Aztec Protocol Launched: V God's "Anonymous Ethereum Dream" Comes True

Compile | Alice, Jiang Xiaoyu

A blockchain is an open ledger, and anyone with a copy of it can see every transaction and the balance of an address. In theory, the system is anonymous because people cannot guess who the owner of the address is and where the person is through the address; however, in practice, if the analysis company knows the real owner behind some addresses and passes Tracking the traces of transactions can still reveal the true identity of other address owners. Therefore, in reality, blockchain systems like Bitcoin and Ethereum are actually pseudo-anonymous.

There are many places that analyst firms can track. For example: a wallet can be linked to an IP address with valid blockchain analysis, and possibly transact with another account that has been KYCed. In addition, the credentials left by users on the site, traces of goods purchased with cryptocurrencies, mean that the identity of the owner is no longer a secret. According to reports, Chainalysis, the largest blockchain analysis company in the United States, has mastered the offline identity information of more than 80% of users on Bitcoin, and has also mastered the identity information of many Ethereum whales.

Given that the current DeFi transactions are highly concentrated on Ethereum, the broadcast of transaction information to an open and transparent public network is a serious problem in the DeFi ecosystem. This means that anyone can view these transactions, and the privacy of participants may be compromised.

For example, once the owner behind an address is exposed, his every move can be recorded by others. What did he do with these coins, how did he operate to get rich, how many addresses and total assets are behind him, all these information are clear at a glance. This makes the "rich people" of Ethereum have to be more careful when conducting transactions in the real world. Such a sense of insecurity also hinders the further development of "on-chain assets" and DeFi.

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Currently well-known privacy projects on Ethereum include Zether and Aztec Protocol.

In the Zether protocol, the account balance and transfer account will be hidden, but the identity of the transferer will not be hidden. According to the first version released by Aztec on Ethereum, the information of the sender and receiver of the transaction, as well as the transaction amount are hidden, but the addresses of the sender and receiver are not hidden.

Previously, the Aztec protocol was well known in the Ethereum community and the Ethereum mainnet to convert the stable currency Maker DAI into a privacy asset. These experiences made Aztec's developers realize that they could gather good ideas to improve the Ethereum network. The most prominent of these is the zero-knowledge proof (Zk-SNARK), a method that can hide token transaction amounts.

"Zk-SNARK" is the abbreviation of "Zero-Knowledge Succinct Non-Interactive Argument of Knowledge", which refers to a proof that someone has certain information structure, eg: a key that does not reveal that information, nor any interaction between the verifier and the verifier. "Zero-knowledge proof" has been widely used in digital currency, and the most famous practical case is Zcash.

Aztec has some similarities to technology already implemented on the Zcash (ZEC) network, such as the information of the sender and receiver of the transaction, and the amount is hidden. But unlike ZEC, the first version of Aztec released on Ethereum, the sender and receiver addresses are not hidden, at least so far.

Aztec adopts a Bitcoin-like UTXO model, the core of which is a note, and the hidden state of the transaction is traced through the zero-knowledge note (Notes) system. These tickets are all available on Ethereum, and users can query the owner of the tickets. However, except for the owner of the note, no one else can see the amount stored on the note.

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According to the developer, there are two options when using the Aztec protocol for private transactions. The first option is to allow anyone to use Aztec to create a token that can support anonymous transactions.

The second option is to create private versions of existing tokens, either ETH or ERC-20. The tokens themselves should be converted into notes, which represent a cryptographic value and are tied 1:1 to the original token.

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Currently, the Aztec network only supports ZkDAI, the private version of the Maker stablecoin. However, Aztec’s developers promise to release additional tokens in the coming weeks and give users full access to the custom token within two months.

The ultimate goal of the project is to create "triple privacy", where any individual part of the Ethereum network can be completely hidden. The next step for the team is to add a special feature to hide the identity of the sender and receiver. This feature may be added later this year.

Aztec CEO Walton-Pocock also stated that the company intends to launch an ultra-fast universal proof of PLONK-SNARK, which will ensure the execution of closed smart contracts under a single trusted setting. (Note: PLONK is a brand-new zero-knowledge proof architecture that supports general-purpose or updatable trusted setups, and has significant performance improvements compared to Sonic. Huge improvement, and doesn't have trust issues due to trusted setup.)

The Aztec developers also announced that they plan to release an open source full version of the Aztec protocol sometime in the future. This will include anonymous voting for governance mechanisms, anonymous personal data management systems.

This also means that once Aztec is fully implemented, it will bring these changes to the DeFi ecosystem and the Ethereum ecosystem:

1. Private decentralized exchange: Users can trade different Aztec assets in complete confidentiality, and any transaction quantity and price cannot be obtained from the transaction process. The decentralized exchange uses the relayer pattern (relayer pattern) and the expected Aztec DeX zero-knowledge proof to achieve the above functions.

2. Private weighted voting: In a wide range of financial applications, the mechanism to protect the privacy of voters is very important, and the valid range proof of the Aztec protocol makes it possible.

3. Anonymous identity sharing scheme: In many scenarios of commitment and KYC, you can prove that you belong to a certain group without revealing your identity, which has very important application value; the Aztec token standard can support such an identity system.

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Parts of the Ethereum blockchain have already begun to become anonymous thanks to the launch of the Aztec protocol.

The Aztec protocol utilizes zkTokens (native tokens encapsulated with privacy zkSnarks) to allow fast and anonymous conversion of Ethereum-based assets. The protocol is unprecedented in being able to enjoy the irreversible and decentralized advantages of a public blockchain without sacrificing privacy.

According to the developers of Aztec, the protocol can not only provide a high degree of privacy for the Ethereum blockchain, but also greatly reduce transaction fees. Additionally, users will soon be able to use Aztec development tools when sending assets.

The Aztec project has received support from ConsenSys, JPMorgan, A.Capital, Libertus Capital and Coinbase. In particular, this team made Vitalik Buterin's previous dream a reality. Prior to this, Vitalik, the founder of Ethereum, repeatedly emphasized that he wanted to invent tools for private transactions.

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Until recently, the Ethereum network has struggled to handle the high volume of transactions. With Aztec’s solution based on Zk SNARKs, true anonymity on Ethereum may finally become a reality.

Zk STARKs were implemented during the Istanbul hard fork in December to improve the scalability of the network. Additionally, according to the developers, the update reduces the gas cost of various operational codes to prevent spam attacks and increases the network's resistance to denial-of-service attacks .

StarkWare, a start-up company focused on scalability solutions in the blockchain field, believes that Ethereum has great potential for expansion after the hard fork. According to its data, the operation scale of Ethereum on the first-level blockchain can be increased by 2000 times. (Note: Founded in 2018, StarkWare Industries develops software and hardware whose applications include transparent privacy in the blockchain, increased transaction throughput, and off-chain computing. The company provides a zero-knowledge protocol called STARK, which aims to in addressing privacy and scalability challenges in the blockchain space.)

More precisely, the updated network will be able to process 9,000 transactions per second, consuming 75 units of gas per transaction, while before that, the upper limit was 2,000 transactions, consuming 300 units of gas per transaction. ).

The second part of the update, codenamed Berlin, is expected to release in 2020, an exact date has yet to be confirmed, as developers recently reported a possible delay. Berlin will include some proposals, the implementation of which will also take more time to test, for example, EIP-1057, which is under active discussion, is an improved PoW algorithm called "progressive PoW" or ProgPoW, which aims to reduce Impact on ASIC devices.

Ultimately, as developers hope, the ethereum network will be faster, cheaper and more scalable when all the upgrades are complete. They expect all of this to happen without compromising the decentralization and flexibility of the network.