$2 billion valuation and $100 billion racetrack: Revealing V God invested in Layer2 project StarkWare
原文标题：《 StarkWare：估值超 20 亿美金，V 神投资，下一波机会在 Layer2 吗？ 》
Original source: Notes on the Study of The Alpha Rabbit.
原文作者：阿法兔
Why research this company?StarkWare is a company that has several characteristics:
First of all,Although driven by science and engineering, the CEO has a strong ability to deal with VC, and has good PR and team organization skills.
The secondThe whole entrepreneurial team thought about the strategic route clearly and long-term, did not ICO at the beginning, and spent a lot of time to build the developer community;
Finally, the company started thinking early on about building a profitable business model, striking a good balance between technology and commercialization.Ethereum founder Vitalik was an early investor in StarkWareIn many subsequent articles published by StarkWare, V was involved in the revision.
What is the story of StarkWare's startup and growth? What other opportunities do ethereum's pain points and L2's expansion present? What are the implications of their journey as engineer entrepreneurs? These are some problems that this paper tries to discuss.
In this paper, the structure
1. Market pain points & AMP; A set of macro data:
How high is the ceiling?
What is zero knowledge proof?
ZKP zero knowledge proof, what does it do?
2. Founding team
Founding team background: technology-driven + complementary capabilities
Why is StarkWare a science-driven startup?
3. Financing process & AMP; Business data
Seed round investor: Ethereum founder Vitalik
StarkWare user & amp; Business data
4. Business Model & AMP; What needs are met by the main product? Core products: StarkEx& StarkNet5. The history of the company
Start from solving technical problems and meeting requirements
Mathematical engineering team + product marketing
StarkPay
Expand business boundaries and enter NFT/Gamefi
6. Perspective of investment institutions
Growth in deal size, driven by improved infrastructure, presents opportunities
7. Other evaluations
Potential problems that may exist
8. Characteristics of entrepreneurial route
Take small steps, iterate quickly, and focus on building a developer community
Market pain points & AMP; Company profile
A set of macro data: How high is the ceiling?
The Market for blockchain technology and services is set to grow from $4.9 billion in 2021 to $67.4 billion by 2026, according to research firm Markets and Market.
Market pain point & NBSP;
As the crypto world continues to heat up, Ethereum has become one of the most popular crypto ecosystems. According to the Dapp Market report released by Dapp.com in 2020, Ethereum increased by 32% unique users and 97% active users in Q2 2020, bringing the total number of users to 4.5 million and the total number of active users to 1.25 million, which is still growing.
However, the ethereum network is currently struggling to keep up with the global transaction load. To further speed up and slow down transactions on Ethereum, developers are looking at L2 (the solution layer for Ethereum L1), which is built on top of the Ethereum network (L1).
We understand L2 as a scale-up solution for Ethereum, with a separate execution layer that runs code, and L2 runs on top of L1.
Starkware uses ZKP's zero-knowledge proof system to solve ethereum's current congestion problem, reducing the computing burden while still writing transaction data to the main network.
Company profile
StarkWare was founded in 2018 and is based in Israel. StarkWare aims to commercialize a specific type ofZero knowledge proof (ZKP) system, called STARKs) technology to improve blockchain scalability and privacy, providing proof of encryption with zero knowledge, transparency (no needfor a trusted setup) and post-quantum secure.
StarkWare will develop a complete proof stack, Software and hardware to support fast and reliable generation andverification of common computations Computational integrity proofs for general computations.).
What is zero-knowledge proof?
ZKPs is currently being used. The most common form of ZKP is public key cryptography, which is used in many key parts of the Internet and cryptocurrencies today. The problem, however, is that these ZKPs are still relatively narrow in scope: they generally only allow someone to prove that they have a private key relative to some public key, and cannot be generalized to any arbitrarily complex computation.
However, the current general-purpose ZKPs is also in the process of iteration and development, although the scope is still relatively limited. Two of the most prominent examples are privacy-focused cryptocurrencies, Zcash and Monero.Zcash uses a different type of ZKP called SNARK, which allows Zcash users to send Zcash privately around the world. Monero uses another form of ZKP called Bulletproofs to accomplish the same task.
ZKP zero knowledge proof, what does it do?
As the application technology of ubiquitous ZKPs matures, it is likely to be widely used.
Strengthen the scalability of blockchain: ZKPs can be used to help blockchain scale by many orders of magnitude. There are two general approaches: sub-chain batch processing, and recursive composition of ZKPs. Of the five basic ways to extend blockchain, ZKPs can be used to help scale blockchains by many orders ofmagnitude. There are two general approaches here: off-chain batching, andrecursively composing ZKPs. Of the five fundamental ways to scale blockchains,the ZKP-based approaches can deliver The best results.) & NBSP;
Power off-chain computing in the Web3 StackAt the same timeImprove the performance of financial services: In the wake of the 2008 financial crisis, the financial institutions that powered the global economy had to comply with risk thresholds. Using ZKPs, these institutions will be able to demonstrate in real time to auditors, governments, clients and the public at large that they are complying with risk thresholds without having to share confidential information from their books.
Founding team
Science driven Crypto Infrastructure Solutions & NBSP;
Founding team background: technology-driven team with complementary capabilities
Founders: Michael Riabzev, EliBen-Sasson and Uri Kolodny
Image credit: StarkWare
Founder and CEO Uri Kolodny graduated from Hebrew University with an UNDERGRADUATE degree in computer science and then did his MBA at MIT Sloan.As a serial entrepreneur, Uri has founded several technology-oriented startups, including OmniGuide, an MIT-backed technology company focused on endoscopic surgery, and Mondria, a developer of big data visualization tools. Prior to that, Uri also worked as an EIR (Entrepreneur in Residence) at two Israeli venture capital firms and as an analyst at consulting firm McKinsey.
Uri also has a strong ability to deal with venture capital firms. I have the ability to set up entrepreneurial team and have rich external PR ability(We can see that StarkWare has been building its own technology blog for a long time, keeping abreast of its own understanding of what it wants to do and its scientific research results with outside users, and ethereum founders often give advice on StarkWare's papers), relatively rich entrepreneurial experience, Let Uri set the vision for the company early and effectively executed the product roadmap for the entire company.
Why is Starkware a technology driven company?
First, the technical team was led by Eli Ben-Sasson (a graduate of Technion, Israel Institute of Technology, Einstein was the first president of the university's academic society), AlessandroChiesa (UC Berkeley, university of California, Berkeley) and Michael Riabzev (Technion) as principals.AlessandroChiesa is co-founder and chief scientist of Starkware. Prior to founding Starkware, he was a co-author of the Zerocash protocol and co-founder of Zcash, which we mentioned earlier.
And as of March 2021,Starkware's Scientific Advisor Avi Wigderson (and Phd advisor to Eli Ben-Sasson) won the Abel Prize.An award given annually by the King of Norway to one or more outstanding mathematicians. Named after The Norwegian mathematician Niels Henrik Abel.
The technical team has more than 10 years of experience in ZKP systems and co-published the STARK Papers. The technical team has relatively rich experience in the industry and professional technical academic background.
Financing process & AMP; Business data & NBSP;
Seed round investor: Ethereum founder V God
Image credit: StarkWare & NBSP;
In January 2018StarkWare raised $6 million in seed funding from Ethereum founders Vitalik Buterin, Paradigm, and Pantera Capital PolyChain.
In July 2018, the Ethereum Foundation invested $12 million in Starkware;
In October 2018A round of financing of 30 million USD, With Sequoia, Paradigm, Scalar Capital, Multichain Capital, Intel Capital, Semantic Ventures, Pantera and others participating in the investment;
March 24, 2021Sequoia, Wing Venture Capital, Paradigm, Pantera Capital, Three Arrows Capital, DCVC, and others participated in the $75 million Series B round;
In November 2021C round financing of 50 million USD, valuation of 2 billion USD, Sequoia Capital led the investment, IOSG and others participated in this investment;
StarkWare user & amp; Business data
In November 2021, StarkWare founder and CEO Uri Kolodny said in an interview that the company is now profitable, and that the Series C funding was aimed at continuing to grow the team and ecosystem. Some of StarkWare's clients include ConsenSys, Immutable, dYdX, and Sorare, to name a few.
With StarkWare, Gas services are available at the lowest possible cost.Ethereum's current high Gas fees are an inherent pain point in the market. So as of November 2021, more than $200 billion worth of transactions were settled through StarkEx, with approximately 50 million transactions conducted on StarkEx and hundreds of thousands of users.
When asked what the business and uniqueness is, co-founder Eli Ben-Sasson said in an interview that StarkWare has a first-mover advantage in terms of total transaction volume and carrying capacity across all L2 solutions. "More than $200 billion has been settled through StarkWare and more than 50 million transactions have been settled."
Business Model & AMP; The main products
What needs are met?
StarkWare's main contribution is to contribute technological advances in the field of zero knowledge academically and computing: First, the StarkWare team developed STARKs (Scalable Transparent Arguments of Knowledge).
STARKs is a form of validity proof with a full de-trust setting, in which all on-chain calculations can be moved to a single off-chain STARK demonstrator (PROver). The prover must then use an on-chain STARK Verifier to verify the integrity and reliability of the associated calculations.(Remember what Starks means, we'll come back to it again and again.)
"Looking at the blockchain, We seesomething that is of tremendous use and potential but is so limited in scale, "said Ben-Sasson, "It needs to scale dramaticallyand community and It needs to do so under the same Principles of decentralization and openness."
Core products: StarkWare& StarkNet
Currently, there are two main types of Rollups in the market, one is ZK Rollups (with zero knowledge proof) and the other is Optimistic Rollups. The so-called Rollups is a way to allow ethereum transactions outside the chain, by only storing transaction data on the chain, You can reduce existing network congestion, increase speed, and reduce Gas costs as much as possible.
StarkEx
StarkEx is an L2 extensibility engine developed by Starkware that performs this functionality in a zero-knowledge environment with assemble-language-like Cairo programs. StarkEx supports on-chain/off-chain hybrid data availability solutions, quick withdrawal, ERC-721 and ERC-20 for guaranteed data availability.
You can also go throughGenerate proof of validity to ensure that all off-chain calculations are executed in their entirety. The STARK proof is verified on the chain before being submitted to the main Ethereum network.
StarkNet
StarkNet is a perfix-free, decentralized L2-ZK-rollup on Ethereum based on the Stark Zero-knowledge proof developed by the Starkware team. It has Turing-complete, Solidity -> The Cairo compiler provides EVM compatibility.
What is Cairo? Cairo is a Turing-complete language, StarkNet is based on Cairo and supports general-purpose computing on Ethereum. Developers can build and deploy applications on StarkNet, and users can initiate and execute transactions on StarkNets, with incentives to keep the node network running.
All StarkNet transactions are periodically packaged in bulk into one proof, verified on Ethereum, and all data used to build StarkNet is published on-chain.
Company development & NBSP;
Start from solving technical problems and meeting requirements
StarkWare Special extension solutions are developed through engineering and science, including cryptography and mathematical computationMake sure everything is in order before release. Other ZKP solutions require more computing work, but their more secure architecture has convinced many developers that they are the future of ethereum network scalability.
The founding team has a clear idea of their strategy early on. Think about monetization right away, and in their 2018 blog post, define your goals and strategic path:
"To build a sustainable revenue business, the founding team's strategy, based on cash flow and revenue requirements, The "re aiming to set up a business with recurring revenues -- We" reold-school that way.Getting to those Recurring revenues requires an importantfirst step: Developing technology and generating demand.)"
Starkware's business model is primarily about what value it can deliver to its users, followed by a vision to reshape the entire blockchain ecosystem.
Moreover,Unlike many Crypto startups, Starkware made it clear in its early days in 2018 that it would not launch an ICO immediately. They think they can explore a new path called Tech4Tokens (T4T).
This may have something to do with founder Uri's venture capital experience.
Let's explain what T4T is: venture capital firms invest in companies, and in return, they get the opportunity to increase in value. Starkware could reap similar returns by investing in its own technology. Think of the team as venture capital technologists exploring becoming a Tech Crypto Fund that invests in technology in exchange for tokens, hence T4T.
If Starkware, as a tech crypto fund, is itself an early investor: the earlier you invest in technology, the greater the impact on Token's value. We are not interested in ordinary cost plus return but in capturing a meaningful future from the value we will create ourselves.
In the future blockchain ecosystem, talent will be far scarcer than cash, and the returns on the Token portfolios of successful venture technologists will reflect this scarcity.
Starkware's tokens have several potential sources: some foundations, others have various mechanisms for increasing the supply of tokens. Starkware believes that Token provisioning will become a core element of blockchain governance if Token is to become a powerful tool to compensate technology developers.
Part of Stark's vision is to become a consulting service provider with talented engineers who can raise significant capital to support r&d, build a larger and more diverse team, and provide full technical support to customers in the future.
Mathematical engineering team + product marketing
By the end of 2018, Starkware had grown to twenty people, with a strong portfolio of math and engineering talent, as well as flexible product and marketing teams.
At the same time, we will further optimize our development strategy, focusing on the large and releasing the small. Starkware's STARKs will profoundly improve two of the most pressing issues of permissionless blockchains: scalability and privacy. Starkware decided that the business would focus primarily on scalability, and privacy would come second.
Move computing and storage down the chain, establish an off chain service, and generate Stark proof of computing integrity. The proof is then put back on the chain for further validation, saving space by doing most of the computation down the chain, while preserving the integrity of the computation and the assumption of no trust.
Bottom line: Throughout 2018, in terms of technology, Starkware's engineering team has built a very technical software stack from zero to one, increasing the performance of validators and checkers and the size of proofs by at least an order of magnitude (and counting).
With these achievements, Starkware recently successfully demonstrated the complete STARK Proof system, which runs in browsers and smartphones with WASM. This has groundbreaking implications for a transparent proof system.
In the summer of 2018, Starkware received funding from the Ethereum Foundation.
March 2019: Starkware launches StarkPay, a payment scalability engine based on STARK Technologies that addresses many of the shortcomings of Lightning,L2 payment solutions. The Lightning Lightning network was founded in 2016 to scale up bitcoin. Lightning is one of the first Layer-2 solutions, cleverly proposing to move transactions off the chain while continuing to rely on blockchain security. It promises not only to scale up payments, but to do so with low delays and minimal fees.
Lightning also has several disadvantages. First, the payer must be online in order to make the payment. - The payee must also be online in order to sign the transaction with their private key. Operational security also faces challenges.
StarkPay
StarkPay's goal is to provide a scalable, capital efficient unmanaged payment solution, StarkPay aims to offer a scalable capital-efficient non-custodialpayment solution With no liVENESS requirements.)
StarkPay has some advantages over the Lightning network:
The first is scalabilityThe computing resources consumed by StarkPay increase with the number of payers and the number of payments. Capital efficiency is relatively high, there are no liquidity requirements for payment processors and verifiers, and the updating of payee balances is not required to be online. Deposits, withdrawals, and payments), transactions can take place offline and then be sent to a blockchain/payments processor.
However,StarkPay also has some obvious downsides, including data availability. To really benefit from STARKs' on-chain logarithmic scaling, data is stored off-chain, which presents data availability challenges. (The popular definition of data availability is that data can be corrupted in many ways, and the more corruption a data vendor can avoid, the more reliable it will be.)
One possible future direction: the formation of a consortium of data availability witnesses who would sign specific certificates submitted to on-chain verifiers that data is available off-chain. On-chain validators will not accept proofs that lack such a proof.
Expand business boundaries and enter NFT/Gamefi
In 2020, Starkware announced its partnership with Immutable. Immutable is the founding team of Gods Unchained, a card game built on ETH. Bring StarkWare's scalability engine, StarkEx, into blockchain gaming and NFT. The plan to use STARKs to demonstrate the integrity of any game logic for off-chain computing is also strategic evidence that the Starkware founding team sees great potential in games and collectibles.
https://cryptobullsclub.com/gods-unchained-token-sale/
Card game Gods Unchained has had some success in the chained gaming ecosystem in 2020, generating nearly $6 million in revenue during its beta run and topping the NFT charts within 24 hours of its market launch.
But on Ethereum, the native throughput cap of four transactions per second limits any application that wants to scale further.For NFT, however, throughput bottlenecks are dire, and lack of scalability is a hindrance to project growth.
However, the StarkEx solution provides Immutable support for ERC-20 and ERC-721, nFT-enabled transactions and casting, and, as shown in the figure, StarkEx can provide over 9000 unmanaged transactions per second.
In August 2020, Cairo, a Turing-complete production-grade STARK system developed by StarkWare, will be released.
In December 2020, an upgrade, StarkEx2.0, moved quickly to the general-purpose Cairo language framework, enabling you to write more efficient code to examine complex, expensive computations and improve scalability. An application case is to do proof checking by examining Merkle sub-tree rather than examining Merklepaths for many individuals.
StarkEx2.0 has a fast L1-L2 connection mechanism that will allow on-chain StarkEx users, quick withdrawals and other L2-L1 interactions. DeversiFi, a decentralized exchange that uses L2 Validium for private transactions, is already planning to use this feature.Meanwhile, StarkEx 2.0 supports ERC-721 and is also ready to support transactions of irreplaceable tokens (NFT) in the ERC-721 format (including the upcoming large-scale off chain minting).. This feature for ImmutableX will also be available to StarkEx customers in the future in the collectable, gaming area. The contract interface has been further improved and users can now deposit any L2 account and withdraw money to any L1 address.
For example, Bob can deposit directly into Alice's L2 account. Alice can withdraw funds directly to her cold wallet Ethereum address, or send funds to Bob's Ethereum address. In addition to this, users can now register with StarkEx at any address (i.e. the operator itself), allowing the application to remove the registration step from the user onboarding process and the user to register directly with L2. There is less friction and better conversion. StarkEx2.0 also supports smart contract key recovery, meaning users can now have multiple L2 accounts per ethereum address, allowing smart contract wallets to recover their keys, and also allowing traders to keep their funds in different accounts down the chain.
In December 2020, Cairo toolchains were released, including the compiler, Cairo virtual Machine, Tracer Code debugger, integrated Development environment extensions such as Vim and Visual Studio Code extensions that provide syntax highlighting for Cairo, With the release of Cairo, begin building the developer community.
In January 2021, building on the previous foundation, official construction of StarkNet began. StarkNet is a decentralized, Stark-powered L2 ZK-rollup that supports computing on Ethereum. It is based on Turing-complete Cairo.
As shown, developers, users, and StarkNet nodes, within StarkNet, can build and deploy applications that implement their own business logic, and users can send transactions to StarkNet for execution, just as they interact with Ethereum today. StarkNet nodes and participants will be motivated by a cryptoeconomic model to ensure that the network operates efficiently and fairly.
All StarkNet transactions will be batched on a regular basis, and their validity will be proven in STARK proofs and verified on Ethereum. StarkNet will scale Ethereum by orders of magnitude because the amount of computation required to verify the STARK proof increases exponentially compared to verified calculations.
Since all StarkNet state transitions will be STARK validated, Ethereum will only accept valid state transitions. All the data needed to recreate the complete StarkNet state will be published on the chain. Anyone can run their own StarkNet node. These attributes will make StarkNet as secure and perfix-free as Ethereum.
StarkWare's way of doing things is to first solve the problem, build the core technology, and then take small steps to gradually apply it to the production development environment.
In April 2021, an ETHEREum L2-powered AMM design was proposed, with liquidity remaining on L1, DAMM is an L2-powered AMM. Itallows liquidity to be bridged on L2 while remaining unfragmented. (AMM is an Automated Market Maker, which does not require an order book. When users compose and add transaction pairs to the project, the person providing the transaction pairs is called "liquidity provider")
In April 2021, after several months of working closely with the dYdX team, Starkware has now ported dYdX's permanent contract trading platform to run on StarkEx, Starkware's L2 scalability engine. That same month, starkex-hosted Immutable now officially offers NFT casting and mass transactions on the Ethereum mainnet, after previously announcing its collaboration with Immutable.
In July 2021, StarkEx3.0 was officially released. For the first time, Ethereum smart contracts can become owners of assets on StarkEx and trade those assets with L2 users via L1 Vaults. This provides StarkEx (L2) users with a low-cost mechanism to interact with external logic (and liquidity) on L1. StarkNet Alpha 1 was released around the same time, featuring L1 and L2 interactivity and on-chain data storage.
In November 2021, StarkWare raised a Series C round of funding, at which time StarkWare is now profitable, to continue to expand the team and grow the ecosystem.
In December 2021, StarkNet officially launched StarkNet Alpha on the main network; In the summer of 2021, StarkWare released StarkNet Alpha on the public beta network. This release supports universal computing smart contracts without licensing at all. Since then, StarkWare has upgraded it twice: first to Alpha 1, offering L1< > L2 messaging and on-chain data availability services, then continued with the upgrade to Alpha 2 to support composability.
As of February 2021, downloads of the Starknet.js library have reached 6.9K
StarkNet Alpha was released to the public beta network in June and to the main network in November. By the time of mainnet deployment, StarkNet was already providing general computing in an Ethereum-like state, and the entire technology development path was relatively fast.
The view of investment institutions & NBSP;
Multichain Capital, one of the investors in Starkware, believes that as the number of users and developers using the Ethereum network increases, venture Capital is also starting to invest more money in infrastructure-based startups, mainly to enhance ethereum scalability to reach more users and further grow transaction size.
Sequoia Capital invested in StarkWare back in 2018, one of sequoia's earlier bets. In 2021, about a quarter of Sequoia's investments were in Crypto startups, according to news reports.
Other evaluation & NBSP;
Potential problems with StarkWare
For those of you who care about ZKPs,There is a consensus in the industry that because of the complexity of mathematical engineering, STARKs is still some way from commercialization, and history suggests thatThe evolution of public key cryptography and STARKs did take years to commercialize.
Entrepreneurial route
In terms of StarkWare's overall business line, the founding team had a clear mind, focusing on the most important features first, releasing them as soon as they were tested, and sharing the iterative process with the community.
Although StarkNet was not fully functional when it was released, with constant iteration, developers have been able to build meaningful and complex applications. As of February 2022, there are hundreds of developers building dozens of DApps on StarkNet, as well as a dozen outside teams developing tools and infrastructure for the StarkNet ecosystem.
Focus on the developer community, which continues to provide feedback to StarkNet. Later, after the basic conditions of availability are met, the strategic focus is on improving system performance.
After that, Starkware is preparing to further open StarkNet's sequencing and validation software to the public. Anyone can participate as a sequencer or prover on StarkNet.
The team's attitude towards entrepreneurship is to keep an open mind, keep improving, keep listening to the community, and the vision is to work with everyone to shape the future of Crypto scalable solutions.
What do you see as the future of Layer 2?
Thanks to Sir Wei, Shawn Chang, and the senior experts in techno evolution for their professional support.
References:
1.https://www.bloomberg.com/news/articles/2021-11-16/sequoia-led-round-values-blockchain-firm-starkware-at-2-billion
2.https://multicoin.capital/2018/10/30/our-investment-in-starkware/
3.https://dcbuilder.mirror.xyz/
4.https://starkware.co/starkex/
5.https://www.jianshu.com/p/6ce113baa464
6.https://medium.com/starkware/starkex-2-0-is-now-live-on-mainnet-d8768b860bd4?7.source=user_profile---------23--------- ----------------------
8. https://www.calcalistech.com/ctech/articles/0, 7340, L - 3901376, 00. HTML
9.https://indianexpress.com/article/technology/tech-news-technology/polygon-overtakes-ethereum-in-terms-of-active-user-b ase-amid-rise-in-crypto-gaming-7560810/#:~:text=The%20Polygon%20network%20surpassed%20the,Ethereum's%20tally%20stood%20a t%20527%2C158.
Welcome to join the official BlockBeats community:
Telegram Subscription Group: https://t.me/theblockbeats
Telegram Discussion Group: https://t.me/BlockBeats_App
Official Twitter Account: https://twitter.com/BlockBeatsAsia
