Vitalik Questions Rollups, Can Aztec Stand Out with Controllable Privacy?

Summary

Aztec is a privacy-first zkRollup built on Ethereum, aiming not merely for scaling but to establish a smart contract system with "privacy-by-default and verifiable execution." Through its architecture combining private execution with on-chain verification, and the Noir programming language designed specifically for zero-knowledge development, Aztec aspires to build a complete ecosystem for privacy-native applications. The project has secured multiple rounds of funding from top-tier institutions and has clearly defined network incentives and community participation mechanisms in its token economic model. Compared to the performance-centric competition among mainstream L2s, Aztec has chosen a differentiated path focused on private execution, giving it a strong unique position within the Ethereum ecosystem. However, its long-term value will ultimately depend on whether privacy demand becomes mainstream, as well as the evolution of key variables such as regulation, technical performance, and ecosystem expansion.

1. Why is Aztec Gaining Market Attention Recently?

Sector Outlook: Structural Resurgence of the Privacy Narrative

Over the past few years, with tightening regulations and exchanges' caution towards anonymous protocols, the privacy sector has significantly cooled down. Many privacy projects were marginalized, and "privacy" was once considered a high-risk narrative. However, the environment is changing. As on-chain applications evolve, privacy is returning to the center of discussion in new ways. AI Agents make automated strategies possible, and automated execution implies that transaction logic and data cannot be fully public; RWA and institutional adoption also require a model that is "verifiable but not overly transparent"; assets must be real, but commercial details need not be fully exposed. Simultaneously, technologies like zkEVM and zkVM are maturing, making verifiable yet invisible computation more feasible. Privacy is no longer just a tool for anonymous transfers; it is increasingly resembling a new infrastructural capability. Aztec's rising prominence is a manifestation of this structural shift.

Team Background and Credibility

Aztec initially launched Aztec Connect, exploring private DeFi, but later proactively shut down that product to focus on building a "privacy-native Rollup." This pivot was controversial at the time but demonstrated the team's willingness to make trade-offs for a long-term technical roadmap rather than maintaining a short-term narrative. Since then, Aztec has clearly focused on a default-privacy zkRollup architecture and introduced Noir, a programming language for zero-knowledge development, gradually building a complete privacy smart contract system.

Founder Zac Williamson has long been involved in zero-knowledge proof and cryptography research and is one of the early contributors to the PLONK universal proof system. The Aztec team has consistently deepened its expertise in ZK technology for years, from privacy asset protocols to Rollup architecture and Noir language development, with a roadmap always centered on verifiable private computation. Even during the downturn of the privacy sector, the team did not halt R&D but actively pivoted and restructured its product direction. This sustained commitment and technical background position Aztec more as a long-term infrastructure project rather than a short-term hype cycle.

Capital Strength

In December 2021, Aztec completed a Series A funding round of approximately $17 million, led by Paradigm, with participation from a_capital, Variant, Nascent, and industry figures like Vitalik Buterin. In December 2022, during a generally bearish market, Aztec secured a $100 million Series B round led by a16z crypto, with participation from A Capital, King River, and others, bringing its total funding to over $119 million. Both a16z and Paradigm are top-tier institutions known for long-term bets on crypto infrastructure, favoring technology and underlying architecture over short-term narratives. Raising a large sum during the late 2022 bear market itself is a signal: capital values Aztec's technical path and long-term potential, not the market sentiment of the time.

Aztec's current attention is driven by multiple factors: the team's long-term accumulation in the ZK field, a clear product restructuring roadmap, and continued support from leading capital. Capital and market attention are leading the way, while the actual ecosystem scale is still under construction.

2. Aztec's Core Positioning: What Is It Actually Building?

Not Just a Layer2, but a Privacy-First Execution Layer

Aztec is not an independent Layer1 public chain but a zkRollup Layer 2 network built on Ethereum. All transaction results and zero-knowledge proofs are ultimately submitted to the Ethereum mainnet for verification, so its security is still derived from Ethereum. However, simply understanding it as just another L2 is inaccurate. Most Layer 2 networks solve performance issues, such as reducing gas costs and increasing transaction speeds. Aztec attempts to address the structural problem of blockchain's default full transparency.

On Ethereum, account balances, transaction history, and contract call logic are public. This transparency ensures verifiability but limits the adoption of many real-world scenarios. Institutional strategies cannot be hidden, on-chain bidding is difficult to keep confidential, and future AI automated execution algorithms would expose details. Real-world commercial activities do not operate in a fully public environment. Aztec's starting point is to give blockchain reasonable privacy boundaries while maintaining verifiability.

Technical Core: Private Execution, On-Chain Verification

Aztec's underlying logic can be summarized as: private execution, public verification. Users complete transactions or contract calls locally and generate zero-knowledge proofs. What is verified on-chain is "whether this action complies with the rules," not "what specifically was done." The network confirms the correctness of the computation but does not need to see amounts, data, or execution details. This differs from traditional Rollups. Ordinary L2s merely compress and submit transactions; essentially, the data remains public. Aztec changes the execution model itself, allowing state to be private while execution remains trustworthy. This structure is termed "verifiable but invisible." It does not eliminate transparency but shifts it from the data layer to the proof layer.

Privacy Smart Contracts and the Noir Ecosystem

Aztec's goal is not merely private transfers but to support "privacy smart contracts." On traditional public chains, contract state is public by default. On Aztec, contracts can have private state and private logic while interacting with the public world when necessary. Developers can decide which information is public and which is confidential, forming an application structure with "controlled transparency." To make this model truly developable, Aztec introduced Noir, a programming language for zero-knowledge applications. ZK development was originally extremely complex, and Noir attempts to engineer this complexity, allowing developers to build privacy applications in a way closer to conventional programming. Aztec is not just building a network; it is establishing a complete privacy-native execution system, including the execution environment, proof mechanism, and development toolchain.

3. Economic Model and Long-Term Value

Current Token Information: Total Supply, Allocation, and Issuance Mechanism

According to the Aztec whitepaper, the genesis total supply of AZTEC is 10.35 billion tokens, allocated across different roles and purposes. Overall, tokens will be distributed to investors, the core team, the foundation, ecosystem development, and community participants, among other groups. Approximately 21.96% (about 2.273 billion tokens) is allocated for token sales, including public auctions and genesis node sales. This portion is primarily for early price discovery and participation incentives during the network launch phase.

Structurally, AZTEC's allocation logic revolves around several core directions: a portion rewards early investors and supporters; a portion is for long-term team incentives; the foundation is responsible for protocol development and governance support; ecosystem grants attract developers and application deployment; additionally, there are dedicated network reward mechanisms (Y1 Network Rewards) and reserves for liquidity and future incentives. This Tokenomics model considers early capital support while reserving a significant proportion for subsequent network operation and ecosystem expansion, aligning more with the allocation structure of long-term infrastructure projects.

Value Capture Logic of a Privacy L2: How Will the Token Function?

The functional design of AZTEC primarily includes the following categories:

(1) Network Security and Staking Incentives. AZTEC tokens are expected to be used for staking by network participants (called Sequencers or ordering nodes) to maintain network stability and decentralized security. Token holders can choose to run nodes or delegate tokens to earn rewards, a mechanism similar to other PoS/staking systems.

(2) Governance Power: AZTEC holders will be able to participate in network governance, including protocol upgrades, parameter adjustments, and ecosystem resource allocation. This makes the token not only a value carrier but also a tool for community decision-making.

(3) Fee Payment and Execution Incentives: If Aztec's smart contract execution environment is activated in the future, the token may be used to pay for transaction or execution fees and to incentivize participants providing proof and sequencing services.

From these designs, it's evident that privacy capability becomes part of its value capture. Unlike ordinary L2s whose value primarily relies on scaling, Aztec provides a technical foundation for real-world finance, institutional-grade applications, or scenarios with high privacy requirements through its "privacy," "selective disclosure," and "controlled transparency" models. Theoretically, this aligns its network fee structure and token demand more closely with high-value on-chain activities.

4. Token Sale and TGE: Fair Auction & Community Vote

Adopting the CCA Mechanism for Public Token Sale

Aztec's public token sale utilized the Uniswap v4 "Continuous Clearing Auction" (CCA) mechanism co-developed with Uniswap Labs, marking the first comprehensive on-chain token issuance attempt using CCA. The CCA mechanism is designed to allow market participants to price and bid transparently and fairly on-chain, avoiding issues like front-running, gas wars, and allocation monopolization by a few large holders common in traditional sales. The entire auction process is fully verifiable on-chain, neutral, and transparent, facilitating genuine market price discovery.

The public auction ran from December 2 to December 6, 2025, attracting over 16,700 participants who bid for tokens worth approximately 19,476 ETH (around $61 million), ultimately allocating about 14.95% of the total AZTEC supply. Participants included not only regular community users but also testnet node operators, early ecosystem contributors, and ETH stakers. The project set a maximum bid limit per participant to prevent excessive concentration by large holders and increase opportunities for ordinary users. After the auction, initial liquidity was automatically matched for Uniswap v4 pools, including approximately 273 million AZTEC tokens (about 2.6% of supply) to bootstrap trading pairs, providing foundational support for future secondary market trading.

Community Vote Triggers TGE

After the auction, a significant portion of AZTEC tokens obtained through bidding, node sales, and rewards remained locked until triggered by the Token Generation Event (TGE). According to the official announcement, this TGE has been approved via community governance vote and is scheduled for February 12, 2026 (Beijing Time). At that time, users who participated in the token sale will be able to freely transfer and trade their AZTEC tokens.

This arrangement reflects Aztec's governance logic: the final free circulation of tokens is not unilaterally decided by the team but jointly determined by users who participated in the sale through on-chain governance voting. The successful triggering of the TGE marks Aztec's entry into a new phase of token economy activation and signifies that the community will begin to genuinely participate in network governance and future power distribution.

Aztec's token sale and unlocking mechanism combines fair price discovery methods, broad community participation, and on-chain governance, laying a more open and decentralized foundation for its long-term value formation.

5. Competitive Landscape

Difference from Mainstream L2s: Competing on Privacy, Not Performance

Current mainstream Ethereum Layer 2 networks, such as Starknet, zkSync, and Scroll, primarily focus on scaling—increasing throughput, reducing costs, and enhancing EVM compatibility. They address the problems of slow chains and high fees; privacy is not their core selling point. Aztec is also based on a zkRollup architecture, but its starting point is different. The project explicitly positions itself as a privacy-first zkRollup, meaning privacy is the default characteristic, not an add-on feature. It supports private state and privacy smart contracts, emphasizing a verifiable but invisible execution model. Therefore, Aztec's relationship with mainstream L2s is not one of performance competition but of differentiation. Other projects compete for the scaling market, while Aztec is attempting to establish a privacy execution layer.

Comparison with Other Privacy Projects: Technical Path and Ecosystem Integration

Within the privacy sector, Aztec also occupies a unique position. Zcash represents payment-level privacy, focusing on hiding transaction amounts and addresses but not supporting complex smart contracts. Secret Network achieves privacy contracts through TEE technology, but it is an independent Layer1, requiring cross-chain bridges for integration with the Ethereum ecosystem. Projects like Zama explore more frontier Fully Homomorphic Encryption (FHE) computation and are still in early stages. In contrast, Aztec's characteristics are: it is built directly on Ethereum, inheriting mainnet security; it supports programmable privacy contracts, not just private transfers; and it builds a complete privacy development tool ecosystem through the Noir language. Within the current Ethereum system, Aztec is one of the most systematic projects advancing the direction of privacy smart contracts.

6. Potential Risks and Future Variables

Regulatory Risk: Will Privacy Face Restrictions?

Privacy protocols have always been sensitive in the crypto industry. Over the past few years, some privacy tools have faced regulatory pressure, as policymakers are not entirely friendly towards untraceable technologies. Aztec emphasizes default privacy. While it is verifiable and not a completely anonymous black box, from a regulatory perspective, privacy infrastructure itself may attract significant attention. The future uncertainty lies in: will regulators allow this "controlled privacy"? Will exchanges and institutions be willing to support a privacy-focused L2? This will directly impact Aztec's development space.

Technical and Ecosystem Risks

Zero-knowledge proofs require computational resources. Compared to ordinary L2s, private execution is more complex, requiring users to generate proofs locally, a process that is not cost-free. Simultaneously, designing for private state and development barriers are higher. Although Noir reduces ZK programming difficulty, it is still a new language, and ecosystem maturity requires time. If performance and user experience cannot be continuously optimized, it may affect mass adoption. Furthermore, Aztec follows a privacy-native path, while mainstream L2s already have mature EVM ecosystems and large user bases. Whether developers are willing to redesign applications for privacy is a practical question. Meanwhile, technological competition is accelerating. Higher-performance zkVMs, modular solutions, and even FHE technology could bring substitution pressure.

Consideration: Could RWA Drive Demand for "Controlled Privacy"?

Beyond regulatory and technical risks, whether on-chain finance needs "controlled transparency" may also influence Aztec's long-term potential. RWA is seen as a significant growth direction for the next phase. However, unlike retail DeFi, the core participants in RWA are often institutions. Institutional real-world transactions typically involve vast amounts of sensitive information: counterparties, price terms, position structures, strategy arrangements, etc. If this information were fully public, it could weaken bargaining power or even influence market behavior itself.

Therefore, RWA does not seek "complete anonymity" but leans more towards selective disclosure under a compliant framework. Assets must be real and verifiable; rules must be auditable; but commercial details need not be public to everyone. From this perspective, Aztec's emphasized model of "verifiable but invisible" logically aligns with this need. It provides not a black-box anonymity but a controlled transparency: publicly verifying results while hiding sensitive data.

However, the reality warrants sober observation. Currently, many RWA projects still opt for permissioned chains, consortium chains, or off-chain custody rather than directly adopting public chain privacy layers. This indicates that while RWA indeed has privacy needs, acceptance of public chain privacy architectures is still in an exploratory phase. If the future trend is open public chains layered with compliant privacy execution, architectures like Aztec's may encounter structural opportunities. If institutions long prefer closed systems, the space for public chain privacy may be constrained.

References

1.Aztec Documentation: https://docs.aztec.network/

2.Aztec network: https://aztec.network/

3.Nior documentation: https://noir-lang.org/ 

4.Aztec whitepaper: https://aztec.network/economic-whitepaper