DeFi is all about democracy and transparency. But, to reach its full potential, it needs privacy too.
This isn’t just about secure transactions. It’s also about basic freedom from snooping, from scrutiny, from other people’s judgement. In the ‘fiat world’, we can do business without everyone else knowing about it. Crypto should offer the same protection.
This is the vision that Aztec is striving to deliver. For those who don’t know, Aztec is one of the most promising layer 2 zero knowledge proof technologies in the entire Ethereum ecosystem.
The project styles itself as a ‘security shield for the internet of money’ and its goal is to provide complete privacy on Web 3.0, sheltering transactions on the public blockchain.
The development team have created their own form of cryptography, PLONK, which can greatly improve the usability and progress of ZK proofs. And last March they launched their inaugural product, zkMoney, the first private rollup service on Ethereum.
zkMoney is an equivalent of zCash, a form of cryptocurrency designed for enhanced privacy, but built on Ethereum. It allows users to send ETH and other tokens with complete confidentiality, so no-one can see how much they’ve sent or who they’ve sent it to. And because it’s on layer 2, senders face a much lower cost than they would on Ethereum.
However, the early versions of zkMoney had some limitations. You couldn’t interact with DeFi, make trades or do a whole bunch of other stuff that people want to do with their funds. All you could do, really, was send money.
Now, however, the devs have rolled out a new product: Aztec Connect.
This private bridge takes the benefits of zkMoney and multiplies them. You can still hold funds in layer 2 and send them to other people, but now you can also connect to Ethereum layer 1 and make transactions there, while continuing to enjoy total privacy.
For example, you’ll soon be able to make a trade on an exchange like Uniswap, pay a much lower fee than you’d pay on layer 1, and enjoy total seclusion. From the outside, people will be able to see that someone with funds on Aztec performed a trade on Uniswap, but they won’t know the identity or any other key details. So users will get full privacy, as well as lower costs.
And this is just the start…
For each application or protocol that exists on Ethereum layer 1, developers can create what is known as an adapter, which opens a connection to other projects.
We’re already seeing adapters for projects like Liquity, a protocol which allows you to borrow or lend interest-free using Ethereum as collateral, and there are many others that will come over time.
In the case of Aztec, this is particularly exciting. With adapters, Aztec users will be able to call and access new platforms, all in total anonymity. This will drive usage to Aztec. And the more people that use Aztec Connect, the cheaper it will get, because the protocol transactions are bundled together so you only have a small number on Ethereum layer 1.
With each new connection, the privacy of layer 2 will increase, and this is something we’re truly excited about.
We’re committed to protecting the privacy of our users too. Through our Validium approach to scaling, we allow users to hide their trades and balance updates from other users, and keep the details away from public on-chain data (you can find out more about this policy here).
Our goal is to build an ecosystem that is both transparent and private. A connected world in which everyone has their own personal space.
Privacy, in our view, shouldn’t be a ‘fiat thing’. It’s great to find another project that sees DeFi the same way.
