Inside Extended: How Starknet’s Tech Stack Enables Next-Generation DeFi Trading
When Ruslan and his ex-Revolut team were building Extended, they had a clear goal: recreate the FTX trading experience without the trust assumptions. They wanted institutional-grade performance with complete self-custody, something that sounds impossible until you see it working.
Extended just migrated from StarkEx to public Starknet, and their numbers tell a compelling story. On their first migration day, with just 10–20% of users moved over, they hit 200 trades per second. That’s more throughput than most Layer 2s can handle at full capacity.
This isn’t just another perpetuals exchange. Extended reveals what becomes possible when you build DeFi applications on infrastructure designed for high-performance computing rather than retrofitted from basic blockchain tech.
The Problem Most DeFi Protocols Can’t Solve
Traditional DeFi faces a brutal trilemma: you can have decentralization, performance, or low costs — but not all three simultaneously.
Most perpetuals exchanges make painful compromises. GMX uses a pool-based model where liquidity providers automatically take the opposite side of every trade. When traders win, LPs lose, creating unsustainable economics during trending markets.
Virtual AMMs like Perpetual Protocol v1 faced worse problems. During 2022’s market downturn, their insurance fund drained due to funding payment imbalances, forcing a complete architectural redesign.
Fully on-chain order books solve some issues but create others. Every order update requires a transaction, making them expensive and slow. Market makers can’t compete with their centralized counterparts when each price adjustment costs dollars in gas fees.
Extended’s solution: a hybrid architecture that settles on-chain but processes orders off-chain. Users retain custody of their funds while getting centralized exchange-level performance.
How Extended’s Hybrid Design Delivers CEX Speed With DEX Security
Extended operates as a hybrid Central Limit Order Book (CLOB), the same model used by top-tier centralized exchanges, but with crucial differences.
Off-chain components handle performance-critical functions:
● Order matching at microsecond speeds
● Risk calculations and position management
● Market data distribution and price feeds
On-chain components handle security-critical functions:
● Trade settlement with mathematical proofs
● Custody and fund security
● Liquidation logic validation
● Oracle price verification
This creates something unprecedented: CEX-level performance with DEX-level security. Users can execute complex trading strategies at institutional speeds while maintaining complete control of their funds.
The key insight: Starknet’s cheap computation allows Extended to validate every trade on-chain without pricing out professional traders. On expensive chains, this level of verification would be economically impossible.
Why Extended Chose Starknet Over Other Layer 2s
When Extended were choosing their settlement layer, they evaluated every major Layer 2. The requirements were strict:
● Sub-$0.001 transaction costs for scalable trading
● Low-latency confirmations for responsive UX
● Mathematical security guarantees (no optimistic assumptions)
● Long-term architectural sustainability
For Extended, Starknet was the only network that checked every box.
The numbers speak for themselves. Starknet transactions cost as low as $0.000057, making high-frequency trading economically viable. By contrast, Ethereum mainnet swaps often run $20–50, and even on Arbitrum, complex trades can cost a few dollars.
But cost alone doesn’t explain Extended’s choice. The real advantage is Starknet’s proving architecture that enables complex financial logic without prohibitive computational overhead.
The Tech Stack Behind Extended’s Performance
Extended’s performance ultimately comes down to Starknet’s technical advantages:
● STARK Proofs: Mathematical certainty without trusted setups and resilience against future quantum attacks.
● State-Diff Compression: Only posting final state changes reduces settlement costs dramatically.
● Recursive Proving: Batching multiple operations shares verification costs across users.
● Native Account Abstraction: Sophisticated trading logic without wallet complexity.
These technical features enable Extended’s product features. You can’t build unified margin systems without cheap, reliable computation. You can’t offer cross-asset collateral without mathematical guarantees about risk calculations.
This is why Extended’s migration from StarkEx to public Starknet matters. StarkEx offered performance but limited composability. Public Starknet offers both performance and the ability to integrate with the broader DeFi ecosystem.
From Perps to Integrated Finance: Extended’s Unified Margin Vision
Extended’s roadmap reveals the deeper potential of building on Starknet. Phase 1 focused on perpetuals, but the real innovation comes with integrated financial services.
Unified Margin System: Instead of isolated trading accounts, users get a single margin account that works across:
● Perpetual contracts
● Spot trading
● Lending and borrowing
● Yield-bearing collateral
Here’s how this works in practice. Deposit wstETH as collateral, earn staking yield while it sits idle, borrow against it to trade Bitcoin perpetuals, and have everything settled in one integrated system. Your margin requirements are calculated across all positions, maximizing capital efficiency.
This level of integration requires sophisticated risk management and real-time calculations, exactly the kind of computation that becomes viable on Starknet but remains prohibitively expensive elsewhere.
How Cross-Asset Collateral Unlocks Capital Efficiency
Traditional DeFi forces users to manage separate positions across different protocols. You might have ETH earning staking rewards on Lido, USDC providing liquidity on a DEX, and separate collateral for derivatives trading.
Extended’s unified margin eliminates these silos. Any supported asset, including yield-bearing tokens, can serve as collateral for any trading strategy.
Practical Example:
1. Deposit 10 ETH worth of wstETH (earning ~4% staking yield)
2. Open $50,000 BTC perpetual position using wstETH as collateral
3. If the position goes negative, automatically borrow USDC against your ETH
4. Pay borrowing costs offset by ETH staking rewards
5. All risk management happens automatically
This creates a capital efficiency breakthrough that’s only possible with cheap, reliable computation. The risk calculations required to manage cross-asset collateral in real-time would bankrupt users on expensive chains.
How Extended’s Model Creates Self-Sustaining Liquidity
Extended’s architecture creates compounding advantages that strengthen over time.
For Traders:
● Better liquidity as more traders migrate to efficient infrastructure
● Lower costs as trading volume scales (shared settlement costs)
● Access to sophisticated strategies previously limited to institutions
For Market Makers:
● Profitable market making at tighter spreads due to low costs
● Sophisticated risk management tools enable better capital allocation
● Integration with DeFi protocols creates new hedging opportunities
For the Ecosystem: Extended proves that high-performance DeFi is possible without compromising on decentralization. Other sophisticated financial applications can build on this foundation.
Extended’s Roadmap to Scale and Adoption
Extended’s roadmap toward massive scale reveals the strategic advantages of their technical choices.
Phase 1: Establish Core Platform ✅ Reliable perpetuals trading with deep liquidity
✅ Competitive pricing and performance metrics ✅ Proven security and custody model
Phase 2: Expand Product Suite 🔄 Cross-asset collateral and unified margin 🔄 Integrated spot trading and lending markets 🔄 Yield-bearing asset support 🔄 Bitcoin-based strategies
Phase 3: Network-Level Innovation 🔮 EVM-compatible chain with embedded margin logic 🔮 Global unified margin accessible to all applications 🔮 Independent validators for distributed operations
Each phase builds on Starknet’s computational advantages. The unified margin system requires complex risk calculations that scale with user activity. On expensive chains, this would become prohibitively costly. On Starknet, it becomes more efficient as it grows.
What This Means for DeFi’s Future
Extended represents more than just another trading platform. It’s proof that DeFi can match traditional finance on performance while maintaining superior transparency and custody models.
For Users:
● Professional-grade trading tools without custody risk
● Capital efficiency through integrated financial services
● Lower costs that make sophisticated strategies accessible
For Builders: Extended’s success validates the Starknet development thesis. Complex financial applications become economically viable when built on proper infrastructure.
For the Industry: As more teams build high-performance applications on Starknet, the ecosystem creates network effects that are hard for competitors to replicate.
The question isn’t whether DeFi can compete with centralized finance. Extended already proves it can. The question is whether other ecosystems can build infrastructure sophisticated enough to support these applications.
Extended’s Long-Term Vision: Turning Efficiency Into Infrastructure
Extended’s long-term vision extends beyond their own platform. They plan to make unified margin logic available as network-level infrastructure; essentially turning financial efficiency into a public good.
Imagine every DeFi application being able to access users’ unified margin accounts. Your lending position on one protocol could serve as collateral for trading on another, with risk management handled by the network itself.
This only becomes possible with infrastructure that can handle the computational complexity of real-time, cross-protocol risk management. Today, only Starknet provides this foundation.
Whether Extended achieves this vision depends on execution and adoption. But their technical architecture positions them to attempt something that wouldn’t be economically feasible elsewhere.
When infrastructure constraints disappear, entirely new categories of applications become possible. Extended shows what the first generation of these applications looks like.
