Vitalik questions Rollup, can Aztec stand out through controllable privacy?

Abstract

Aztec is a privacy-first zkRollup built on Ethereum, not solely aimed at scalability, but attempting to establish a "default privacy, verifiable execution" smart contract system. Through an architecture combining private execution with on-chain verification and a language designed specifically for zero-knowledge development called Noir, Aztec aims to create a complete ecosystem of privacy-native applications. The project has completed multiple rounds of financing from top institutional investors and has clarified network incentives and community participation mechanisms in its tokenomic model. Compared to the performance competitive path of mainstream L2s, Aztec has chosen a differentiated path of privacy execution, which has a strong uniqueness within the Ethereum ecosystem. However, its long-term value still depends on whether privacy demand becomes mainstream, as well as the evolution of key variables such as regulation, technical performance, and ecological expansion.

1. Why is Aztec recently attracting market attention?

Track Outlook: The Structural Resurgence of Privacy Narrative

In the past few years, with increasing regulation and exchanges' caution towards anonymous protocols, the privacy track has clearly cooled down. Many privacy projects have been marginalized, and "privacy" was once regarded as a high-risk narrative. However, the environment is changing. With upgrades to on-chain applications, privacy is beginning to return to the discussion center in new ways. AI Agents have made automated strategies possible, and automated execution means that transaction logic and data cannot be fully public; RWA and institutional entry also require a model that is "verifiable but not overly transparent"; assets must be real, but business details do not have to be fully exposed. At the same time, technologies like zkEVM and zkVM are maturing, making verifiable but invisible computation more feasible. Privacy is no longer just an anonymous transfer tool, but rather a new capability of infrastructure. The rise of Aztec embodies this structural change.

Team Background and Credibility

Aztec initially launched Aztec Connect, exploring privacy DeFi, but then proactively closed the product and shifted its focus to building a "privacy-native Rollup." This adjustment caused controversy at the time, but it reflected the team's willingness to make sacrifices for a long-term technical route rather than maintaining a short-term narrative. Subsequently, Aztec clarified its focus on the zkRollup architecture with default privacy and launched the Noir programming language aimed at zero-knowledge development, gradually building a complete privacy smart contract system.

The founding team member Zac Williamson has long been engaged in zero-knowledge proofs and cryptography research and is one of the early contributors to the PLONK universal proof system. The Aztec team has been deeply engaged in ZK technology for years, from privacy asset protocols to Rollup architecture, to Noir language development, showing a consistent focus on verifiable privacy computation. Even during the low point of the privacy track, the team did not cease R&D but instead proactively transformed and restructured the product direction. This sustained investment and technical background make Aztec more like a long-term infrastructure project rather than a short-term hotspot that fluctuates with market cycles.

Capital Strength

In December 2021, Aztec completed approximately $17 million in Series A financing led by Paradigm, with participation from a_capital, Variant, Nascent, and industry-renowned investors such as Vitalik Buterin. In December 2022, during a period of overall market downturn, Aztec completed a $100 million Series B financing led by a16z crypto, with participation from A Capital, King River, and others, bringing the total financing to over $119 million. Both a16z and Paradigm are top-tier institutions with a long-term commitment to crypto infrastructure, leaning towards long-term bets on technology and underlying architecture, rather than short-term narrative trading. Completing significant financing at the end of the bear market in 2022 itself is a signal: capital values Aztec's technological path and long-term potential rather than the market sentiment at the time.

The current attention on Aztec is driven by multiple factors: the team's long-term accumulation in the ZK field, a clear product reconstruction route, and continuous support from leading capital. Capital and market attention occur first, while the true ecological scale is still under construction.

2. Aztec's Core Positioning: What Are They Building?

Not Just Layer2, But a Privacy Execution Layer

Aztec is not an independent Layer1 public chain, but a second-layer network based on zkRollup built on Ethereum. All transaction results and zero-knowledge proofs will ultimately be submitted to the Ethereum mainnet for verification, hence security still derives from Ethereum. However, understanding it solely as another L2 is inaccurate. Most second-layer networks solve performance issues, such as reducing gas costs and increasing transaction speed. Aztec, however, attempts to solve the structural issue of blockchain's default complete transparency.

On Ethereum, account balances, transaction records, and contract call logic are all public. This transparency ensures verifiability but limits the implementation of many real-world scenarios. Institutional strategies cannot be hidden, on-chain bidding is hard to keep confidential, and future AI automated execution will also expose details. Real-world business activities do not operate in a completely public environment. The starting point of Aztec is to allow the blockchain to maintain verifiability while having reasonable privacy boundaries.

Technical Core: Private Execution, On-Chain Verification

The underlying logic of Aztec can be summarized as: private execution, public verification. Users complete transactions or contract calls locally and generate zero-knowledge proofs. On-chain verification checks "whether this is compliant with the rules" rather than "what was specifically done." The network confirms the correctness of the computation without needing to see the amounts, data, or execution details. This differs from traditional Rollup. Ordinary L2 simply compresses transactions for submission, and the data remains public; whereas Aztec changes the execution model itself, allowing the state to be private while still ensuring the execution is credible. This structure is referred to as "verifiable but not visible." It does not eliminate transparency, but shifts transparency from the data layer to the proof layer.

Privacy Smart Contracts and Noir Ecosystem

Aztec’s goal is not just to facilitate private transfers but to support "privacy smart contracts." On traditional public chains, contract states are publicly visible by default. On Aztec, contracts can have private states and private logic while interacting with the public world when necessary. Developers can decide which information is public and which is confidential, forming an application structure that has "controllable transparency." To make this model truly developer-friendly, Aztec launched Noir, a programming language for zero-knowledge applications. Zero-knowledge development is inherently complex, but Noir aims to engineer this complexity, allowing developers to build privacy applications in a manner closer to conventional programming. Aztec is not just building a network, but establishing a complete privacy-native execution system, including execution environments, proof mechanisms, and development toolchain.

3. Economic Model and Long-Term Value

Current Token Information: Total Supply, Allocation, and Issuance Mechanism

According to information disclosed in the Aztec white paper, the total genesis supply of AZTEC is 10.35 billion tokens, which will be allocated to different roles and purposes. Overall, tokens will be distributed among investors, the core team, the foundation, ecosystem builders, and community participants. Approximately 21.96% (about 2.273 billion tokens) will be used for token sales, including public auctions and genesis node sales, mainly aimed at early price discovery and participation incentives during the network launch phase.

Structurally, AZTEC's allocation logic revolves around several core directions: one part is used to reward early investors and supporters, another part is used for long-term team incentives, the foundation is responsible for protocol development and governance support, and ecological subsidies are intended to attract developers and application implementations; additionally, there is a dedicated network rewards mechanism (Y1 Network Rewards) along with liquidity and future incentive reserves. This Tokenomics design takes into account early capital support while reserving a significant portion for subsequent network operation and ecological expansion, leaning more towards a structure akin to long-term infrastructure projects.

Value Capture Logic of Privacy L2: How the Token Will Function

The functional design of AZTEC mainly includes the following categories:

(1) Network security and staking incentives. The AZTEC token is expected to be used for the staking of network participants (called Sequencers or ordering nodes) to maintain network stability and decentralized security. Token holders can choose to run nodes or delegate tokens to earn rewards, mimicking mechanisms found in other PoS/staking systems.

(2) Governance power: AZTEC holders will be able to participate in network governance, including protocol upgrades, parameter adjustments, and ecological resource allocations. This makes the token not only a value carrier but also a tool for community decision-making.

(3) Fee Payment and Execution Incentives: In the future, if Aztec's smart contract execution environment is activated, tokens may be used to pay transaction or execution fees, and provide incentives to those who offer proof and ordering services.

From these designs, it can be seen that privacy capability becomes part of its value capture capacity. Unlike regular L2s that mainly rely on scalability value, Aztec provides a technical foundation for real-world finance, institutional-grade applications, or scenarios with high privacy demands through "privacy," "selective disclosure," and "controllable transparency" models. Theoretically, this brings its network rate structure and token demand closer to activities on high-value chains.

4. Token Sale and TGE: Fair Auctions & Community Voting

Public Token Sale Using CCA Mechanism

Aztec's public token sale adopted the Continuous Clearing Auction (CCA) mechanism, jointly developed with Uniswap Labs. This is currently the first comprehensive token issuance attempt using CCA on-chain. The design goal of the CCA mechanism is to allow market participants to self-price and bid on-chain in a transparent and fair manner, avoiding issues such as front-running, gas wars, and monopolized allocations typical of traditional sales. The entire auction process is verifiable on-chain, neutral and transparent, conducive to a genuine market price discovery.

The public auction ran from December 2 to December 6, 2025, attracting over 16,700 participants. Tokens worth approximately 19,476 ETH (around 61 million USD) were sold, distributing about 14.95% of the total AZTEC supply. Participants included not only ordinary community users but also testnet node operators, early ecosystem contributors, and ETH stakers. The project set a single highest bid limit during the auction to prevent excessive concentration by large holders and to improve opportunities for ordinary users. After the auction, initial liquidity was automatically matched for Uniswap v4's liquidity pool, including approximately 273 million AZTEC tokens (about 2.6% of the supply) for trading pair initiation, which will provide foundational support for future secondary market transactions.

Community Voting Initiates TGE

After the auction, a large number of AZTEC tokens obtained through bidding, node sales, and rewards remain locked until the Token Generation Event (TGE) is triggered. According to official announcements, this TGE has passed in the community governance vote, with the date set for February 12, 2026 (Beijing time), at which point users participating in the token sale will be free to transfer and trade their AZTEC tokens.

This arrangement reflects Aztec's governance logic: the ultimate free circulation of tokens is not unilaterally decided by the team, but collectively determined by users participating in the sale through on-chain governance voting. The successful triggering of the TGE marks Aztec's entry into a new phase of token economy activation and signifies that the community will begin to truly participate in network governance and the future allocation of power.

Aztec's token sale and unlock mechanism combine a fair price discovery method, broad community participation, and on-chain governance mechanisms, laying a more open and decentralized foundation for its long-term value formation.

5. Competitive Landscape

Differences with Mainstream L2: Competing on Privacy, Not Performance

Current mainstream Ethereum second-layer networks, such as Starknet, zkSync, and Scroll, have core goals centered on scalability, such as increasing throughput, reducing costs, and enhancing EVM compatibility. They solve issues like slow chains and high transaction fees, with privacy not being a core selling point. Aztec also builds on the zkRollup architecture but has a different starting point. It is clearly positioned as a privacy-first zkRollup, meaning default privacy is a characteristic rather than an added feature. It supports private states and privacy smart contracts, emphasizing a verifiable but invisible execution model. Therefore, Aztec's relationship with mainstream L2 is not one of performance competition, but rather a differentiated competition. Other projects compete for the scalability market, while Aztec attempts to establish a privacy execution layer.

Comparison with Other Privacy Projects: Technical Path and Ecological Integration

Within the privacy track, Aztec occupies a unique position. Zcash represents payment-level privacy, focusing on hiding transaction amounts and addresses but does not support complex smart contracts. The Secret Network achieves privacy contracts through TEE technology but operates as an independent Layer1, requiring cross-chain bridges for integration with the Ethereum ecosystem. Projects like Zama, exploring more cutting-edge fully homomorphic encryption computing, are still in early stages. In contrast, Aztec's distinctive features include: direct construction on Ethereum, inheriting security from the main network; it supports programmable privacy contracts rather than merely private transfers; and it develops a complete privacy development tool set through the Noir language. Within the current Ethereum ecosystem, Aztec is one of the most systematic projects promoting the direction of privacy smart contracts.

6. Potential Risks and Future Variables

Regulatory Risks: Will Privacy Be Restricted?

Privacy protocols have always been sensitive in the crypto industry. In recent years, some privacy tools have faced regulatory pressure, and policies have not been entirely friendly towards untraceable technologies. Aztec emphasizes default privacy; although it is verifiable and not a completely anonymous black box, from a regulatory perspective, privacy infrastructure itself may be a focal point of scrutiny. The uncertainty lies in whether regulation will allow such "controllable privacy." Will exchanges and institutions be willing to support privacy-oriented L2? This will directly impact Aztec's development space.

Technical and Ecological Risks

Zero-knowledge proofs require computational resources. Compared to regular L2, privacy execution is more complex, as users need to generate proofs locally, which is not a cost-free process. Moreover, the design and development threshold of private states is higher. Although Noir reduces the difficulty of ZK programming, it remains a new language, and ecological maturity will need time. If performance and experience cannot be continuously optimized, it may affect mass adoption. Furthermore, Aztec is taking a privacy-native route, while mainstream L2s already have mature EVM ecosystems and numerous users. Whether developers are willing to redesign applications for privacy remains a practical question. At the same time, technical competition is accelerating. Higher-performance zkVMs, modular solutions, and even FHE technology may exert replacement pressure.

Thought: Will RWA Drive Demand for "Controllable Privacy"?

Besides regulatory and technical risks, whether on-chain finance needs “controllable transparency” may also impact Aztec's long-term space. RWA is viewed as an important incremental direction for the next stage. However, unlike retail DeFi, the core participants in RWA are often institutions. Institutions commonly handle a large amount of sensitive information in real transactions: counterparties, price terms, holdings structure, strategic arrangements, etc. If this information is entirely public, it may weaken bargaining power, or even impact market behavior itself.

Thus, RWA does not pursue "complete anonymity," but rather leans towards selective disclosure under compliance conditions. Assets must be real and verifiable; rules must be auditable; but business details do not need to be publicly exposed to everyone. From this perspective, Aztec's emphasized "verifiable but not visible" model logically aligns with this demand. It does not provide a black box anonymity but rather a form of controllable transparency: publicly verifying results while concealing sensitive data.

However, the reality deserves calm observation. Currently, many RWA projects still choose permissioned chains, consortium chains, or off-chain custody rather than directly adopting public chain privacy layers. This indicates that while RWA does have privacy needs, the acceptance of public chain privacy architecture is still in the exploratory phase. If the future trend is to open public chains and overlay compliant privacy execution, architectures like Aztec may encounter structural opportunities; if institutions continue to prefer closed systems, the space for public chain privacy may be limited.