L2.Finance-zk logoL2.Finance-zk

This project is archived.




This project includes unverified contracts (CRITICAL).
Layer2.finance-ZK has been shut down, users are encouraged to use optimistic rollup version.

Celer’s Layer2.finance in ZK Proofs Mode Built with StarkEx from StarkWare.

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Risk Analysis

Sequencer failureState validationData availabilityUpgradeabilityProposer failure

State validation

ZK proofs (ST)

ZK-STARKS are zero knowledge proofs that ensure state correctness.

Data availability

External (DAC)

Proof construction relies fully on data that is NOT published on chain. There exists a data availability committee (DAC) that is tasked with protecting and supplying the data.



The code that secures the system can be changed arbitrarily and without notice.

Sequencer failure

Force via L1

Users can force the sequencer to include a withdrawal transaction by submitting a request through L1. If the sequencer censors or is down for , users can use the exit hatch to withdraw their funds.

Proposer failure

Use escape hatch

Users are able to trustlessly exit by submitting a Merkle proof of funds.


Validity proofs ensure state correctness

Each update to the system state must be accompanied by a ZK Proof that ensures that the new state was derived by correctly applying a series of valid user transactions to the previous state. Once the proof is processed on the Ethereum blockchain the L2 block is instantly finalized. The system state is represented using Merkle roots.

  1. Enforcing Consistency on the On-Chain State - StarkEx documentation

Zero knowledge STARK cryptography is used

Despite their production use ZK-STARKs proof systems are still relatively new, complex and they rely on the proper implementation of the polynomial constraints used to check validity of the Execution Trace.

  • Funds can be lost if the proof system is implemented incorrectly.

  1. STARK Core Engine Deep Dive

Data is not stored on chain

The balances of the users are not published on-chain, but rather sent to several well known and trusted parties, also known as committee members. A state update is valid and accepted on-chain only if at least a quorum of the committee members sign a state update.

  • Funds can be lost if the external data becomes unavailable (CRITICAL).

  • Users can be censored if the committee restricts their access to the external data.

  1. Data Availability Modes - StarkEx documentation
  2. Validium - StarkEx documentation
  3. Availability Verifiers - StarkEx documentation


The system has a centralized operator

The operator is the only entity that can propose blocks. A live and trustworthy operator is vital to the health of the system. Typically, the Operator is the hot wallet of the StarkEx service submitting state updates for which proofs have been already submitted and verified.

  • MEV can be extracted if the operator exploits their centralized position and frontruns user transactions.

  1. Operator - StarkEx documentation

Users can force exit the system

Force exit allows the users to escape censorship by withdrawing their funds. The system allows users to force the withdrawal of funds by submitting a request directly to the contract on-chain. The request must be served within a defined time period. If this does not happen, the system will halt regular operation and permit trustless withdrawal of funds.

  • Users can be censored if the operator refuses to include their transactions. They can still exit the system.

  1. Censorship Prevention - StarkEx documentation


Regular exit

The user initiates the withdrawal by submitting a transaction on L2. When the block containing that transaction is proven the funds become available for withdrawal on L1. Finally the user submits an L1 transaction to claim the funds. This transaction does not require a merkle proof.

  1. Withdrawal - StarkEx documentation

Forced exit

If the user experiences censorship from the operator with regular exit they can submit their withdrawal requests directly on L1. The system is then obliged to service this request. Once the force operation is submitted if the request is serviced the operation follows the flow of a regular exit.

  1. Forced Operations - StarkEx documentation
  2. Forced Withdrawal - StarkEx documentation
  3. Forced Trade - StarkEx documentation

Emergency exit

If enough time passes and the forced exit is still ignored the user can put the system into a frozen state, disallowing further state updates. In that case everybody can withdraw by submitting a merkle proof of their funds with their L1 transaction.

  1. Forced Operations - StarkEx documentation
  2. Forced Withdrawal - StarkEx documentation
  3. Forced Trade - StarkEx documentation


The system uses the following set of permissioned addresses:

Governor 0x1E15…735e

Can upgrade implementation of the system, potentially gaining access to all funds stored in the bridge. Currently there is no delay before the upgrade, so the users will not have time to migrate.

Data Availability Committee

There exists a Data Availability Committee with unknown members and an unverified smart contract.

SHARP Verifier Governor 0x3DE5…F5C6

Can upgrade implementation of SHARP Verifier, potentially with code approving fraudulent state. Currently there is no delay before the upgrade, so the users will not have time to migrate.

Broker Owner 0xe0b7…5988

Most Broker functionality is restricted only for the owner, it includes managing rides, setting prices or slippages, burning shares.

Operator 0x85A7…1EA5

Allowed to update state of the system. When Operator is down the state cannot be updated.

Smart Contracts

A diagram of the smart contract architecture
A diagram of the smart contract architecture

The system consists of the following smart contracts:

This contract stores the following tokens: ETH, USDC, USDT.

Committee 0xF000…28A9

The source code of this contract is not verified on Etherscan.

Broker manages investment strategies on L1 for tokens deposited to the system. Strategies invest in specific protocols, e.g. Compound and they escrow LP tokens as custom Wrapped tokens.

StrategyCompound 0x5b00…5C97

It is through this contract that groups of users interact with the Compound DeFi protocol.

GpsFactRegistryAdapter 0x6e3A…3baE
OrderRegistry 0x518c…dDf8

CallProxy for GpsStatementVerifier.

SHARPVerifier 0x6cB3…1BF6

Starkware SHARP verifier used collectively by Starknet, Sorare, ImmutableX, Apex, Myria, rhino.fi and Canvas Connect. It receives STARK proofs from the Prover attesting to the integrity of the Execution Trace of these Programs including correctly computed L2 state root which is part of the Program Output.

FriStatementContract 0x3E61…d2DD

Part of STARK Verifier.

MerkleStatementContract 0x5899…5fa4

Part of STARK Verifier.

MemoryPageFactRegistry 0xFD14…D1b4

MemoryPageFactRegistry is one of the many contracts used by SHARP verifier. This one is important as it registers all necessary on-chain data.

CairoBootloaderProgram 0x5d07…9dDf

Part of STARK Verifier.

The current deployment carries some associated risks:

  • Funds can be stolen if a contract receives a malicious code upgrade. There is no delay on code upgrades (CRITICAL).

  • the source code of unverified contracts contains malicious code (CRITICAL).