StarkNet Outage Incident Report: State Conflict Between Execution Layer and Proof Layer Resulted in Approximately 18 Minutes of On-chain Activity Rollback

StarkNet, an Ethereum layer-2 network based on zero-knowledge rollups, experienced a four-hour outage on January 5, 2026. The network temporarily halted block production, freezing all transactions and disrupting decentralized applications. Engineers later confirmed the issue was related to a proving error and initiated a chain reorganization.

The outage affected more than 56,000 active accounts and roughly $840 million in total value locked. During the downtime, users were unable to submit or finalize transactions, and decentralized finance (DeFi) activities such as swaps and withdrawals were delayed.

StarkNet confirmed service has been restored and issued a warning that transactions submitted between 9:24 a.m. and 9:42 a.m. UTC may not have been processed correctly. The network will publish a retrospective report with root causes and long-term prevention measures.

Why Did This Happen?

The issue stemmed from a state conflict between StarkNet’s execution layer and proof layer, which led to approximately 18 minutes of on-chain activity being rolled back. Engineers discovered the problem during a routine investigation, leading to the temporary pause in sequencing.

This is the second major outage for StarkNet in the past six months. A prior incident in September 2025, related to the Grinta upgrade, also caused extended downtime and required chain reorganization.

How Did Markets React?

The incident had minimal impact on the price of STRK, the network’s native token. STRK remained relatively stable, showing a less than 1% dip over the last 24 hours.

Broader Ethereum metrics remained largely unaffected, with ETH trading near $3,192 as of the outage. This resilience suggests continued investor confidence in the network’s ability to recover from disruptions.

What Are Analysts Watching Next?

Analysts are closely following StarkNet’s post-mortem analysis and mitigation strategies. The network aims to improve its infrastructure to reduce the risk of future outages, especially as it expands its role in Bitcoin-related decentralized finance (BTCFi) and broader DeFi adoption.

Stablecoin growth on StarkNet also remains a key metric for observers. Despite the outage, the network's stablecoin market has grown to $204.9 million, with USDC accounting for 97% of the market.

StarkNet’s ability to maintain network activity and user confidence during these disruptions will be critical to its long-term success in the Ethereum ecosystem. The network has expressed a commitment to transparency and operational stability as it continues scaling decentralized finance and gaming applications.