The layer-two network Starknet has launched a new privacy feature, Shadow Accounts, which allows users to trade, provide loans, and manage positions in DeFi without linking their activity to their primary cryptocurrency wallets.
StarkWare announced the launch, on 13 October, of a system that creates separate blockchain addresses for each individual DeFi application. This feature, based on the STRK20 privacy concept, allows users to keep their current positions under different names while hiding the addresses of their primary wallets. The company confirmed that the balances and transactions of shadow accounts remain visible on the blockchain.
Starknet's shadow accounts separate DeFi activity from wallet activity
With shadow accounts, users can interact with supported decentralized applications through dedicated addresses that are not publicly linked to their primary wallets. Each application receives a separate, persistent identity, allowing users to return to existing positions without revealing connections to other activities.
StarkWare explained that using the same public wallet across multiple platforms allows blockchain observers to study the transactions, assets, and trading strategies associated with that address. Shadow accounts are designed to prevent these activities from being easily combined into a single public wallet history.
Unlike temporary wallet addresses, shadow accounts remain accessible across repeated interactions with the same application. Users can maintain lending positions, accumulate rewards, or manage other financial operations using the same address.
The system forms each account based on information associated with the user, the selected application, and a unique identifier known as a nonce. According to the official Starknet.js documentation, users can create multiple shadow accounts for a single application, allowing them to separate different types of activities within one service.
However, this protection has certain limitations. StarkWare states that shadow accounts hold public assets ERC-20, which means their balances and transaction histories remain accessible through blockchain explorers. The privacy protection concerns the link between these addresses and the user's primary wallet.
Thus, this feature does not make all trading positions, token transfers, or financial operations invisible. Even if an observer identified a specific shadow account, its publicly recorded operations can still be examined.
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