Aztec Network
May 19th, 2019
## min read

Creating, Settling & Streaming Confidential Assets

This is the fourth part, we dive into the creation and management of confidential assets, a breakthrough in private transactions.

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Written by
Joe Andrews
Edited by

This article is in English, you can read a Mandarin(中文) translation here.

This series is split into 4 parts:

  • Part 1 — An introduction to AZTEC
  • Part 2 — Deploying AZTEC on Ganache
  • Part 3 — Constructing Proofs, Signing Flows and Key Management
  • Part 4 — Creating, Settling, & Streaming Confidential Assets

The demo dApp implements a confidential loan on Ethereum. The loan provides for the following functionality :

  1. A borrower can create a loan request with a confidential loan notional.
  2. A lender can request access to see the value of the loan notional.
  3. A lender can settle a loan request by transferring the notional to the borrower, the transfer notional should be confidential. The blockchain should verify that the notional amount and the settlement amount are equal.
  4. The borrower should be able to pay interest into an account that the lender can withdraw from. Any payments to the interest account should be confidential.
  5. The lender should be able to withdraw interest from the interest account as it accrues up to the last block time. The blockchain should verify the amount of interest the lender is withdrawing is correct, and the withdraw amount and the balance of the account should remain confidential.
  6. The lender should be able to mark a loan as defaulting if the interest account does not contain sufficient interest. The blockchain should validate that this is the case whilst keeping the total interest payed, the account balance and the loan’s notional confidential.
  7. The borrower should be able to repay the loan and any outstanding accrued interest at maturity. Both the interest and the notional repayment should remain confidential.

To build the above functionality, the dApp will combine two confidential assets, and the following proofs: Mint Proof, Join Split Proof, Bilateral Swap Proof, Dividend Proof, Private Range Proof.

Creating the Loan ZkAsset

As the loan is intended to be a fully private asset without a public equivalent, it will inherit from the reference EIP1724ZkAssetMintable.sol contract. In this case, the constructor is overridden with to create a fully private asset.

pragma solidity >= 0.5.0 <0.7.0;import "@aztec/protocol/contracts/ERC1724/ZkAssetMintable.sol";import "@aztec/protocol/contracts/libs/NoteUtils.sol";import "@aztec/protocol/contracts/interfaces/IZkAsset.sol";contract Loan is ZkAssetMintable {  using NoteUtils for bytes;constructor(    address _aceAddress,   ) public ZkAssetMintable(_aceAddress, address(0), 1, true, false)          {  } }

All AZTEC toolkits perform logical checks on note values. To perform a logical check, a note must first be created. In order for the loan’s notional to be confidential, it must be represented as a note in the loan’s note registry. As the initial supply of any note registry is zero, in a private asset the Mint Proof must be used to adjust the total supply and create new notes.

Step 1: Constructing the Mint Proof

Firstly, construct a proof using aztec.js.

const {   proofData,} = aztec.proof.mint.encodeMintTransaction({        newTotalMinted: newTotalNote,        oldTotalMinted: oldTotalNote,        adjustedNotes: [loanNotionalNote],        senderAddress: loanDappContract.address,});

Step 2

This proof can now be used to Mint the new notes inside the loan’s note registry. Only the owner of the note registry is permitted to call the confidentialMintmethod. In this case, a smart contract called the constructor of the loan ZkAsset. That contract is the owner of the ZkAsset note registry. This permits it to validate a supplied proof and process the resultant transfer instructions inside ACE.

Loan(loanId).confidentialMint(MINT_PROOF, bytes(_proofData));

The Settlement ZkAsset

The primary functions of the loan (primary settlement, interest payments and repayment) require value transfer. As this value transfer is required to be confidential, the settlement asset also needs to be a ZkAsset that implements EIP1724. The ZkAsset represents the currency the loan counter-parties will use to transact and is redeemable for a public ERC20 token e.g (DAI, CUSD).

Creating the settlement asset requires initialising the ZkAsset constructor with different parameters to the Loan ZkAsset. This tells ACE that this asset is linked to a public ERC20 token and the supply is not adjustable.

pragma solidity >= 0.5.0 <0.7.0;import "@aztec/protocol/contracts/ERC1724/ZkAsset.sol";contract ZKERC20 is ZkAsset {constructor(    address _aceAddress,    address _erc20Address   ) public ZkAsset(_aceAddress, address(_erc20Address), 1, false, true) {  }}

Creating an AZTEC note in the note registry of the Settlement ZkAsset requires a transfer of sufficient ERC20 tokens into ACE equal to the notes value multiplied by a scaling factor. These tokens are owned by ACE in return for creating the desired note.

It is worth noting that creating notes of a ZkAsset with a linked public token has limited confidentiality. An observer of the blockchain can deduce the notes created in any given transaction, sum to the amount of ERC20 consumed. As such it is recommended to create multiple notes in one transaction, in order to help obfuscate the value of individual notes.

If full confidentiality is required for the settlement asset, a private ZkAsset with no public equivalent should be used. Here, AZTEC notes are issued on receipt of funds via bank transfer. The notes are still 1–1 backed with fiat, similar to a stable coin, but the note creation transaction preserves confidentiality as no public ERC20 tokens are consumed. Carbon Money are working on an implementation of this.

This demo assumes a fully private asset is not required and consuming ERC20 tokens is an acceptable solution.

Step 1:

The ACE contract is approved to spend ERC20 tokens on behalf of the token owner.

await settlementToken.approve(aceContract.address, value);

Step 2: Creating the proof

const {      proofData,      expectedOutput} = aztec.proof.joinSplit.encodeJoinSplitTransaction({    inputNotes: [],    outputNotes: [Note1, Note2], // note values sum to kPublic    senderAddress: account.address,    inputNoteOwners: [],    publicOwner: account.address,    kPublic: -value,     validatorAddress: joinSplitContract.address, });

A particular variant of the Join Split proof is required when interacting with public value. The proof has no inputNotes, the input is a public value of ERC20 represented by kPublic. This value is negative as it represents value being converted into an AZTEC note form, (if value was redeemed from note form, the value would be positive). The Join Split proof is validation that the sum of the output notes is equal to the value of kPublic.

The proof construction also requires the Ethereum addresses of the publicOwner (the owner of the tokens spent in this transaction) and the senderAddress (the account that will send this transaction to the ACE for validation), to be set.

Step 3: Approving ACE to spend Tokens

Any proof that results in the transfer of public value has to be first approved by the owner of the public tokens for it to be valid. This allows ACE to transfer the value of the tokens consumed in the proof and acts as an additional security measure when dealing with ERC20s.

await ACE.publicApprove(zkAsset.address, hashProof, kPublic, {      from: accounts[0],});

Step 4: Relaying the transaction

When relaying proofs to ACE, the sender address specified in the proof must match the msg.sender of the account that calls ACE.validateProof().This prevents malicious actors snooping on the transaction pool from front running the execution of this proof.

(bytes memory _proofOutputs) = ACE.validateProof(JOIN_SPLIT_PROOF, address(this), _proofData);

Step 5: Processing Transfer Instructions

Successful proof validation will return an array of proof outputs. These proof outputs contain the state update instructions that allow a dApp to update a note registry.

_loanVariables.settlementToken.confidentialTransferFrom(JOIN_SPLIT_PROOF, _proof2Outputs.get(0));

Settling the loan

Once the loan ZkAsset and the settlement ZkAsset have been created, and each note registry populated with the initial notes, the loan is prepared for settlement. The diagram below shows the state of our dApp at this point and the swap that is required for settlement

The left hand side represents the loan ownership register (currently owned by the borrower) and the right hand side represent all of the notes that make up the lenders balance of the settlement asset.

To settle the loan the Bilateral Swap Proof is required. The borrower wishes to receive a note of the settlement ZkAsset equal to the loans notional multiplied by the loan price. The lender wishes to receive a note that represents 100% of the loan’s ownership register, in this case the notional note. Later on, this note will be used to claim interest and repayment at maturity. The ownership note can also be split and transferred should the lender wish to trade the loan.

Step 1 : Approving the settlement contract to spend notes

As the settlement transaction needs to be atomic, the transaction will be orchestrated by a smart contract. After a proof has been validated, ACE will only process the state updates (create or destroy notes) if the notes destroyed in a transaction have first been approved for spending by the note owner. The validation and processing of the Bilateral Swap proof must occur in an atomic transaction, otherwise, if one side of a transaction fails to approve the notes for spending, there is a chance one party will not receive their required ask in the swap. It is up to the dApp developer to ensure the correct permission logic is in place when calling functions within the AZTEC system. ACE will only validate the mathematical logic of a transaction, but does not know if a transaction should take place. In the case of loan settlement, the dApp should validate that the input notes have been approved by both the buyer and the seller and they are agree to the transfer.

In order for the transaction to process correctly, both the borrower and the lender need to approve the settlement contract to spend their respective notes.

const settlementSignature = signNote(   zkSettlementAsset.address,   settlementNoteHash,   loanId,   lender.privateKey);await zkSettlementAsset.confidentialApprove(   settlementNoteHash,   loanId,   true,   settlementSignature,    {      from: lender.address,  });

Step 2: Constructing the proof

const {     proofData,} = aztec.proof.bilateralSwap.encodeBilateralSwapTransaction({        inputNotes: [takerBid, takerAsk],        outputNotes: [makerAsk, makerBid],        senderAddress: loanId,});

The proof requires 4 notes, and will validate the following logical statements:

  1. The takerBid note is equal to the makerAsk note.
  2. The takerAsk note is equal to the makerBid note.

Step 3: Relaying the Transaction and Updating State

When relaying proofs to ACE, the sender address specified in the proof must match the msg.sender of the account that calls ACE.validateProof().This prevents malicious actors snooping on the transaction pool from front running the execution of this proof.

Once validated, the proof outputs can be used to update the retrospective note registries. This will destroy the takerBid note and create the makerAsk note in the settlement ZkAsset note registry and destroy the makerBid note and create the takerAsk note in the loan ZkAsset note registry.

(bytes memory _proofOutputs) = ACE.validateProof(BILATERAL_SWAP_PROOF, address(this), _proofData);(bytes memory _loanProofOutputs) = _proofOutputs.get(0);(bytes memory _settlementProofOutputs) = _proofOutputs.get(1);settlementZkAsset.confidentialTransferFrom(BILATERAL_SWAP_PROOF, _settlementProofOutputs);loanZkAsset.confidentialTransferFrom(BILATERAL_SWAP_PROOF, _loanProofOutputs);

Thats it! The loan has been settled and all balances remain confidential.

Interest Streaming

AZTEC notes can be owned by smart contracts. This makes it is possible to construct complicated financial instruments using AZTEC. For the loan, we wish to create a system in which the lender can withdraw interest from an account as it accrues. Should the interest account contain insufficient collateral the lender should be able to mark the loan as defaulting and the smart contract transfer any security used as collateral to the lender.

To make interest streaming non-interactive from the borrowers point of view, the blockchain must validate the interest the lender is trying to withdraw is not greater than the currently accrued interest, and use this validation to ensure the correct amount of interest is then withdrawn. This flow is possible by combing the Dividend Proof and the Join Split proof. The Dividend Proof allows us to prove that one note is a ratio of another note plus a residual (to account for the quirks of solidity arithmetic).

Note1 * a = Note2 * b + Residual

If Note2 is set as the withdrawal note, the proof creator is incentivised to pick values of a and b such that the residual note is minimised. This enables Note2 to be expressed as a ratio of Note1 .

Note1 = Note2 * b/a

To apply this to the loan, a ratio must be found that expresses the AccruedInterest with respect to another note supplied by the smart contract in this case the notional.

This is possible with a little algebra:

Interest Steaming with the Dividend Proof

As a smart contract can set the values of ElapsedTime, InterestRate and InterestPeriod. The lender will only be able to construct a proof that will satisfy equation (1) if the value of AccruedInterest picked is correct up to the last block time.

If the Dividend Proof succeeds, the Accrued interest note that is used can be trusted and if supplied inside a subsequent valid Join Split proof, can be used to split the CurrentInterestBalance into the AccruedInterest plus a remainder note.

This process can be repeated for each block allowing the lender to withdraw interest as it accrues by the second. In each case, the blockchain will validate this correctness of the withdrawal.

#moneystreaming

Programatic Default — No Lawyers

Historically, should a borrower fail to pay interest on a loan or fail to pay back the loan at repayment, the lender would have to go through the courts to claim any collateral in lieu of repayment. Interest streaming allows the blockchain to validate a state of default and programatically transfer any collateral to the lender without the need for any arbitration, lawyers or courts.

To achieve this, two proofs are combined the Dividend Proof as used before to validate the currently accrued interest, and the Private Range Proof, to validate that the accrued interest is greater than the available balance inside the interest account.

Putting it all together — DEMO

https://medium.com/media/828f2ee46c391382128652e0eee2b481/href

The Loan dApp is available on github and can be cloned here.

Thanks for reading Part 4 of this series!

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Aztec Network
Aztec Network
22 Jul
xx min read

How Gas Works on Aztec

Gas on Aztec

Gas on Aztec is known as Fee Juice and is used to pay for transaction costs. This is the same as $ETH on Ethereum. Some apps will handle transaction costs for you under the hood, but if you are using a browser extension wallet, you will not be able to send transactions without it. Fee Juice can be obtained by bridging the $AZTEC token on Ethereum to the Aztec Network L2. This means that under the hood, all activity that happens on Aztec is underpinned by the $AZTEC token bridged into the network. Some bridges like Shield (by human.tech) handle this for you, allowing you to allocate a portion of your bridged transaction to convert into Fee Juice and land in your wallet automatically.

Public vs Private Assets

Assets and transactions on the Aztec Network can be either public or private. If you bridge publicly, your tokens will arrive as public, traceable tokens visible to all. Privately bridging, on the other hand, will give you private assets that are visible only to you. These assets can then be sent privately to another user or wallet without ever revealing who you are, what tokens were sent, how many, or who the recipient is.

Public vs Private Gas

Like tokens on the Aztec Network, Fee Juice (gas) can also be public or private. The reason for this is that even if what you are sending is private, the gas you spend to execute that transaction could still be visible if you are using public Fee Juice, potentially revealing transaction patterns and activity. Private Fee Juice keeps your entire transaction footprint hidden. When you send a private transaction, you can use private Fee Juice, and when you send a public transaction, you can use public Fee Juice, which means your transaction costs are always aligned with the type of transaction you're making.

Fee Juice in Apps

Aztec has native fee abstraction, which means apps could let you pay for transactions in any token you want, or cover your fees entirely. Apps like Nyx may choose to cover part or all of a user's transaction costs, or allow you to pay in tokens that are convenient for you. This means you will most likely never see Fee Juice in an app; instead, you'll pay in whatever makes sense for what you're doing, on your terms. Similarly, you might never even see an Aztec wallet at all, because the app itself becomes your interface that you connect to using your MetaMask wallet.

Fee Juice in Browser Wallets

If you're using a browser extension like Azguard, you'll manage Fee Juice directly in your wallet alongside your private and public balances, converting between tokens as needed to cover transaction costs.

When you bridge tokens in, you'll need enough Fee Juice to cover the cost of your first transaction, then you'll need to monitor how much Fee Juice you have available to make transactions. Browser wallets will allow you to send either publicly or privately to other users and will default to using either public or private Fee Juice depending on the type of transaction. Both private Fee Juice and public Fee Juice will appear by default in your token list.

Wrapping up

How you handle Fee Juice depends on where you're transacting: apps can abstract it away entirely and let you pay in any token, while a browser wallet like Azguard puts it in your hands to manage across public and private balances. Match your gas to your transaction, keep private activity private down to the fee, and you move on your terms.

Aztec Network
Aztec Network
21 Jul
xx min read

Introducing Alpha V5

The Aztec Network today activated Alpha V5, a major protocol upgrade passed by token-holder governance and executed onchain. Alpha V5 reduces private-transaction proving times by more than 2x compared to the previous version, lowers the cost of a fully private transaction by roughly 50%, resolves the critical issues found in V4, and sees the first wave of apps go live. Users can now send private transactions and earn yield on Aave simply by connecting their Ethereum wallets on Nyx, bridge from Ethereum to Aztec using Shield or TRAIN, privately collect NFTs on RavenHouse, or play Dark Forest Aztec, a hidden-information strategy game in a universe that lives entirely onchain. 

"Alpha V5 continues Aztec's work at the frontier of client-side proving, with cryptographic breakthroughs that cut proving times by more than half this release," said Zac Williamson, Co-founder, Aztec Foundation. "We believe Aztec is now the fastest system in the world for proving a fully private transaction entirely on a user's own device, and every release moves the industry closer to private transactions at public transaction speeds."

As the only decentralized privacy L2, Aztec is the credibly neutral privacy layer for Ethereum. Aztec allows anyone to write smart contracts that include both private and public aspects – every private transaction is proven on the user's own device, so no operator, sequencer, or intermediary can see the data. The Alpha V5 proving improvements come from cryptographic advances that make this client-side proving faster than any prior release. The network remains in alpha, but with V5 it is ready for teams to begin building and deploying applications.

Performance - 2.5 second fully private transactions 

Making private transactions practical comes down to how quickly a proof can be generated on a user's own device, without offloading that work to a server that would learn what the user is doing. On Alpha V5, proving a private token transfer natively now takes approximately 2.5 seconds on a consumer laptop, down from 5.2 seconds on V4, and about 6.8 seconds in a browser, down from 12.5 seconds. Across every measured transaction flow, client-side proving times improved by approximately 2x compared with V4.

Bench machine: an M2 MacBook (12 cores, throttled to 8). "Native" runs Aztec's C++ proving binary; "WASM" runs the same prover in a browser engine (Node on V8).

Alpha V5 lowers ECDSA signature-verification cost by approximately 2x, speeds up Poseidon2 hashing by approximately 3x, and reduces the protocol circuit gate count by approximately 50% (gate count is the number of individual operations a proving circuit must perform, and it is the main driver of how long a proof takes to generate). Each of these lowers the amount of work a device performs to prove a transaction, and the reduction in gate count in particular compounds across every proof the network generates.

Apps - send, receive, and earn privately on Ethereum

Alpha V5 launches the first wave of apps on a network where privacy is built into the protocol rather than managed by an operator. On other networks that claim privacy, transactions still pass through an operator or node that reads them in plaintext, or depend on a viewing key that a third party holds, so users rely on someone else to protect their data and to decide when it gets disclosed. On Aztec, every private transaction is proven on the user's own device, so the app, the sequencer, and any operator never need to see the underlying data. Nyx is one of these apps, allowing users to privately send transactions and privately earn yield on Aave. 

"On Ethereum, everything you do is public. That's why we built Nyx: a private account governed by your Ethereum wallet", said Nikhil, Co-founder of Nyx. "Now you can send, receive and earn in private. Nyx was the first app live on the Aztec Alpha, and we're excited to expand participation to more users with the added stability of Alpha V5."

Other apps on Alpha V5 include Azguard and Nethermind (wallets), Shield, TRAIN, and RavenHouse (bridges), and the Aztecscan block explorers. Also launching is Dark Forest Aztec, a game where users explore a universe, control planets, manage planetary energy, expand territory, and launch attacks through strategic play with private state and hidden actions.

Dark Forest Aztec private universe-building gameplay

Lower costs, higher security 

Transaction fees on Aztec come from two main sources: the cost of proving a transaction and the cost of verifying the rollup proof on Ethereum. Alpha V5 reduces both. It lowers the network's proving-cost parameter by 50%, and it reduces the L1 gas required to verify a rollup proof by approximately 40%. Because rollup proofs are verified on Ethereum and that cost is shared across all transactions in a batch, the L1 reduction lowers fees for every user, while the lower proving-cost parameter reduces the per-transaction proving fee directly. Together, these bring the average cost of a fully private token transfer to under a $0.05 transaction cost.

Alpha V5 also hardens the network on several fronts. It resolves critical vulnerabilities found in Alpha V4 along with additional bugs discovered since launch. Aztec's bug bounty program on Cantina also drew more than 234 security researchers to participate. The network remains in alpha, and further bugs may surface as usage grows, but each release has closed the issues found in the last and strengthened the protocol against new ones. With the critical V4 issues resolved and these safeguards in place, Alpha V5 is stable enough for teams to begin building and deploying applications.

Availability

Alpha V5 is live now, view the Alpha V5 landing page for a full list of features, performance updates, and live apps to explore. 

About Aztec

Aztec is the only decentralized, privacy-first Layer 2 on Ethereum. Developers write private and public logic in the same smart contract, and private functions are executed and proven on the user's own device, so no operator sees the underlying data. The protocol is upgraded through onchain governance, and the network settles to Ethereum. For more information, visit aztec.network.

Aztec Network
Aztec Network
30 Jun
xx min read

Inside an Aztec Transaction

On Ethereum today, each transaction reveals everything publicly. The token you moved, the size, the timing, the wallet it came from, every action you take. Given the limitations of this type of transparent network, the industry is now focusing on bringing privacy onchain as a top priority. The response to this has mostly been to enable private transactions that shield transfers in various ways. But when we look at how privacy works on Web2, it’s clear that users and developers need granular privacy controls: the ability to decide what is public or private and who is able to see different types of data.

Aztec was built so that one transaction can carry two halves. A private half that runs on your own device and never leaves it, and a public half that the network runs in the open. Apps can choose which aspects are private or public, and users can choose what they want to reveal and when.

This article will follow an example transaction on Aztec: a vote in an onchain election built on Aztec, where who you are and which candidate you chose stay private, while the running tally for each candidate stays public for anyone to verify.

Public and private in one move

Picture the vote you cast in our example as two aspects that seamlessly weave together. In the first step, you act in private: an app records your vote on your device and hands the network a proof that the vote is valid without revealing it. In the second, the network acts in public: it checks that proof, then adds one to the chosen candidate's public tally. It is one transaction: one part stays with you, one part goes to the network. Both parts end up recorded onchain, in two separate state trees, one private and one public. The walkthrough below follows how these two aspects work together and what this means for how your transaction lands onchain. 

It starts on your device

You open the voting app and connect an Aztec wallet. That first step looks like any onchain app. The difference is inside the wallet. An Aztec wallet carries a private execution environment, the PXE, pronounced "pixie", which runs on your phone or in your browser. The PXE is where the private half of your transaction executes, and where the proof of that work gets made, on your hardware, under your exclusive control.

Every account on Aztec is a smart contract rather than a bare key. That design, account abstraction, allows a wallet to authorize a transaction however its owner chooses without writing an identity onto the network for everyone to read. The wallet is the front door, and on Aztec you can decide if the door is open or closed, who you share your information with. 

The private half runs on your device

The voting app is a smart contract with two kinds of functions. The private functions run first, and they run inside your PXE. Your identity and the candidate you picked are the private inputs, and they stay on your device.

The only thing to leave your device is a proof confirming the legitimacy of your vote. Aztec's client-side proving system, Chonk, takes the private execution and produces a zero-knowledge proof: a compact cryptographic receipt that your vote followed the rules, that you are eligible, and have not voted before, while revealing nothing about who you are or who you voted for. Think of it as a sealed ballot the network can confirm is valid without opening it. The network learns only that a legitimate vote happened. It does not learn how you voted, or even which account voted. 

This is the part that used to be too slow to be practical. Generating a proof on a phone was the bottleneck every privacy app hit. Aztec’s Chonk is purpose-built for fast proving on low-memory devices, both natively and in the browser, so the private half runs on the device in your hand instead of on someone else's server.

The public half runs in the open

Some elements of a vote should be public. The tally is shared infrastructure, the number everyone relies on to trust the result. Thanks to programmable privacy on Aztec, the app marks that part public. Public functions live on the network and run in the open, the way functions do on Ethereum.

On Aztec, private and public logic live in the same contract, and the developer decides which is which, function by function and variable by variable. Programmable privacy is a dimmer, not a switch. The voting app turns it up on the individual ballot and turns it down on the running tally. That boundary is a design decision written into the contract, and it is the thing no transparent chain and no fixed-privacy chain can offer.

The network checks the proof and runs the public part

Your vote leaves your device as a bundle: the zero-knowledge proof of the private half, plus the call to the public function that updates the count. It goes to Aztec's sequencers, a decentralized set of thousands of independent operators, with more than 3,500 of them running the network today.

The sequencers do two jobs at once. They verify the proof of your private vote, confirming it is valid and eligible without seeing the choice behind it, and they run the public function that adds one to the chosen candidate and updates the public tally. Your ballot stays sealed. The count goes up by one for everyone to see. The same proof guarantees you cannot vote twice, even though no one learns which ballot is yours.

Two state trees, both onchain

Aztec has two main state trees, and both live onchain. One holds private state, the other holds public state, so the full record of what happened sits on the network rather than on any one person's laptop. The two trees store each record in two different ways depending on if it needs to be private or public. 

The private tree uses a UTXO model, the same note-based design used by Zcash. In this model, state is written as commitments: each entry is a sealed record that a valid vote was cast, with the voter and the choice kept private. Just like with Zcash or Bitcoin, you do not edit a private entry in place. You write a new one, and the design stops the same vote from being cast twice (old state is nullified). The vote stays private, and the record of a legitimate vote happening is onchain for the network to check.

The public tree uses an account-based model, the same shape Ethereum uses: values that update in place, readable by anyone. This is where each candidate's tally lives.

One transaction wrote information to both trees. The private tree recorded that you voted, sealed. The public tree recorded the new totals, in the open. Everything is onchain. The difference between the two trees is how much each one reveals.

Every private app on Aztec writes into that same private tree. A vote, a payment, and a payroll run all land in one shared record of activity, so each user's privacy grows stronger as the network grows, instead of splitting into a separate pool for every app.

A block is proposed, and Ethereum records it

Aztec is an L2 on Ethereum, so everything settles to Ethereum L1. A sequencer on Aztec gathers transactions into a proposed block. Other sequencers validate it before it goes to Ethereum's pending chain. At that point the block sits on Ethereum, ordered and recorded, waiting for its proof. The network has agreed on what happened and the proposed block is just waiting a final proof. 

Anyone can prove it

Proving a block is its own job, and on Aztec, it belongs to no one in particular. A decentralized, permissionless set of provers competes to take a full epoch, a 32-block stretch of the chain, and compresses it into a single zero-knowledge proof of the entire epoch. Anyone with the hardware can run a prover and bid for the work. There is no privileged operator, no committee you have to trust, no outside network holding a key.

That openness is the whole point of a privacy layer. A system that protects your data but routes it through one trusted server has only moved the exposure rather than removed it. Aztec keeps proving permissionless and your private inputs on your device, thereby avoiding any exposure.

The economics land in the voter's favor too. As an L2 network, Aztec spreads the cost of that one L1 proof across thousands of transactions in the rollup, so a vote costs pennies, not the millions of gas a private proof would cost verified alone on Ethereum.

Settled on Ethereum, verifiable by anyone

A prover then posts the epoch proof to Ethereum's proven chain, and the Aztec state is final. Ethereum verifies one proof and inherits the correctness of everything inside it. Aztec extends Ethereum and settles to Ethereum, so your hybrid transaction carries Ethereum's security without carrying Ethereum's enforced transparency.

Anyone can now verify that the result is valid and that every counted vote was legitimate. No one can see how any individual voted. The tally is on the shared ledger where it belongs, and your ballot stayed yours the whole way through.

What this unlocks

For the voter, their ballot was never a broadcast. The candidate you chose stayed yours, with no record tying your wallet to a name for anyone to read later, and you can still check that your vote was counted and the result is honest. You took part without your choice becoming data for systems built to act on it.

For a founder, the election app in this walkthrough is easy to implement without needing to build extensive custom code. Secret ballots with a public, verifiable count, in one contract, is a product category that opens up only because the boundary is programmable. You can build governance, elections, and polls where people vote without fear and the result still proves itself. And of course you can build anything that requires both public and private state to work seamlessly together. 

For an infrastructure provider, the same machinery serves clients who need a result they can stand behind without exposing the people who produced it. Selective disclosure lets a client prove exactly what a counterparty needs to see, the count and the integrity of the process, and protect everything else, on their own terms. That is a guarantee a transparent chain cannot make.

A real vote needs two things at once: a secret ballot and a count anyone can check. A transparent chain makes you give up the first to get the second. On Aztec, you get both. The tally settled on Ethereum for anyone to verify, and how you voted stayed yours. The infrastructure is in place, what will you create with it? 

->Review the Aztec Basics

->Head to the docs and start building today

Aztec Network
Aztec Network
23 Jun
xx min read

The Devil's Bargain - Privacy Without Credible Neutrality

Crypto is in a long night. It is no secret that the industry is facing challenging circumstances and there has been a clear consolidation of the industry. Right now we are seeing a focus on real traction, demonstrable value projects shipping practical solutions that will meaningfully reach users. 

Some of that discipline is overdue. However, in times like these the properties that made crypto structurally different begin to look expendable. Decentralization slows you down. It makes upgrades harder. It makes institutional sales harder. It removes the control surfaces that the existing financial world knows how to buy.

We used to accept those costs as the price of building something durable. But, in a famine, they look like unaffordable affectations. Discarding them wholesale, however, is like selling the land out from under our feet.

Permissionless, uncensorable transaction networks with rich composability - this is the clay from which our industry was grown. The long term commercial health of our industry depends on preserving these properties in an age of privacy and institutional adoption.

These trade-offs become more challenging and pernicious when privacy is involved. Privacy is the narrative for crypto in 2026, and for good reason. It’s the missing piece that will deliver the traction and real use-cases that the industry so desperately needs. 

The challenges of decentralization multiply under the constraints of privacy and what we are seeing in the industry is not a pivot, but a complete capitulation of all of the differentiable value that made crypto valuable.

I have spent nearly a decade building a network that marries programmable privacy with decentralization. A network where users keep their data, where applications are composable with one another, where transactions can settle without a privileged party learning everyone’s business or deciding which products are allowed to exist. That required new cryptography, new programming models, new state architecture, new wallets, and a fairly insane number of tradeoffs that are invisible until you try to build the thing yourself. There are easier products to ship. 

A centralized privacy service can give institutions something legible quickly, replicating how the existing financial sector works: a responsible operator, a viewing key, a way to block transactions, a way to explain the whole thing to a risk committee. Some of these products will be useful. Some will be good businesses. But they are not the thing we came here to build.

The Devil’s Bargain

Institutional and enterprise adoption is one of the core growth areas in this crypto-winter and the playbook is simple: use the language of crypto as a skin-suit to sell products and services that pattern match onto existing financial rails, with their need for complete visibility, censorship, centralized network operators and all of the liabilities this incurs.

This is a tempting bargain because it shortens the path to adoption. It gives buyers and regulators a shape they understand. A company. A contract. A switch. But the moment you accept that bargain, the system changes character. It may still be encrypted. It may still contain proofs. It may still call itself private. But, it now behaves like and is an operated service. 

There is a party with privileged knowledge and privileged control. Builders must shape themselves around it. Institutions negotiate with it. Regulators may pressure it. Attackers target it. Users ultimately depend on it. By a backdoor I mean something specific: a network or protocol-level viewing key where the product developer does not control who can see their users’ data, especially when paired with network-level controls that can block transactions or ban smart contracts entirely. I do not mean application-level controls. I do not mean user-authorised disclosure. I do not mean a dapp deciding that users must prove something before using it. Regulated applications will need rules. The issue is that the disclosure boundary of your application belongs to somebody else, and the same layer that sees can also decide whether your users are allowed to transact. In short, users lack a platform that has credible neutrality.

The Platform Risk

Privacy on top of centralized rails is fatal. If one party can see everything and stop anything, that party may be treated as responsible for seeing and stopping.

This compounds into substantial platform risk. If an entity builds on top of such a system they must surrender visibility and control to the network operator to satisfy their liabilities without consideration for yours. Decentralization and ultimately credible neutrality is the difference between whether you own durable infrastructure or are renting a service whose rules can change on a whim. Worse, you cannot “just build things”. For novel transaction flows approval must be sought and granted. Tell me, would Ethereum have grown if every smart contract deployment required approval from the Ethereum Foundation?

Privacy needs the same freedom. A private credit market, for example, touches identity, collateral, repayment history, payment flows, liquidation logic, lender disclosures, auditor access and borrower privacy. If every component lives inside a different permissioned service, each with its own operator and viewing assumptions, that is a bureaucratic friction that negates blockchain’s core value proposition; composability.

A decentralized and credibly neutral privacy network prevents the settlement layer from becoming the single place where all surveillance and censorship obligations naturally accumulate. It allows product developers to scope their code to satisfy their own narrow requirements without consideration for the obligations of a centralized operator.

Building for credible neutrality

A lot of today’s privacy narrative treats architecture as if it were a detail. It is not. You cannot take a transparent ledger, staple confidentiality onto the edge, add a viewing key for comfort, and expect to get programmable private infrastructure.

If the state model is not private from the ground up you get wrappers, third party tools, data custodians, ad hoc disclosure paths and a pile of assumptions that every application drags into the next. Developers do not get a normal programming model where private contracts can call private contracts and users keep state on their own devices. They do not get composability.

The difference matters. In a real private execution environment, users generate transactions locally. They do not outsource their intent to a third party who learns what they are doing. Private contracts interact through a state model designed for privacy. The network settles proofs without becoming the party that knows everyone’s business. Privacy is part of the architecture.

This is why Aztec has taken so long. We built something that makes programmable private state and decentralised settlement live inside the same system. That means proving systems that run on consumer hardware, a transaction architecture built around local private execution, and a programming model where privacy is idiomatic and just works out of the box.

A centralized service can skip much of this. It can hold the key, run the prover, approve the flow and call the result privacy. It gets to market faster because it is not trying to arrive at the same place.

The edge

Adding decentralization does not make obligations disappear. Applications, issuers, frontends, custodians and regulated businesses will continue to exist in a web of obligations and responsibilities. Anyone pretending otherwise is unserious.

The question is where those obligations live. If they are pushed into the settlement layer, the settlement layer is no longer credibly neutral. It needs visibility into everyone and controls over everyone. 

The better answer is selective disclosure. Users and applications should prove specific facts to specific parties for specific purposes. A regulated application may need to know that a user passed a check, that a transaction satisfies a policy, or that an auditor can inspect a particular flow. None of that requires the base network to hold a permanent key into everyone’s activity.

This will be harder to explain to the existing world. New infrastructure always fails to fit the categories built for the old infrastructure. Bitcoin did not arrive as a neatly regulated bank product. Ethereum did not wait for every lawyer to understand smart contracts. Stablecoins and DeFi forced institutions, regulators and users to develop new language around rails that kept existing.

If the standard for privacy infrastructure is to plug into the old world without changing anything, the answer will always be a service with a backdoor. And the result will be to catch crumbs falling from the tables of the old world.

The market worth building

The market we should be building is, well, a market. A private financial system that compounds: assets, liquidity, identity, credentials, credit and applications interacting through a shared settlement layer without forcing users to surrender their data to whoever sits in the middle. 

Traditional finance is built out of vertically integrated information silos. Those silos are its moat. Banks, exchanges, custodians, payment processors and data brokers all benefit from controlling the information that flows through them. A global private settlement layer attacks that advantage directly. It lets liquidity and credentials move while outsourcing information custody to neutral cryptographic infrastructure. 

A company wants a moat. A settlement layer wants surface area. A permissioned privacy provider can ration access, raise fees, exclude applications, shape disclosure rules and define acceptable use around its own risk tolerance. These are products pretending to be networks, and not durable financial infrastructure. What bothers me is this compounding category confusion. Networks adding protocol-level viewing keys and transaction controls are using the same language as decentralised programmable privacy, and commentators are treating them as variations of the same thing. They are not.

We have spent nine years walking the hard road. Now, just as we are close, the market has lost faith. Everyone is reaching for whatever lifeline looks immediate. Some of those lifelines will be real. Some will make money. But if crypto responds to its long night by rebuilding financial privacy as permissioned services, then we will have survived by surrendering the property that made the industry worth building.

Markets can grow when the platform is removed from the position where it can dictate the rules. It would be perverse to forget that lesson while building privacy, the domain where control over information matters most.

The land we till

Crypto is in a famine. The land is struggling. We could sell our land for a pittance and survive the season. But the famine will pass, and when it does the land will blossom again. Without the land we are nothing.

We have struggled immensely to create a permissionless network that can marry privacy with decentralisation: an indestructible network whose users cannot be surveilled and whose transactions cannot be censored. This is the soil we have to grow our crops. To surrender a backdoor or a centralized operator for temporary relief is to sell our land for the price of a stablecoin. And we cannot sell the land.


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