Starknet, an Ethereum layer-2 network, has rolled out a new privacy feature designed for decentralized finance (DeFi) users. The Shadow Accounts feature allows individuals to interact with DeFi applications without publicly linking these activities to their primary wallets. StarkWare, the team behind Starknet, explained that this feature creates separate, persistent addresses for each application, funded through the network’s STRK20 privacy pool. This setup enables users to maintain DeFi positions like lending or trading under different onchain identities, with transactions and balances still visible onchain.
The Shadow Accounts feature obscures the connection between the shadow account and the wallet funding it. Users can switch between public and private modes within a DeFi app, deposit assets into a vault, and maintain their positions until they withdraw funds back into a shielded balance. StarkWare envisions expanding this functionality to other DeFi activities, including liquidity provision, lending, borrowing, staking, derivatives trading, prediction markets, and NFT marketplaces.
The launch aligns with StarkWare’s broader focus on blockchain privacy. In June, the company introduced the STRK20 privacy framework, which supports private transfers and shielded token balances on Starknet. Additionally, StarkWare demonstrated a Private Know Your Customer (KYC) system that month, allowing users to verify personal information without revealing their full identity documents.