Author: CoinW Research Institute

Abstract

Aztec is a privacy-first zkRollup built on Ethereum, which does not aim solely at scaling but attempts to establish a "default privacy, verifiable execution" smart contract system. Through an architecture that combines private execution with on-chain verification, as well as the Noir language designed specifically for zero-knowledge development, Aztec aims to build a complete ecosystem for privacy-native applications. The project has completed multiple rounds of financing from top institutions and clearly defines network incentives and community participation mechanisms in its token economic model. Compared to the performance competition route of mainstream L2s, Aztec chooses a differentiated direction of privacy execution, which has strong uniqueness within the Ethereum system. However, its long-term value still depends on whether the demand for privacy becomes mainstream and the evolution of key variables such as regulation, technical performance, and ecological expansion.

1. Why has Aztec recently attracted market attention?

Industry Prospects: Structural Rebound of Privacy Narrative

In recent years, as regulations tightened and exchanges became cautious about anonymous protocols, the privacy sector has significantly cooled. Many privacy projects have been marginalized, and "privacy" was once seen as a high-risk narrative. But the environment is changing. With the upgrade of on-chain applications, privacy is starting to return to the discussion center in new ways. AI Agents make automated strategies possible, and automated execution means that trading logic and data cannot be fully public; RWA and institutional entry also require a "verifiable but not overly transparent" model; assets must be real, but business details do not have to be fully exposed. At the same time, technologies such as zkEVM and zkVM are maturing, making verifiable yet invisible computations more feasible. Privacy is no longer just an anonymous transfer tool, but more like a new infrastructure capability. The warming of Aztec reflects this structural change.

Team Background and Credibility

Aztec initially launched Aztec Connect to explore privacy DeFi, but later proactively shut down the product to shift focus towards building a "privacy-native Rollup". This adjustment sparked controversy at the time but also demonstrated the team's willingness to make sacrifices for a long-term technical path rather than maintaining short-term narratives. Subsequently, Aztec clearly focused on the zkRollup architecture with default privacy and launched the Noir programming language aimed at zero-knowledge development, gradually building a complete system of privacy smart contracts.

Team founder Zac Williamson has long engaged in research on zero-knowledge proofs and cryptography and is one of the early contributors to the PLONK universal proof system. The Aztec team has been deeply involved in ZK technology for many years, focusing consistently on verifiable private computing, from privacy asset protocols to Rollup architecture and then to Noir language development. Even during the low point of the privacy sector, the team did not stop research and development, instead proactively transforming and reconstructing product directions. This ongoing investment and technical background make Aztec more like a long-term infrastructure project rather than a short-term hot spot fluctuating 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 like Vitalik Buterin. In December 2022, during a general market downturn, Aztec completed a $100 million Series B financing, led by a16z crypto, with institutional participation from A Capital, King River, and others, bringing the total financing scale to over $119 million. Both a16z and Paradigm are top institutions with a long-term layout in crypto infrastructure, favoring long-term bets on technology and underlying architecture rather than short-term narrative trading. Completing substantial financing during the bearish market at the end of 2022 is a signal in itself: capital values Aztec's technical path and long-term potential, not 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 have preceded, while the real ecological scale is still under construction.

2. Aztec's Core Positioning: What Exactly Is It Building?

Not just a Layer 2, but a Privacy Execution Layer

Aztec is not an independent Layer 1 public chain, but a zkRollup second-layer network built on Ethereum. All transaction results and zero-knowledge proofs will ultimately be submitted to the Ethereum mainnet for verification, so security still comes from Ethereum. However, understanding it merely as another L2 is inaccurate. Most second-layer networks address performance issues, such as reducing Gas costs and increasing transaction speeds. Aztec, on the other hand, attempts to solve the structural problem of blockchain being completely transparent by default.

On Ethereum, account balances, transaction records, and contract call logic are all public. This transparency ensures verifiability but limits the realization of many real-world scenarios. Institutional strategies cannot be hidden, on-chain bidding is difficult to keep confidential, and the algorithms for future AI automated execution will expose details. Real-world business activities do not operate in a fully open environment. Aztec's starting point is to allow 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. The on-chain verification checks "whether this complies with the rules" rather than "what exactly was done". The network confirms that the calculation is correct but does not need to see amounts, data, or execution details. This is different from traditional Rollups. Regular L2s simply compress transactions and submit them; essentially, data remains public; Aztec changes the execution model itself, allowing the state to be private, but execution remains trustworthy. This structure is referred to as "verifiable but not visible". It does not eliminate transparency but rather shifts transparency from the data layer to the proof layer.

Privacy Smart Contracts and Noir Ecosystem

Aztec's goals are not just limited to private transfers but also support "privacy smart contracts". In traditional public chains, contract states are public 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, thus forming an application structure of "controllable transparency". In order to make this model genuinely developable, Aztec launched the Noir programming language aimed at zero-knowledge applications. Zero-knowledge development is inherently complex, and Noir attempts to engineer this complexity so that developers can create privacy applications in a manner closer to conventional programming. Aztec is not just building a network; it is establishing a complete privacy-native execution system, including execution environments, proof mechanisms, and development toolchains.

3. Economic Model and Long-Term Value

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

According to Aztec's white paper, the genesis total supply of AZTEC is 10.35 billion tokens, allocated according to different roles and uses. Overall, the tokens will be distributed to multiple groups including investors, core teams, foundations, ecological construction, and community participants. Approximately 21.96% (about 2.273 billion tokens) is allocated for token sales, including forms like public auctions and genesis node sales. This part is mainly used for early price discovery and participation incentives during the network launch phase.

Structurally, the distribution logic of AZTEC revolves around several core directions: a portion for rewarding early investors and supporters, some for long-term incentives for the team, the foundation responsible for protocol development and governance support, and ecological subsidies to attract developers and application implementation; additionally, there are specific network reward mechanisms (Y1 Network Rewards) and reserves for liquidity and future incentives. This Tokenomics considers early capital support while reserving a substantial proportion for subsequent network operations and ecological expansion, leaning towards a long-term infrastructure-type project distribution structure.

Value Capture Logic of Privacy L2: How Tokens Will Function

The functional design of AZTEC primarily includes the following categories:

(1) Network security and staking incentives. The AZTEC token is expected to be used for staking by network participants (referred to as Sequencers or ordering nodes) to maintain network stability and decentralized security. Token holders can choose to run nodes or delegate tokens for rewards, a mechanism similar to 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 allocation. This makes the token not only a value carrier but also a community decision-making tool.

(3) Fee payments and execution incentives: In the future, if Aztec's smart contract execution environment is enabled, tokens may be used for paying transaction or execution fees, and to incentivize participants providing proof and ordering services.

From these designs, it can be seen that privacy capabilities become part of its value capture ability. Unlike ordinary L2s which mainly rely on scaling value, Aztec provides a technical foundation for real-world finance, institutional-level applications, or scenarios with high privacy requirements through "privacy", "selective disclosure", and "controllable transparency" models. Theoretically, this makes its network fee structure and token demand more closely aligned with high-value chain activities.

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

Public sale of tokens using CCA mechanism

Aztec's public token sale adopts the Uniswap v4 "Continuous Clearing Auction" (CCA) mechanism co-developed with Uniswap Labs, which is currently the first attempt at fully utilizing CCA for token issuance on-chain. The design purpose of the CCA mechanism is to allow market participants to price and bid on-chain in a transparent and fair manner, avoiding the traditional sale issues of front-running, gas wars, and monopolization of distribution by a few large holders. The entire auction process is verifiable on-chain, neutral, and transparent, conducive to real market price discovery.

The public auction runs from December 2 to December 6, 2025, attracting over 16,700 participants who bid, resulting in approximately 19,476 ETH (about $61 million) worth of tokens sold, ultimately distributing around 14.95% of the total supply of AZTEC. Participants included not only ordinary community users but also testnet node operators, early ecosystem contributors, and ETH stakers. The project set a maximum bid limit per person in the auction to restrict excessive concentration among large holders and increase opportunities for regular users to participate. After the auction concludes, it automatically matched the initial liquidity for Uniswap v4's liquidity pool, including about 273 million AZTEC tokens (about 2.6% of the supply) for launching trading pairs, which will provide foundational support for future secondary market trading.

Community Voting to Initiate 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 the official announcement, this TGE has been approved in the community governance vote, and the time is set for February 12, 2026 (Beijing time), at which point participants in the token sale can freely transfer and trade their AZTEC tokens.

This arrangement reflects Aztec's governance logic: the final circulation of the token is not unilaterally decided by the team but is decided collectively by users participating in the sale through on-chain governance voting. The successful triggering of the TGE marks Aztec entering a new phase of launching token economies and signifies that the community will begin to truly participate in network governance and future power distribution.

Aztec's token sale and unlocking mechanism combines fair price discovery methods, extensive community participation, and on-chain governance mechanisms, laying a more open and decentralized foundation for its long-term value formation.

5. Competitive Landscape

Differences from Mainstream L2s: Not Competing on Performance, but on Privacy

The current mainstream Ethereum second-layer networks, such as Starknet, zkSync, and Scroll, have core goals centered around scaling, such as increasing throughput, lowering costs, and enhancing EVM compatibility. They address issues like slow chains and high transaction fees, with privacy not being the core selling point. Aztec is also based on zkRollup architecture, but its starting point is different. It is clearly positioned as a privacy-first zkRollup, meaning privacy is a default feature rather than an added one. It supports private states and privacy smart contracts, emphasizing a verifiable but not visible execution mode. Therefore, the relationship between Aztec and mainstream L2s is not a performance competition but rather a differentiation competition. Other projects are competing for the scaling market, while Aztec is attempting to establish a privacy execution layer.

Comparison with Other Privacy Projects: Technical Path and Ecological Integration

Within the privacy sector, Aztec occupies a special position. Zcash represents payment-level privacy, with its core being hiding transaction amounts and addresses, but it does not support complex smart contracts. Secret Network achieves privacy contracts through TEE technology, but it is an independent Layer1 and requires cross-chain bridges for integration with the Ethereum ecosystem. Projects like Zama, focusing on FHE, are exploring cutting-edge fully homomorphic encryption computing and are still in early stages. In contrast, Aztec's characteristics include: it is directly built on Ethereum, inheriting security from the mainnet; it supports programmable privacy contracts, not just private transfers; and it creates a complete privacy development tool system through the Noir language. Within the current Ethereum ecosystem, Aztec is one of the most systematic projects promoting privacy smart contracts.

6. Potential Risks and Future Variables

Regulatory Risk: 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 the policy environment is not entirely friendly to non-traceable technology. Aztec emphasizes default privacy, which, although verifiable, is not a completely anonymous black box, but under the regulatory perspective, the privacy infrastructure itself may be a focal point of attention. The uncertainty lies in whether regulations will allow such "controllable privacy". Will exchanges and institutions be willing to support privacy-oriented L2s? This will directly affect the development space of Aztec.

Technical and Ecological Risks

Zero-knowledge proofs require computational resources. Compared to ordinary L2s, privacy execution is more complex, requiring users to generate proofs locally, a process that is not cost-free. Additionally, the design and development barriers for private states are higher. While Noir lowers the difficulty of ZK programming, it is still a new language, and ecological maturity will take time. If performance and experience cannot be continuously optimized, widespread adoption may be affected. Moreover, Aztec follows a privacy-native route, while mainstream L2s already have mature EVM ecosystems and substantial user bases. Whether developers are willing to redesign applications for privacy is a practical issue. At the same time, technological competition is accelerating. Higher-performance zkVMs, modular solutions, and even FHE technology may bring alternative pressures.

Thoughts: Will RWA Increase Demand for "Controllable Privacy"?

In addition to regulatory and technical risks, whether on-chain finance requires "controllable transparency" may also affect 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 usually involve a lot of sensitive information in real transactions: counterparty, price terms, holding structure, strategic arrangements, etc. If this information is fully public, it may weaken bargaining power and even affect market behavior itself.

Therefore, RWA is not about pursuing "complete anonymity" but rather leans towards a selective disclosure under compliance conditions. Assets must be real and verifiable; rules must be auditable; but business details do not need to be publicly available to everyone. From this perspective, Aztec's emphasis on the "verifiable but not visible" model logically fits this need. It does not provide a black box of anonymity but a kind of controllable transparency: public verification results and hidden sensitive data.

However, the current situation is also worth observing calmly. Many RWA projects currently still choose permissioned chains, consortium chains, or off-chain custody rather than directly adopting public chain privacy layers. This shows that there is indeed a demand for privacy in RWA, but the acceptance of public chain privacy architecture is still in the exploratory stage. If the future trend is towards open public chains combined with compliant privacy execution, architectures like Aztec may encounter structural opportunities; if institutions persistently prefer closed systems, the space for public chain privacy may be limited.

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