Private Smart Contracts vs Private Transactions: ZK-Proofs Compared

ZK-Proofs for Private Smart Contracts (e.g., Aztec, Aleo) excel at creating fully private, composable application logic. They use zero-knowledge proofs to validate state transitions off-chain, publishing only a validity proof to the base layer. This enables complex private DeFi, voting, and gaming applications where the entire business logic and user interactions must be hidden. For example, Aztec's zk.money demonstrated private rollups, though with throughput limited by proof generation times (~15 TPS for simple transfers).

Private Transactions (e.g., Tornado Cash, Zcash) take a focused approach by obscuring the sender, recipient, and amount of a simple asset transfer. This strategy provides strong, atomic privacy for payments but results in a trade-off: the smart contract logic itself remains public and limited. Protocols like Tornado Cash, which once secured over $1B TVL, are effective for breaking on-chain links but cannot support private conditional logic or complex state.

The key trade-off: If your priority is building a full-stack private dApp with hidden logic (e.g., a private AMM or voting system), choose a ZK-smart contract platform. If you prioritize efficient, asset-focused privacy for payments or shielding transaction graphs, a dedicated private transaction protocol is the optimal, simpler tool.

ZK-Proofs for Private Smart Contracts (e.g., Aztec, Aleo, zkSync's ZK Stack) excel at creating fully private, complex application states. They leverage zero-knowledge proofs to validate computations on encrypted data, enabling confidential DeFi, private voting, and shielded gaming. For example, Aztec's zk.money demonstrated private rollups with a throughput of ~300 TPS for simple transfers, though complex logic reduces this significantly. This approach is ideal for protocols like Aave or Uniswap that need to hide not just user balances but the entire logic of positions, trades, and liquidations.

Private Transactions (e.g., Tornado Cash, Zcash, Monero) take a different, more focused approach by anonymizing the sender, receiver, and amount of a basic asset transfer. This results in a critical trade-off: superior simplicity and lower computational overhead for payments, but no capacity for private, programmable logic. Zcash's Sapling protocol can handle ~40 TPS with full shielding, a benchmark for this category. It's a powerful tool for privacy-preserving payments or obscuring wallet activity, but it cannot support the conditional logic required for smart contracts.

The key trade-off is between programmability and specialization. If your priority is building a novel, logic-heavy dApp where the entire state must be confidential—such as a private DEX, an on-chain voting system, or a confidential RWA platform—choose ZK-Proofs for Private Smart Contracts. The ecosystem tooling (Noir, Leo) and L2 infrastructures are maturing for this purpose. If you prioritize maximizing privacy and efficiency for simple value transfers or shielding existing ERC-20/ETH holdings, choose Private Transactions. This path offers battle-tested, audited circuits with a narrower, more performant scope for its intended use case.