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MakerDAO, the decentralized organization (DAO) behind the DAI stablecoin, today announced the protocol’s upcoming deployment on Ethereum’s layer-2 scaling solution StarkNet.
The launch is slated for April 28.
Considered a key player in the decentralized finance (DeFi) space, MakerDAO is a smart contracts-based system for lending and borrowing crypto without the need for intermediaries.
MakerDAO’s protocol is built on the Ethereum blockchain and comes with two currencies: a stablecoin known as DAI and Maker (MKR), the system’s governance token.
MakerDAO’s integration with StarkNet is the first time the protocol has launched on Ethereum rollups built using zero-knowledge (ZK) technology.
Rollups settle transactions outside the main blockchain, alleviating congestion from the mainnet and thus offering higher transaction speeds without sacrificing overall security.
What is StarkNet?
Produced by Israeli company StarkWare, StarkNet is a layer-2 scaling solution for the Ethereum blockchain.
It uses the cryptography technology known as ZK rollups, which lets blockchain networks like Ethereum process large batches of transactions quickly and cheaply. And because it leverages zero-knowledge technology, they also preserve a significant portion of users’ privacy.
In an announcement shared with Decrypt, the team at MakerDAO stressed that the protocol’s integration with StarkNet will significantly lower the cost of DAI transactions and minting compared to the Ethereum mainnet.
Sharing more insights into the matter, Louis Baudoin from the StarkNet Core Unit at MakerDAO told Decrypt that “Maker’s gas costs are dominated by transactions related to minting and by transactions related to oracle costs,” adding that “once Multi-Collateral DAI (MCD) is deployed on StarkNet, we can expect the transactions related to minting to cost 10x less on StarkNet than on [on the] Ethereum [mainnet].”
Today’s news follows last year’s integrations with “optimistic rollups” Arbitrum and Optimism and is part of the protocol team’s multichain strategy. Optimistic rollups are similar to ZK rollups but differ in how the transaction data from the layer-2 network is relayed to the mainnet.
This multichain strategy aims to make both DAI and Maker Vaults—the tool enabling users to deposit collateral and generate DAI—available on as many layer-2 scaling solution protocols as possible.
“As we see unsustainable gas fees drive more activity and users to a wider variety of blockchains, security challenges that come with bridging will continue to grow,” said Baudoin. “Projects must move on to layer 2 to continue to serve users, and MakerDAO is partnering with StarkNet to do exactly that.”
Faster withdrawals, faster minting
Other advantages of deploying on StarkNet, according to Baudoin, include the ability for users to make faster withdrawals and reduce DAI minting times.
The former comes thanks to the Maker Wormhole—the protocol’s solution for “almost instant teleportation of DAI” across the Ethereum ecosystem.
The Maker Wormhole utilizes a “burn-and-mint” mechanism for almost instantaneous withdrawals and “aims at solving the issue of transferring DAI from one layer 2 to the other in minutes,” explained Baudoin. “It allows withdrawals in minutes instead of hours (currently on StarkNet) to days (currently on Optimism).”
As for reducing DAI minting time, Baudoin said that users can execute transactions on StarkNet within one to two minutes, compared to reaching finality after three to eight hours on Ethereum’s mainnet.
“The objective for StarkNet is to bring the transaction time down to a few seconds within the next year,” added Baudoin. “From a cost standpoint, users can execute transactions on StarkNet at a cost about 10x cheaper than on Ethereum layer 1.”
The improvements are not coming immediately, though.
A dedicated MakerDAO engineering team is working on implementing a multiphase roadmap for the StarkNet integration, starting by building a simple bridge with a wallet interface.
The next phases include the release of fast withdrawals, slated for Q2 2022, followed by near-instant DAI withdrawals and, ultimately, MakerDAO’s full-scale integration with StarkNet.