Starknet launches Shadow Accounts for private DeFi activity

Ethereum layer-2 network Starknet has launched Shadow Accounts, a feature that gives users separate, persistent addresses for decentralized finance applications. The accounts obscure the connection between a user’s main wallet and their DeFi activity, while balances, transactions and positions linked to each account remain visible onchain.

StarkWare, the team behind Starknet, said users can fund Shadow Accounts with shielded balances held in the network’s STRK20 privacy pool. This allows users to manage lending, trading and other DeFi positions under separate onchain identities.

After a DeFi application integrates the feature, users can connect their wallets, switch from public to private mode and deposit assets into a vault. The Shadow Account manages the position until the user withdraws the funds to a shielded balance.

Shadow Accounts do not make DeFi activity fully private. The accounts’ balances, transactions and positions remain publicly visible onchain, according to StarkWare. The feature currently supports activity through vaults.

StarkWare said the functionality could later support liquidity provision, lending, borrowing, staking, derivatives trading, prediction markets and NFT marketplaces.

The launch follows StarkWare’s introduction of the STRK20 privacy framework in June. The framework supports private transfers and shielded token balances on Starknet. Later that month, StarkWare demonstrated a private Know Your Customer system that lets users verify personal information without disclosing their full identity documents.