Aztec Network is Bringing Privacy to Public Blockchains

Forget Tornado Cash. This L2 Scaling Solution is Providing Genuine Privacy For Users.

Aztec Network is Bringing Privacy to Public Blockchains

Forget Tornado Cash. This L2 Scaling Solution is Providing Genuine Privacy For Users on the Ethereum Network. 

News of Tornado Cash being blacklisted by the US government has reignited heated discussions around what privacy should look like in the blockchain space.
Aztec Network is a privacy-focused L2 scaling solution that allows users to interact with the Ethereum Network anonymously.  The self-proclaimed  “privacy layer of Web3” — believes the  right to financial privacy is essential, and their vision is to allow fully private transactions on public blockchains like Ethereum.

Jon Wu, Aztec’s Head of Growth, outlines the network’s vision and overall use-case well in the following:

“Imagine if everyone could see all of your credit card transactions–that’s Ethereum today. Our primary goal is to bring consumer privacy to DeFi.”
While Aztec is currently dedicated to providing programmable privacy on the Ethereum network,  Aztec CEO Tom Walton-Pocock has said that the protocol is dedicated to helping all blockchains achieve superior privacy in DeFi and Web3 moving forward. 

How Does the Aztec Network Really Work?

Similar to Tornado Cash, the Aztec Connect protocol obfuscates inputs and outputs leveraging zero-knowledge proofs and allowing for the creation and swapping of securely wrapped tokens. This creates a dual benefit of providing genuine privacy for users, as well as reducing gas fees on transactions by up to 100X. 

Completely Open Protocol

The first major feature that makes Aztec Connect desirable is that it’s an entirely open protocol, meaning that any developer can build new applications on top of it. It also means the code is easily audited and can be scanned by developers and white-hat hackers for bugs, well before a Nomad-like exploit occurs.

The Aztec network isn’t just limited to DeFi transactions, as the newly-released Connect feature can also be used for NFT purchases and transfers. Additionally, it offers the ability to integrate with DAOs for anonymizing voting, contributor salaries, and treasury management.

Put simply, Aztec uses a privacy model similar to a virtual private network (VPN).  When a user makes a deposit in Aztec, they are transferring assets to an Aztec smart contract on Ethereum.  Then, when the user wants to make a DeFi transaction, they tell the Aztec Private Rollup to execute said transaction. Much like a VPN, the rollup executes DeFi transactions in a similar way to Curve swaps and returns the result to the Aztec contract without ever exposing a user's wallet address.

Opt-in Compliance

In regards to upholding principles of privacy, the Aztec Network decided to implement an “opt-in” compliance model, so that the default mode for user activity on the protocol is private. Users then have the option to choose whether or not they share their transaction data — a particularly useful feature when it comes to paying taxes. In addition to this opt-in compliance, Aztec imposes very low limits on withdrawals and deposits, making it more accessible to users looking to transfer smaller volumes of funds.  

Aztec’s Major Developments

On July 7th, Aztec Network announced the successful deployment of its updated Layer 2 rollup solution on Ethereum, called Aztec Connect. The update included a revamping of the protocol’s DeFi aggregator, which now allows for DeFi apps like Lido and Curve to be used privately.

With the successful release of the Connect feature, the Aztec team occupies a unique market position where the protocol not only reduces gas fees and transaction times in a similar vein as competing Layer 2s like Optimism, Arbitrum, it one-ups them by offering legitimate privacy solutions for its users.
Late last year, Aztec raised $17M in a Paradigm-led Series A funding round. 

Additionally, the broader cryptocurrency community have not been sparing in their praise for the recent updates to the Aztec Network.

Crypto McKenna, a solidity developer and angel investor, tweeted the following in support of Aztec: “Mark my words what Aztec are building is one of the single greatest changes since the protocol’s inception.”

Following the news that Tornado Cash has been blacklisted, privacy has rapidly become a focal point of interest for the cryptocurrency industry. Undoubtedly, concerns about anonymity and privacy will continue to grow in the wake of this news, so it's reasonable to expect that privacy protocols such as Aztec will see a resurgence in popularity and utility.

Buy / No Buy Recommendation

If you value immutable privacy on the blockchain, Aztec Network is a no-brainer: buy.
If you think that privacy is an overhyped concern, and that the public nature of the blockchain is no big deal: skip it.  

About SmartBlocks

Mark Fidelman

Here at SmartBlocks, we believe it’s time to democratize currency and make it available to anyone, anywhere, anytime.