Aztec protocol can provide the tools developers need to create the next generation of decentralized financial services and rebuild digital assets with absolute privacy and private governance.
Blockchain is an open ledger, and anyone with a copy of it can see the balance of each transaction and address. Theoretically, the system is anonymous because people can’t guess who the owner of the address is or where he is; However, in fact, if the analysis company knows the real owners behind some addresses and tracks them through transaction traces, it can still find out the real identities of the owners of other addresses. Therefore, in reality, blockchain systems like bitcoin and Ethereum are actually pseudo anonymous.
There are many places for analysts to track. For example, a wallet can be connected to an IP address through effective blockchain analysis, or it can trade with another KYC account. In addition, the credentials left by users on the website and the traces of purchasing goods with cryptocurrency all mean that the identity of the owner is no longer confidential. It is reported that 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 the identity information of many Ethereum whales is also being mastered.
In view of the fact that the current WiFi transactions are highly concentrated on Ethereum, the transaction information is broadcast to the open and transparent public network, which is a serious problem of the current WiFi ecology. This means that anyone can view these transactions and the privacy of the participants may be compromised.
For example, once the owner behind an address is exposed, his every move can be recorded by others. What he did with the money, how he managed to make a fortune, how many addresses he had behind him, and how much total assets he had, all these information were at a glance. This makes Ethereum’s “rich” have to be more careful when dealing with the real world. Such insecurity also hinders the further development of “assets on the chain” and defi.
Fortunately, after the launch of Aztec protocol, Ethereum based assets can realize rapid anonymous conversion. Aztec is bound with the original token according to the ratio of 1:1. Users can deposit 10000 Dai in Aztec and convert it into 10000 zkdai, so as to carry out anonymous WiFi activities. For defi, it means a lot.
1. Working mode of Aztec protocol
Currently, zether and Aztec protocol are well-known privacy projects in Ethereum.
In zether agreement, the account balance and transfer account will be hidden, but the identity of the transferor 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, Aztec protocol was well known in Ethereum community and Ethereum main network, which can convert stable coin maker Dai into private assets. These experiences make Aztec developers realize that they can collect good ideas to improve Ethereum network. The most prominent one is zero knowledge proof (zk-snark), which can hide token transaction amount.
“Zk-snark” is the abbreviation of “zero knowledge successful non interactive argument of knowledge”, which refers to a kind of proof structure that can prove that someone has some information, such as a key that does not display the information, and there is no 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 with the technology that has been implemented on zcash (Zec) network, such as the information of the sender and receiver of the transaction, and the amount of money is hidden. But different from Zec, the first version of Aztec released on Ethereum, the addresses of sender and receiver are not hidden, at least so far.
Aztec adopts the utxo model similar to bitcoin, the core of which is bills, and traces the hidden state of transactions through the notes system. All these bills can be checked on Ethereum, and users can query the owner of the bills. However, except for the owner of the bill, no one else can see the amount stored on the bill.
It is worth noting that as a layer 2 protocol on Ethereum network, Aztec zero knowledge proof is very efficient in scalability, which is completely within the bearing capacity of hardware wallet.
2. How to use Aztec in anonymous transactions
According to the developer’s introduction, there are two options when using Aztec protocol for privacy 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, whether eth or erc-20. The token itself should be converted into notes, which represents an encrypted value and is bound to the original token in a ratio of 1:1.
The copies created are stored in Aztec’s special repository. Charlie Cowan is one of the project developers who wants to create a complete privacy based infrastructure. He also pointed out that, given that the financial activities of all users may soon appear on the public chain, the issue of protecting personal data will soon become an urgent and important issue.
3. WiFi enters the era of privacy
At present, Aztec network only supports zkdai, which is the private version of maker stable currency. However, Aztec’s developers promise to issue other tokens in the next few weeks and provide users with full access to custom tokens within two months.
The ultimate goal of the project is to create “triple privacy”, which can completely hide any independent part of the Ethereum network. The team’s next step is to add a special feature to hide the identity of the sender and receiver. This feature may be added later this year.
Walton Pocock, Aztec’s chief executive, also said the company intends to launch the ultra fast universal certification of pronk-snark, which will ensure the execution of closed smart contracts under a single trusted setting（ Carbon chain value note: plonk is a new zero knowledge proof architecture, which supports general or renewable trusted setup, and has significant performance improvement compared with sonic. This technology is a great progress in using zero knowledge proof in real environment, and will not cause trust problems due to trusted settings.)
Aztec developers also announced that they plan to release the full open source version of the Aztec protocol sometime in the future. This will include the management mechanism of anonymous voting, anonymous personal data management system.
This means that once Aztec is fully implemented, it will bring these changes to the ecology of WiFi and Ethereum
1. Private decentralized exchange: users can trade different Aztec assets in complete confidentiality, and no transaction quantity and price can be obtained from the transaction process. The decentralized exchange uses the relay 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 voter’s privacy is very important, and the proof of the effective scope of 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; Aztec token standard can support such identity system.
Combined with the above extended functions, Aztec protocol can provide developers with the tools they need to create the next generation of decentralized financial services and rebuild digital assets with absolute privacy and private governance.
4. V God’s “anonymous Ethereum dream” comes true
Due to the launch of Aztec protocol, some Ethereum blockchains have become anonymous.
Aztec protocol uses zktoken (a native token with privacy zksnarks encapsulation) to allow fast anonymous conversion of Ethereum based assets. This protocol can enjoy the irreversible and decentralized advantages of public blockchain without sacrificing privacy, which is unprecedented.
According to Aztec developers, the protocol can not only provide a high degree of privacy for Ethereum blockchain, but also greatly reduce transaction costs. In addition, users will soon be able to use Aztec development tools when sending assets.
Aztec project has been supported by consensys, JPMorgan, A. capital, liberty capital and coinbase. In particular, the team made vitalik buterin’s previous dream come true. Before that, vitalik, the founder of Ethereum, repeatedly stressed that he wanted to invent tools for private trading.
So far, only Ethereum mixers developed by a third party can achieve a certain degree of anonymity. The launch of Aztec has taken a big step forward in the very important cause of anonymity（ Carbon chain value note: the ether money (ETH) obfuscator is a public third party that initiates the transfer on behalf of the sender, which is called mixer or relay. It can better protect personal privacy when users use Ethernet currency or conduct Ethernet currency transactions. Due to the characteristics of Ethereum blockchain, ETH is not completely anonymous when it is used for all kinds of transactions or donation of Ethereum coins. The ether currency confusion service can cut off the connection between the old Eth and the new and confused eth funds. After using the ETH obfuscator, the new Ethernet address will hardly be tracked. It has also been reported that the government wants to shut down these projects due to this feature of the obfuscator.)
5. Where will Ethereum go after Aztec?
Until recently, Ethereum had been struggling to handle a large number of transactions. With the Aztec solution based on ZK snarks, Ethereum’s real anonymity may eventually become a reality.
ZK stars was implemented during hard forking in Istanbul in December to improve network scalability. In addition, according to the developers, the gas cost of various operation codes is reduced after the update to prevent spam attacks and increase the network’s resistance to distributed of service attacks.
Starkware is a start-up company focusing on scalability solutions in the area of blockchain. The company believes that Ethereum has great expansion potential after hard bifurcation. According to its data, the operation scale of Ethereum in the first level blockchain can be increased by 2000 times（ Carbon chain value note: founded in 2018, starkware industries develops software and hardware, and its applications include transparent privacy in blockchain, increased transaction throughput, and non chain computing. The company offers a zero knowledge protocol called stark, which aims to solve the privacy and scalability challenges in the area of blockchain.)
To be more precise, the updated network will be able to process 9000 transactions per second, each transaction consuming 75 units of gas. Before that, the upper limit was 2000 transactions, each transaction consuming 300 units of gas.
The second part of the upgrade, codenamed Berlin, is expected to be released in 2020, a date that hasn’t been set, as developers recently reported that it might be delayed. Berlin will include some proposals, and the implementation of these proposals also needs 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 the impact on ASIC devices.
In the end, as developers hope, after all the upgrades are complete, Ethereum will become faster, cheaper and more scalable. They expect all of these to be achieved without compromising the decentralization and flexibility of the network.
Responsible editor; zl