background: layer 2 networks, ERC-20 tokens and zero-knowledge proofs
A layer 2 network is a separate blockchain that processes transactions off the main Ethereum chain and then posts compact evidence back to it. The approach reduces fees and increases throughput while inheriting security from Ethereum. Starknet belongs to the group of layer 2 networks that use validity proofs, in which a mathematical proof shows that a batch of transactions was executed correctly.
The ERC-20 standard defines a common set of functions that a fungible token must provide, such as checking a balance and transferring units to another address. Wallets, exchanges and applications all recognize this interface, which is why a privacy framework designed around it can work with assets that already exist and with those yet to be created.
Zero-knowledge proofs are what make hidden balances workable. A user can show the network that a transfer is valid, for example that the sender has enough funds and that no tokens were created from nothing, without disclosing the amounts or the identities involved. The network verifies the proof and updates its records without learning the private details.
8. What the framework changes for everyday users
For an individual holder, the main change is control over what the public can see. A person who receives a salary in a stablecoin, or who holds savings in strkBTC, no longer has to expose the full balance and history of that wallet to anyone who learns the address. Wallet tracking tools, which are widely used by analysts and by opportunistic traders, would see far less.
The ability to switch between public and shielded modes also matters. Not every transaction needs to be private, and some, such as those with a regulated exchange, may need to be visible. Giving users the choice avoids forcing a single trade-off on everyone.
At the same time, privacy is not the same as anonymity in every circumstance. The presence of viewing keys means that disclosure remains possible in defined situations, and users who rely on shielded assets should understand who holds those keys and under what conditions they can be used.
9. Why privacy matters for institutions and traders
Public blockchains broadcast every trade. That openness makes it easy for others to track large positions and enables front-running, in which a third party sees a pending order and trades ahead of it to profit. Large holders, funds and businesses are often reluctant to operate under those conditions, since their strategies and payments are exposed to competitors.
Confidential swaps and lending could make onchain finance more workable for users who prefer discretion. A company paying suppliers in stablecoins, for example, would not need to reveal its commercial relationships to the entire internet. Tighter global privacy rules could also draw interest from institutions toward platforms that offer compliant private transactions, because the tools for lawful disclosure are built in.
None of this removes the policy debate around privacy. Regulators will judge such systems on whether the disclosure mechanisms work in practice and who controls the keys. The design is a technical proposal for balancing the two goals, and its acceptance will depend on how authorities and exchanges treat the assets in real use.
10. What to watch next
The key questions are practical. Developers will need to adopt STRK20 for assets beyond strkBTC, and users will need to find the private modes easy enough to use. Liquidity in shielded pools is another factor, since a private market with few participants can leak information through the size and timing of transactions.
Observers will also watch how exchanges, custodians and regulators respond to viewing keys as a compliance tool. If authorities accept them as adequate, private tokens could move into mainstream products. If not, adoption may remain limited to users who value confidentiality over broad access. Either way, STRK20 marks a clear attempt to bring programmable privacy, a feature long associated with Zcash, into the Ethereum ecosystem.
For now, the practical test is whether the framework attracts real usage. A privacy feature that exists on paper but lacks wallets, liquidity and applications offers little to users, so the coming months of developer activity and user adoption will show whether programmable privacy becomes a standard part of Ethereum-linked finance or remains a specialized option. The outcome will also shape how other layer 2 networks approach confidentiality.
Readers should also keep in mind that the framework is new, and that real-world behavior of any privacy system, including how well its disclosure tools work under legal requests, only becomes clear after sustained use by many participants.