Starknet Launches Shadow Accounts for Private DeFi Activity

Starknet, the Ethereum layer-2 network developed by StarkWare, has rolled out a new wallet privacy feature called Shadow Accounts that enables users to interact with decentralized finance applications without linking those activities to their primary wallets. The feature creates separate, persistent addresses for individual apps, allowing users to fund them using shielded balances held in Starknet's STRK20 privacy pool. According to StarkWare, this setup lets traders and DeFi participants maintain lending, borrowing, and trading positions under distinct onchain identities, reducing the public traceability of their strategies. While the link between a shadow account and its funding wallet is obscured, Starknet noted that balances, transactions, and positions remain publicly visible onchain.

Once a DeFi protocol integrates the feature, users can connect their wallet, toggle from public to private mode, and deposit assets into a vault. The shadow account then manages their positions autonomously until funds are withdrawn back into a shielded balance. StarkWare said the functionality is expected to expand beyond vaults to include liquidity provision, staking, derivatives, and prediction markets, covering most major DeFi verticals.

The Shadow Accounts launch builds on StarkWare's broader privacy roadmap. In June, the company introduced the STRK20 privacy framework, which supports private transfers and confidential holdings on Starknet, followed shortly by a Private Know Your Customer system that verifies personal information without exposing full identity documents. Together, these tools position Starknet as one of the more aggressive Ethereum scaling solutions pushing onchain privacy infrastructure, even as regulators continue to scrutinize anonymity features in decentralized finance.