Starknet launches "Shadow Accounts" to separate DeFi activity from your main wallet

Ethereum layer-2 network Starknet has added a privacy feature called Shadow Accounts, which lets users take part in decentralized finance without publicly tying that activity to their main wallet.

How it works

StarkWare, the company behind Starknet, says Shadow Accounts create a separate, persistent address for each application. Users fund these accounts from shielded balances held in Starknet's STRK20 privacy pool, so they can keep lending, trading or other DeFi positions under different on-chain identities.

Inside a supporting app the flow looks like this:

1. Connect a wallet and switch from public to private mode.
2. Deposit assets into a vault; the Shadow Account holds the position.
3. Withdraw back into a shielded balance when finished.

What stays public

The feature hides the link between the shadow address and the wallet that funded it — not the activity itself. Balances, transactions and positions of each Shadow Account remain visible on-chain, Starknet says.

What's next

StarkWare says the approach could later extend beyond vaults to liquidity provision, lending and borrowing, staking, derivatives, prediction markets and NFT marketplaces. It builds on the STRK20 privacy framework introduced in June and a private "know your customer" demo StarkWare showed later that month, which let users prove personal details without revealing full identity documents.

Why it matters

Public blockchains make it easy to trace one wallet's entire history. Tools that separate identities per app are one way to regain some financial privacy without leaving the transparency of a public ledger.