- Aztec Network is an Ethereum Layer 2 scaling solution using Proof of Zero Knowledge called PLONK which allows zkRollup users to access DeFi anonymously.
- Aztec Network’s architecture allows transactions to always be private, while maintaining auditability and compliance.
- Through Aztec Connection and zk.money, users can access DeFi protocols on Ethereum while preserving their privacy as well as experience reduced costs when interacting with the ecosystem.
Privacy, especially granting the power to the user to manage their private information, is a key element in the ecosystem and in Web3 in general.
For a long time, regulators stayed out of the revolution that was happening in the crypto ecosystem, however, this has started to change especially as cryptocurrencies have gained utility, popularity and use, The main focus of criticism is cryptocurrencies or projects that seek to promote the financial privacy of the user.
In the traditional world, financial privacy is something sacred. Nobody wants to reveal more information than necessary about their finances, especially how much money they earn or spend and how they do it. In fact, it is only the banks and rating agencies that have the ability to access our financial data; at least in theory.
Does seeking financial privacy make you a criminal? Nope. Clearly criminals’ motives for seeking financial privacy are fundamentally different from those of legitimate users.
People like to keep their financial privacy, especially as it is a tool to decrease the chances of being targeted by criminals or harassment.
However, most blockchains are one big open book that anyone can come and read very closely, meaning anyone can see how their money is received and spent. Transparency in the blockchain is considered, in fact, as a point to improve to achieve mass adoption of Web3.
The largest DeFi activity is hosted on Ethereum which, as many will know, is a public blockchain and, consequently, transparency is its main feature. So how do we manage to participate in DeFi without exposing our financial information to the world?
Aztec Network Beginner’s Guide
Since excessive transparency is considered as a problem for the mass adoption of Web3, solutions based on it have emerged and today we will tell you about Aztec Network.
What is? It is the first Smart Contract platform with privacy by default. It is an Ethereum Layer 2 scaling solution using Proof of Zero Knowledge called PLONK focused on bringing privacy to the Web3. plonk him allows zkRollup users to access DeFi anonymously and with transactions that are much more affordable than those directly on the Ethereum mainnet.
Rollups process transactions on another faster blockchain, known as Layer 2, which, in this case, is Aztec Network, and then transfer the transaction data to the main chain, which, in this case, is Ethereum. While zkRollups are protocols that use Zero Knowledge Proof at Layer 2 to determine that a transaction is valid using only minimal information about that transaction.
The company’s motto is “Privacy first. Privacy Second”. According to Aztec Network, its architecture allows transactions to always be private, while maintaining auditability and compliance.
The team behind the solution is made up as follows: Zachary Williamson is the co-founder and CTO of Aztec Network, who has studies at the University of Oxford and the University of Southampton. joe andrews, Product Manager, who has studied at the Imperial College of London and an extensive career. Jonathan Wu, Growth of Aztec, who has studies at Yale University and Harvard Business School.
Likewise, Aztec Network has had the financial support of companies such as ConsenSys and Paradigm.
Meet zk.money
zk.money It consists of a Layer 2 privacy protocol built into the Aztec Network. Basically Ethereum users can use this protocol in order to convert their transactions on the private blockchain.
Zk.money is powered by Aztec and at the moment it is not as decentralized as it is intended to be. More rollup providers are expected to join later this year and make zk.money more decentralized; meanwhile, users rely on Aztec to transmit accumulated transactions to the chain.
So when you make a deposit through zk.money, you will receive zkETH or zkDAI. Basically the token gets a zkSNARK “shield” that anonymizes it. In case of sending zkETH or zkDAI to a user who is not in zk.money, he will receive the ETH token without the shield, keeping the shipment private.
A recommendation that applies to any privacy solution is that you do not withdraw to the same address from which you made the deposit to increase privacy.
Aztec Connection is the bridge from privacy to DeFi
Aztec Connection It consists of a privacy bridge for Decentralized Finance (DeFi) on Ethereum and is built as an extension of zk.money.
It allows users to access to DeFi protocols on Ethereum while preserving your privacy as well as reducing the costs of interacting with the ecosystem.
One aspect that makes Aztec Connection is that it allows users to interact with L1 DeFi projects from the private L2 of Aztec Network. In this way, there is no fragmentation of liquidity.
How to use zk.money?
If, after thoroughly investigating the protocol as well as its Smart Contract, you decide to trust it, then you must connect your DeFi wallet as a MetaMask to the protocol. To do this, follow these steps:
- Go to the official website from zk.money. It is important to make sure that it corresponds to the correct domain.
- Click on “Log In” and select the DeFi wallet you have. It can be MetaMask or WalletConnect. You must sign the resulting transaction with your wallet to generate an account in the protocol.
- Choose the name of the account and register. Later you must sign two more transactions to generate the privacy keys and expenses of your account.
- Make sure you understand the risks.
- Select the amount of ETH you want to deposit into the protocol and click on “Shield”.
How to use Aztec for more privacy in DeFi?
Once you have a zk.money account you should go to “earn” on the official page of zk.money. From this section you can find the opportunities available in DeFi which you can access from Aztec.
Specifically you can participate in protocols like ElementFi with fixed returns or Lido with Staking returns. Select the one you want by clicking on “Earn” and you must enter the amount of cryptocurrencies you want to deposit. Continue with the steps to deposit.
final thoughts
Privacy is not a crime, however, we are in uncertain times where the United States regulatory authorities are persecuting those who use privacy tools in the crypto ecosystem for the possibility that they do so for criminal purposes.
zk.money, like Tornado Cash, makes transactions private. However, it will be publicly recorded in the blockchain for everyone that a certain crypto wallet interacted with a privacy protocol.
In fact, recently FTX seems to have started to block those accounts that have sent cryptocurrencies through zk.money, as it has identified the protocol as a cryptocurrency mixer, a highly risky activity prohibited by FTX.
Aztec Network in reply assured that it is taking steps to ensure that “potential illicit users” do not use its service so that users can privately interact with DeFi without legal issues.
In addition to this, Aztec Network is a recent protocol and consequently there are significant risks that users must evaluate before beginning to interact with it. For example, possibility of theft of funds, Censorship and MEV (Mining Extractable Value), among others. As well as vulnerabilities in the Smart Contract that can lead to theft of funds.
However, if you are interested in navigating the DeFi world prioritizing your privacy, Aztec Network could be a tool that helps you in the process.
You might be interested in: