Starknet Launches Shadow Accounts for DeFi Wallet Privacy

Ethereum layer-2 network Starknet has launched a new wallet privacy feature designed to let users interact with decentralized finance applications without publicly linking their activity to main wallets.

According to StarkWare, the team behind Starknet, the Shadow Accounts feature creates separate, persistent addresses for individual applications. Users fund these accounts using shielded balances held within the network's STRK20 privacy pool, enabling them to maintain lending, trading, and other positions under distinct onchain identities.

Functionality and Visibility

While the feature obscures the connection between the shadow account and the funding wallet, balances, transactions, and positions remain publicly visible onchain, as stated by Starknet. Once integrated into a decentralized finance application, users can connect wallets, switch from public to private mode, and deposit assets into a vault. The Shadow Accounts maintain positions until users withdraw funds back into a shielded balance.

StarkWare noted that the functionality could eventually expand beyond vaults to include liquidity provision, lending, borrowing, staking, derivatives trading, prediction markets, and non-fungible token marketplaces.

Broader Privacy Push

The launch follows StarkWare's wider blockchain privacy initiatives. In June, the company introduced the STRK20 privacy framework to support private transfers and shielded token balances on Starknet. Later that month, StarkWare demonstrated a Private Know Your Customer system allowing users to verify personal information without revealing full identity documents.

Key facts

• Starknet launched Shadow Accounts to obscure connections between main wallets and decentralized finance activity.
• The feature creates separate, persistent addresses funded by shielded balances in the STRK20 privacy pool.
• Balances and transactions of shadow accounts remain publicly visible onchain.
• StarkWare plans to expand the functionality to lending, staking, derivatives, and non-fungible token marketplaces.