Understanding AZTEC Tokens in One Article: The Core Driver of Programmable Privacy

For the past decade, public blockchains have faced a core challenge that has yet to be fully resolved: privacy. Transparency makes trustless verification possible, but it also creates a structural barrier—without privacy protection, real-world assets and institutions will never truly be able to be put on the blockchain.

Privacy is critical for finance, identity, and real-world applications, but current solutions fall far short. Many solutions rely on centralized sorters, trusted execution environments, or are merely superficial add-ons, failing to provide true end-to-end privacy protection.

True privacy must be native, programmable, usable, and decentralized from day one. It must allow developers to freely define which information is public or private, and ensure that no central party can undermine these privacy guarantees. Aztec Network's mission is to fill this gap.

Aztec is a privacy-focused Ethereum Layer 2 blockchain that provides true end-to-end confidentiality for composability between private and public logic through client proofs, programmable privacy, and the new alt-VM.

XT Exchange now supports AZTEC on pre-market OTC , giving early participants access to one of the most anticipated privacy protocols.

Quick Summary

• Aztec is a privacy-first Ethereum Layer 2 solution that achieves programmable privacy through custom alt-VM, encrypted UTXO state, and client proofs.
• It supports a seamless combination of private and public logic, giving developers precise control over which data remains confidential.
• The $AZTEC token is used for staking, proof, fees, and governance, and features a flexible fee abstraction to optimize the user experience.
• These components together build true end-to-end privacy and a decentralized foundation that supports real-world high-throughput applications.

What is AZTEC?

Aztec is a privacy-focused Ethereum Layer 2 blockchain built to address privacy gaps that existing networks struggle to fill. While Ethereum publicly discloses all transactions, addresses, and contract states, Aztec reintroduces a fundamental element of real-world systems: the right to privacy without compromising key transparency.

Aztec achieves this by redesigning the execution model from first principles. Instead of relying on the EVM, it introduces a completely new alt-VM that handles private and public execution, private and public state, and enables seamless composition between them. Its core features include:

• Private functions: executed on the user's device and cryptographically proven.
• Public functions: Executed in the Aztec virtual machine
• Private state: Stored in encrypted UTXO format, visible only to the owner.
• Public state: Recorded in a transparent Merkle tree.
• Private and public logic and data can be combined across domains.
• Private and public messaging with Ethereum

Founded in 2017 by Zac Williamson, Joe Andrews, Tom Pocock, and Arnaud Schenk, Aztec was initially named CreditMint, a platform for issuing on-chain corporate bonds. However, the team quickly realized that the fundamental problem hindering the wider adoption of blockchain was the lack of programmable privacy.

After completing a $2.1 million seed round of funding at the end of 2018 and securing further funding in 2019, Aztec launched its mainnet in January 2020. In 2021, the project raised $17 million in Series A funding led by Paradigm, with participation from Vitalik Buterin and other well-known investors; in 2022, it raised another $100 million in Series B funding led by a16z.

To date, Aztec has raised more than $119 million, demonstrating the industry’s high level of confidence in its vision of building a fully private, programmable Ethereum Layer 2.

How AZTEC Works: Core Mechanism Analysis

Aztec's architecture implements a completely new programming model called programmable privacy. By using Noir—a domain-specific language inspired by Rust—developers can define privacy rules at different levels, including users, data, metadata, transactions, and even the entire contract logic. No longer needing to choose between "complete transparency" and "complete secrecy," builders can precisely define the scope of privacy required for their applications.

Aztec also introduced a client-side proof mechanism to ensure that sensitive data never leaves the user's device. Instead of exposing plaintext input to the network, users generate zero-knowledge proofs locally and only submit these proofs to the blockchain. This eliminates a major attack surface: since the data is never leaked, there is no risk of it being compromised.

Unlike earlier privacy systems, Aztec has been decentralized from day one. Ordering, proof, and governance are all built into the protocol, ensuring that no centralized entity can breach privacy guarantees. Privacy only has meaning when "no one—including Aztec itself—can violate it."

AZTEC Token Overview: Its Role in Empowerment, Economics, and the Network

$AZTEC is the native asset of Aztec Network, used to support its proof-of-stake security model, governance system, and economic incentives. This token is issued on Ethereum in ERC-20 form, is immutable, and does not offer privacy features.

Token core functions and empowerment

1. Cybersecurity (Staking)

$AZTEC secures network security by staking on Ethereum L1 through an independent sorter.

• Minimum stake: 200,000 $AZTEC
• Staking provides Sybil resilience and protects the unconfirmed chain until final determination.
• Misconduct will result in punitive slashing.
• Users can delegate operations to the sorter while retaining token custody and voting rights.

2. Blocks and Proof Incentives

AZTEC will reward the following participants by issuing additional tokens:

• Proposed block sorter
• The reward for proving validity comes from transaction fees and block rewards. Aztec incentivizes multiple provers in each epoch to maintain competition and network activity.

3. Transaction fees

Although the final fee is paid in $AZTEC, the native fee abstraction mechanism allows users to pay with assets such as ETH and USDC through "Fee Contracts (FPCs)," thereby improving the user experience.

4. Governance rights

$AZTEC represents governance voting rights. Token holders can:

• Approval of parameter adjustments and protocol upgrades
• Adjusting inflation, incentive and fee mechanisms
• The minting of new tokens within a limited scope is proposed by the sorter, and token holders vote by locking up their tokens.

Token community acquisition channels

The Aztec Foundation is conducting ongoing liquidation auctions on Ethereum to widely distribute $AZTEC to node operators, contributors, and community participants.

• Maximum total supply sold: 14.95% of the total token supply.
• Lower limit of valuation: $350 million FDV (approximately 75% lower than the previously implied valuation)

AZTEC's token distribution

The total supply of $AZTEC is 10.35 billion, distributed among community participants, node operators, governance-managed reserves, ecosystem growth initiatives, and early adopters. This distribution structure aims to ensure broad community ownership at network launch while maintaining long-term network security, continuous development, and ecosystem adoption incentives.

21.96% (2.27 billion tokens) of the total token supply was allocated to a token sale organized by the Aztec Foundation during Ignition.

• Phase 1 – Genesis Sequential Sale (1.93%): 200 million tokens will be distributed to early sequencers .
• The second phase – a public auction (14.95%) – will allocate 1.547 billion tokens to expand participation among current and future Aztec users .
• The 2.64% (273 million tokens) associated with Phase 2 will be automatically injected into the Uniswap V4 liquidity pool governed by Aztec .
• The two-sided sale (2.44%), totaling 252.5 million tokens, will be allocated to strategic investors at the Foundation's discretion. No two-sided sales are expected in 2025.

To support ecosystem development, 10.73% (1.11 billion tokens) will be used for ecosystem grants , primarily targeting non-internal contributors and community members , with the majority of these grants allocated before the token sale. Another 4.88% (505 million tokens) will be allocated to future incentives , managed by Aztec governance, and may be used to increase staking rewards or provide liquidity incentives within 24 months of Ignition.

Cybersecurity will be enhanced through first-year cyber rewards , which comprise 2.41% (250 million) of the supply and have been pre-minted to compensate sorters and provers in the first year.

The Aztec Foundation received 11.71% of the supply (1.21 billion tokens) to support protocol operations, research, partnerships, and continued ecosystem growth.

Long-term supporters and builders collectively hold a significant portion of the token supply, including 27.25% (2.82 billion tokens) from investors and early supporters , and 21.06% (2.18 billion tokens) from team members , reflecting their central role in the network's development.

How to Purchase $AZTEC | Participation Guide

The earliest way to access Aztec Network was through pre-market trading of $AZTEC on XT Exchange, where users could trade the token before its official listing.

Beyond Pre-Market trading, users can directly participate in early opportunities within the Aztec ecosystem. This includes ongoing liquidation auctions by the Foundation (which can allocate up to 14.95% of the total token supply to the community), as well as staking programs, orderer participation, and governance activities to be launched after the network goes live. Community members can gain more influence within the network by staking $AZTEC, supporting block production, or contributing to the ecosystem through grant programs. Through these channels, early participants gain exposure, drive network decentralization, and collectively shape the long-term direction of the Aztec Network.

Competitive advantages of AZTEC tokens

AZTEC, built on a solid technological foundation and extensive token use cases, has laid a strong foundation for future ecosystem expansion. Its core competitiveness lies in achieving true end-to-end privacy—a bottleneck that public blockchains have struggled to overcome for over a decade. By generating proofs locally on user devices, Aztec ensures that sensitive data never leaves the user's control, thus achieving programmable and scalable privacy protection at the user, data, metadata, and even the entire contract logic level. This makes Aztec one of the few networks capable of supporting real-world applications (such as finance, identity, and RWA) while avoiding the exposure of user behavior or transaction patterns.

Another major advantage of Aztec is its commitment to trusted decentralization from day one. Ordering, proof-of-concept, and governance all operate in a distributed manner at network launch, ensuring that no single entity can censor transactions or breach privacy commitments. The $AZTEC token further strengthens the network's neutrality by driving staking, incentives, and governance, while its fee abstraction mechanism allows users to experience privacy applications without directly holding the token.

Key Risks and Challenges of AZTEC Tokens

The first key risk stems from the inherent complexity of Aztec's privacy-first architecture. The network introduces a new alt-VM, a dual-track private-public execution model, and client-side proof mechanisms. While these designs bring enhanced functionality, they may also introduce greater technical uncertainty. For example, potential vulnerabilities in the proof system, performance bottlenecks, or unexpected interactions between private and public states could all impact network stability.

The second challenge stems from Aztec's decentralized launch model and token governance system. Network security relies on the participation of a wide range of sorters and provers, sufficient staking, and active governance. If staking is overly concentrated, or if participation in the governance process is too low, both the network's decentralization and economic security may be compromised.

Aztec's Future Outlook

Aztec's vision extends far beyond anonymous payments. The project aims to become the default marketplace for programmable assets globally—where not only on-chain synthetic assets, but also real-world assets, credentials, and financial instruments can be traded, automated, and securely held without exposing sensitive information. In this future, identities can be securely linked to blockchain accounts; credentials and proofs can be stored cryptographically on-chain; and developers can build high-throughput financial and social applications without forcing users to sacrifice privacy.

By refactoring Ethereum's smart contract model around privacy rather than transparency, Aztec provides the industry with a long-missed capability: a practical, flexible, composable, and truly end-to-end privacy system that enables real-world activities to be securely and fully brought on-chain.

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