S1E12: Privacy with Jonathan Wu from Aztec

July 5, 2022
0:00 Intro • 2:55 Aztec intro • 5:10 Zero knowledge proofs and their place in Aztec • 12:05 Aztec progress • 16:30 The Merge affect on Aztec • 21:43 Connecting to Aztec • 28:44 How does Aztec make money? • 34:08 Challenges faced by Aztec • 37:43 Potential Aztec partnerships • 39:36 Privacy puzzle • 46:55 Passwordless future • 49:05 How can Beanstalk be supportive of Aztec?
The Bean Pod



Aztec intro

  • A privacy first ZK-rollup on Ethereum
  • A scaling solution for Ethereum
  • Compute is performed off-chain on a single machine in order to achieve privacy and affordability
  • Privacy is maintained because users can submit encrypted data

Zero knowledge proofs and their place in Aztec

  • Zero knowledge proofs are a way to prove something without revealing the underlying information.
  • An analogy would be entry into a night club where you could verify somebody is of age with a blob of information, without revealing that person’s date of birth. Also it can be assumed once you are inside the club that everyone is of age because they passed the initial verification.
  • Aztec abstracts away Ethereum addresses with an alias system to preserve privacy.

Aztec progress

  • Original paper was written in 2019.
  • Original version was launched last year.
  • Launched zk.money, which is private payments. Similar to Tornado Cash with some added features and lower fees.
  • Working on shipping Aztec connect, which allows users to use Aztec as a proxy to Ethereum, essentially adding privacy to any service.

The Merge affect on Aztec

  • The Merge won’t impact layer 2s significantly, but the future roadmap will have more implications for them, such as data sharding and some of the intermediate EIPs.
  • Exploring EIPs to reduce the cost of storage and call data on Ethereum, which will benefit all L2s.

Connecting to Aztec

  • Aztec Connect is an intermediate step on the way to a full fledged execution environment. It serves as a proxy or privacy layer for Ethereum L1.
  • Users can get privacy by default when interacting with standard Ethereum smart contracts.
  • Has applications like private voting and private treasury management that would be of interest to some DAOs.
  • Makes things like private NFTs possible.

How does Aztec make money?

  • For now, Aztec passes on ETH gas savings to its users. In the future, validators will still pass on a lot of the savings, but also charge a margin.

Challenges faced by Aztec

  • Need highly performant proofs to guarantee privacy.
  • Building a decentralized validator network.
  • Convincing developers to adopt a new language and learn a whole new stack.

Potential Aztec partnerships

  • In touch with most major DeFi protocols, because they seem to be the most obvious use case. Privacy and cost savings are huge benefits to those users.
  • Launching with Lido and Element. Already have Aztec Connect integrations written for AAVE, Uniswap, Compound, and others.

Privacy puzzle

  • Argument against privacy is that it leads to nefarious activity.
  • If that’s true for Aztec and blockchain, then that’s true for privacy everywhere.
  • There are two forms of privacy
    • True unimpeachable, iron-clad privacy where you absolutely can’t backdoor what someone’s doing.
    • Fake backdoor privacy, which is kind of what we have today. You can obscure things, but it’s not perfect.
  • We need to figure out if we value true privacy as a society.

Passwordless future

  • Might be possible with biometric enclaves.