Aztec

Aztec is a ZK-Rollup protocol built on Ethereum that provides programmable privacy for decentralized applications (dApps). Unlike standard Layer 2 solutions that only scale transactions, Aztec uses advanced zero-knowledge cryptography, specifically ZK-SNARKs, to encrypt transaction amounts and participant identities on-chain. This allows users to transfer assets and execute complex logic within smart contracts without revealing sensitive financial data to the public ledger, a core feature known as private computation.

The protocol's architecture is built around two main transaction types: private and public. Private transactions are fully shielded, obscuring sender, receiver, and amount, and are settled in a private state tree. Public transactions are transparent and compatible with standard Ethereum smart contracts. A critical innovation is Aztec Connect, a bridge system that lets users interact with mainstream DeFi protocols like Lido or Uniswap directly from a private account, enabling private yield farming and swaps by batching private user intents into a single public contract call.

Key technical components include the PLONK proof system for efficient proof generation and the Noir domain-specific language (DSL), which allows developers to write privacy-preserving smart contracts. By leveraging ZK-Rollup technology, Aztec also provides scaling benefits by bundling hundreds of private transactions into a single cryptographic proof submitted to Ethereum Layer 1, significantly reducing gas costs per transaction compared to executing privacy operations directly on the mainnet.

Aztec addresses a fundamental gap in blockchain transparency by enabling confidential DeFi and payments. Use cases include private payroll, discreet corporate treasury management, and shielding individual trading strategies from public analysis. As a Layer 2, it inherits Ethereum's security while offering a specialized execution environment for privacy, positioning it as a critical infrastructure for users and institutions requiring financial confidentiality on a public blockchain.

At its core, Aztec operates as a zk-rollup, a Layer 2 scaling solution that batches hundreds of transactions off-chain and submits a single cryptographic proof—a zk-SNARK—to the Ethereum mainnet for verification. This architecture provides scalability by reducing on-chain data and computation, while the zero-knowledge proofs ensure the validity of the batched transactions without revealing their contents. Unlike standard rollups, Aztec's primary innovation is extending this privacy to the transaction data itself, allowing amounts and participant identities to remain hidden.

User privacy is achieved through a dual-note system. Funds are represented as encrypted notes stored in a private data tree. To transact, a user creates a zero-knowledge proof that demonstrates they own the input notes, know the transaction's validity conditions, and can generate the correct output notes—all without revealing the notes' values or the links between them. This process is managed by Aztec's domain-specific language, Noir, which allows developers to write private smart contract logic that compiles into these verifiable zk-SNARK circuits.

The network distinguishes between public and private state. The public state is visible on-chain and handles functions like proving rollup validity and managing public smart contracts. The private state, consisting of encrypted notes, is stored off-chain by users and sequencers. A user's ability to spend is proven via zk-SNARKs, not by revealing a private key on-chain. This separation allows for complex DeFi interactions—like private lending or trading—where financial logic is executed confidentially, with only the essential proof of correctness being published.

Key components enabling this system include the Aztec Sandbox for local development, the Aztec Node (sequencer) for processing transactions, and the Rollup Contract deployed on Ethereum L1. The sequencer collects private transactions, generates the rollup proof, and posts it to mainnet. Users interact with the network through wallets like the Aztec Wallet SDK, which handles note management and proof generation locally, ensuring private keys and sensitive data never leave the user's device.

Aztec's approach contrasts with mixing-based privacy systems by providing programmable privacy integrated at the smart contract layer. This enables new use cases such as confidential voting in DAOs, private payroll, and stealth airdrops. By leveraging succinct proofs, the system maintains strong privacy guarantees—data availability for public data and data privacy for encrypted notes—while inheriting Ethereum's security for settlement and consensus.

The Aztec Network was a zk-rollup that enabled private transactions and smart contract execution on Ethereum. Launched in 2018, it was one of the first projects to implement a UTXO (Unspent Transaction Output) model with zero-knowledge proofs, specifically zk-SNARKs, to shield transaction amounts and participant identities. This allowed users to transact with confidential assets while still inheriting Ethereum's security. The network's core innovation was Aztec Connect, a bridge system that let users interact with public Ethereum DeFi protocols like Lido and Uniswap privately, a concept known as private DeFi.

Aztec's architecture was built around two types of accounts: public notes for transparent interactions and private notes for confidential state. Its PLONK-based proving system, optimized for efficient private computation, was a key technical contribution to the broader zk-rollup ecosystem. However, the project faced significant challenges, including regulatory uncertainty surrounding privacy tools and the immense engineering complexity of maintaining a general-purpose private zk-rollup. In March 2024, the Aztec Labs team announced the sunsetting of the Aztec Network, citing these hurdles and a strategic pivot.

The legacy of Aztec is profound. Its technology and research, including the Noir domain-specific language for zero-knowledge circuits, continue to influence the field. The team shifted focus to developing Aztec Protocol, an open-source framework for building privacy-preserving applications. While the original network is deprecated, its pioneering work demonstrated the feasibility and demand for sophisticated on-chain privacy, paving the way for next-generation ZK-rollups and fully homomorphic encryption (FHE)-based systems that aim to solve similar problems with different cryptographic trade-offs.