Ethereum layer-2 network Starknet has introduced Shadow Accounts, a privacy feature that lets users access decentralized finance (DeFi) services through addresses separate from their main wallets. The system prevents public links between main wallets and activity across supported applications.
StarkWare announced the launch on October 13, saying, “Every app should have a private mode. So we shipped it.” However, the company’s documentation makes clear that the feature does not conceal every transaction or balance.
Starknet Shadow Accounts separate DeFi activity from wallets
Each Shadow Account gives a user a separate address for a DeFi application. Unlike a temporary address, it remains active across repeated transactions, allowing users to maintain positions and collect rewards.
Accounts are created on first use and remain linked to the chosen application. Starknet's documentation describes them as accounts for positions held over time, rather than tools for a single transaction. This allows an application to recognize a returning user through that separate address.
For example, users could manage lending activity through one address and trading activity through another. The arrangement prevents those accounts from being directly tied to the same main wallet through the system’s public records.
However, Shadow Accounts do not make DeFi activity invisible. Starknet’s technical documentation warns, “A shadow account holds public ERC-20 funds,” meaning balances and transactions remain visible through blockchain explorers. Someone who identifies a Shadow Account can still review its recorded activity.
The privacy feature instead seeks to conceal the connection between the account and the wallet that funded it. Transaction amounts and timing may still provide information to blockchain observers.
STRK20 privacy pool funds separate accounts
Shadow Accounts operate through STRK20, the privacy framework Starknet launched in June. Users can deposit supported tokens into a shared pool, where the system protects their balances from public viewing.
When users choose private mode in a compatible application, their wallet transfers funds from a shielded balance to a Shadow Account. The separate account then interacts with the application while maintaining its own transaction history and ongoing positions.
After completing an activity, users can move supported funds back into their shielded balance. The wallet handles the data and cryptographic proofs needed to confirm those transactions without publicly identifying the original wallet.
Starknet’s documentation allows users to create more than one Shadow Account for the same application. This means separate activities within one service can use different addresses.
StarkWare opens Shadow Accounts to DeFi developers
StarkWare has released tools that allow developers to add Shadow Accounts to existing services. The integration uses the Starknet Wallet API and a function called shadow_account_invoke, which lets applications submit transactions through a user’s separate account.
The wallet handles proof generation and transaction submission, while developers do not need access to the user’s private viewing keys. However, users must have a compatible wallet, and each DeFi application must support the feature.
The team has demonstrated the system with Vesu’s vSTRK vault. StarkWare also identified possible future uses in lending, staking, liquidity provision, derivatives, prediction markets and NFT platforms, although availability across those services has not been confirmed.
The launch follows the STRK20 privacy framework for Ethereum tokens and a June demonstration of private identity checks from StarkWare. Its privacy framework also includes controlled disclosure tools for audits. StarkWare has not disclosed how many applications or users have adopted Shadow Accounts since their launch. It has also not released figures for trading volume or assets managed specifically through the new feature.
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