Starknet has introduced a new wallet privacy feature called Shadow Accounts, aimed at reducing the public link between a user’s main wallet and their activity in decentralized finance applications.

The system assigns separate persistent addresses to individual apps and funds them with shielded balances from the STRK20 privacy pool. That setup allows lending, trading and other DeFi positions to be managed under different onchain identities, while the balances, transactions and positions tied to those shadow accounts remain visible onchain.

How the feature works

According to the announcement, Shadow Accounts are designed for users who want to interact with DeFi applications without exposing a direct public connection to their primary wallet. Rather than using one address across multiple services, a user can operate through a distinct address for each integrated application.

The key privacy change is that the link between the funding wallet and the shadow account is obscured. Starknet says the separate application-specific addresses are persistent, meaning they can continue to hold and manage positions over time instead of acting as one-time transaction accounts.

Private mode inside supported apps

When the feature is integrated into a DeFi application, users can switch from public mode to private mode within that app. The process involves depositing assets into a vault, after which a Shadow Account manages the user’s position until the funds are withdrawn back into a shielded balance.

This structure is meant to let activity continue under a different onchain identity while preserving visibility of the resulting account state. In practice, that means the privacy feature does not hide the existence of balances, trades or open positions; it is focused on masking the connection to the main funding wallet.

What it can be used for now

Starknet said the feature supports separating activity such as lending and trading, helping users avoid having all of their DeFi behavior clustered under a single publicly traceable address. The same approach can also apply to other positions maintained through supported applications.

The underlying funding comes from the STRK20 privacy pool, which provides the shielded balances used to supply the individual shadow accounts. That pool is central to the model because it enables funds to be routed into application-specific accounts without exposing the original wallet relationship in the usual way.

Potential expansion beyond current use cases

StarkWare indicated that the Shadow Accounts model could extend further than vault-based interactions over time. The company said possible future applications include liquidity provision, lending, borrowing, staking, derivatives trading, prediction markets and NFT marketplaces.

For now, the confirmed step is the rollout of Shadow Accounts as a privacy option for DeFi activity on Starknet. Broader adoption will depend on integration by individual applications, since the public-to-private mode switch and vault workflow are available when a DeFi app implements the feature.

Source: cointelegraph.com