Aztec Network co-founders on programmable privacy and zero-knowledge proofs

0:00Passion Addison from the Cryptocoin Show and today on blockchain interviews we have Zach Williamson and Joe Andrews co-founders of Aztec Network the privacy first layer 2 on Ethereum here to discuss programmable privacy zero knowledge proofs Aztec Network and the Uniswap CCA auction and token sale that's going on right now. Gentlemen, thanks for taking the time and and

0:24appreciate you guys being here. >> Thanks for having us on. It's an absolute pleasure. Yeah, likewise. I've actually followed uh Aztec Network for a few years and some of my friends that I've I've worked with over the years uh have been working on the project and it's great to see uh it it blowing up and I think the privacy narrative overall in uh crypto right now and for

0:47Ethereum it's a great time to be to be launching. So um and we can dive into all that but I just sort of love to start out high level on for those who aren't fully familiar with Aztec network and and the privacy part of it. U what is the the network? What does it do and why does it matter so much? >> Should I start with that one? So AIC is a privacy preserving layer 2 built on

1:11top of Ethereum. Uh so what do we mean by that? Um we mean that we are recreating the smart contract style ecosystem of Ethereum that that world computer but where private information is a firstass part of that network um where we use advanced proofs to make that happen effectively a private world computer and this is important because it opens up an entire universe of

1:35applications that benefit from distributed letters benefit from decentralization but require working with data that is sensitive that you cannot just throw on a transparent ledger. So, we're talking about things like people's identities or sensitive data or just information that you don't want to be like sniped and viewed by bots, by data miners. Um, and the the

1:56the end goal really is to to bring web two style um like functionality and user experiences into web 3 products and services. >> Definitely. And do you do you believe that privacy is of becoming even more important now that larger enterprises and institutions are getting involved? Of course, individual privacy is important as well. >> I got some views on this. I think it's

2:21kind of twofold. One is um you know blockchains are reaching more into the real world and as they do that we run into this you know age-old problem of like people need privacy. the world relies on information asymmetries and that's missing from most blockchains and so I think that's one reason why this is kind of top of mind at the moment is as as we see all these new chains launch

2:44these lay ones these lay twos and like some of them do start to get adoption they they run head first into this wall which is we need privacy and I think yeah the other side is obviously institutions are just noticing this industry growing um and wanting to get part in it and when they try and replicate their flows on these public ledgers. They they they run into the

3:05same problem which is hey this the thing that powers my business in web two the information that I hold can't be public like that's how my business functions and um yeah they run into the same problem of needing privacy. We we kind of ran into this problem six seven years ago when we were trying to put corporate debt onto Ethereum. So that's kind of

3:25how Aztec was was created like with this desire to build um uh kind of a product on top of Ethereum and realizing we couldn't. Uh but I think that's the main reason is that yeah there's increased adoption and just increased like eyes on on on crypto and uh blockchains in general and they they all see the same thing which is it doesn't work without um kind of strong privacy guarantees.

3:47>> Definitely. And with that corporate debt, that's interesting. Way back, now we're seeing a a huge surge in, you know, real world [clears throat] assets actually being tokenized on Ethereum. Uh different money market instruments and and equities and hopefully, you know, the whole financial system and and stock market will be uh on blockchain if not

4:07on Ethereum. And with Aztec being a a layer 2 on Ethereum versus a standalone chain and having that foresight like six, seven years ago when you started developing it, um can you talk about the positioning in where the industry is at right now with Ethereum and Aztec as a layer 2 and how that fits in? >> Yeah, I can I can I can I can start with that. I mean, the the the foresight is

4:32really just um uh I mean for us it was pretty basic. it's, you know, we're trying to do something extremely challenging, a fully like private um privacy preserving smart contracts. So, we didn't want to build our own consensus network. Didn't want to build our own execution clients um the way that you have to do on if you're not building on Ethereum. So, um for us, it

4:52was a it was a no-brainer. Um also, uh you know, privacy is not not useful if you don't have uh liquidity. And Ethereum is and I think will remain for some time the canonical home of assets um being issued. Um uh and so when it comes to your your question about like the um what was it? Sorry, sorry for um forgetting like was it you asking about the positioning of of Ethereum today um

5:16and like where it stands in the general blockchain space. Uh I think that Ethereum is is a very unique value proposition um that um is very differentiated uh because it is a fully decentralized distributed network where um governance is very pluralistic. It's very security conscious um and uh that does affect it like the the speed of Ethereum when it makes to make decisions

5:43strategic shifts. Um however despite all that it's delivered some of the most technically ambitious um uh updates um ever seen from any blockchain. You know what's happening particularly with the visaka update upgrade effectively sharding realized something people have been talking about for years is is incredible. And so you just have this profound concentration of talent on

6:06Ethereum because it is genuinely decentralized and composable and permissionless. um you don't need to ask permission to build in it. You know that there's not going to be like privileged stakeholders that are going to kind of undermine you or rug you. Um it's it's very unique and uh I see it being um you know it won't be the fastest blockchain um ever but but it will always be um I

6:29think the most secure one that people are comfortable building on uh and the one where for for meaningful assets assets with like substantial value behind them is kind of the natural place to to to create and distribute them. >> Yeah. Yeah, in terms of for Aztec, I mean, we we get to inherit that security um as as a ZK rollup and validity roll up on on Ethereum. And so, as Zach was

6:52saying, kind of that not having to rethink consensus and um kind of focus on, you know, building out the privacy side of things and and augmenting Ethereum with privacy has kind of been kind of key to our our strategy. Unlike most layer twos, like we're not just taking Ethereum and putting it on a on a like lower layer to make it cheaper or faster. We actually have different block

7:15space. And so we're kind of value additive to all of uh the Ethereum chains um like layer 1 and and all of the layer 2s. Like you can easily bridge from Aztec to any of these chains. Um and you can bridge not just value but information. Um, and that's very powerful because it means you can, you know, plug into existing DeFi but add user privacy. So, if I'm a user and I

7:39want to swap funds on arbitum, um, I can do that from by routing my transaction through Aztec and as a result kind of Aztec is kind of, you know, value additive to to most EVM chains and that ecosystem is just growing. It's like it's it's about network effects really. Um, and I think that's what's going to keep Ethereum on top for a long time and why we're happy to kind of plug into

8:02that ecosystem and contribute privacy when we can. >> Definitely. Yeah. No, it's really exciting and especially the growth and interest in Ethereum as a treasury asset this year and the market cap uh going up so rapidly and volatility in both directions. But uh it's been an exciting year uh for adoption uh overall and you know the network effect is it's it's

8:26hard to compare maybe there's one other chain that we could compare potentially but I think Ethereum has quite the lead and you know talking about developing uh on Ethereum say there was a for example there's a a DAP uh or um that wanted to maybe it was already on Ethereum maybe there's developers that want to build something that's privacycentric how do they go about starting

8:49with Aztec and and integrating that privacy like from the beginning. >> Yeah, maybe I can take a stab. So there's kind of I think of as like type one applications and then type type two is just a as a mental model. And so for type one, these are like applications that exist not on Aztec. Um they're they're applications designed uh for the EVM. They're public applications. They

9:11were designed without privacy as a core primitive. And in those in those kind of applications um you know the the capital and the app stays on its destination chain. So it's on Ethereum mainet it's on arbitum it's on base. In that flow all a developer needs to do is build a simple interface that lets a user route their transaction through Aztec. And so you need to build

9:34an application that attracts a user but you don't need to rebuild unis swap. And when you do that, you get uh privacy because you can you can bridge um when you bridge out of Aztec um you can't see who sent the transaction. You can then start to augment those with kind of like additional logic. So you can say okay this transaction came from Aztec and I

9:53also get a guarantee that um the person who sent it has a UK passport. So you can start to do kind of like conditional confidential logic as like a a gateway into building on Aztec. But this is really still kind of like in the camp of type one applications. It's like the the design space is existing public defi that we we kind of know and love for type two applications. Um these are like

10:16Aztec native applications. Um and here you get to really leverage the um uh the power of having kind of privacy as a first class primitive or private state as a first class primitive. In that model uh you have to deploy a smart contract onto Aztec. you use our programming language no mir which is a rust kind of uh rustl like DSL and uh you can then leverage kind of uh much

10:39more featurerich applications that you know can't exist in a in a public execution environment >> the best example to maybe illustrate the difference that that that I like to share is around um unis swap is obviously a public deck it's the ratio of two public variables to create a price an OTC desk is an inherently private um application or or a dark pool

11:01and you can't do an OTC desk without an intermediary on on Ethereum. On Aztec, you can um uh because you know it's it's hiding uh who the buyer is, who the seller is, how much they're buying or selling or the price. And you can kind of compose that in in any way you want as a developer. And so it's these types of net new applications that um are kind

11:22of type two on Aztec uh that we're we're excited about. Both will obviously drive transaction throughput on Aztec. I think it's very easy to just bring privacy to existing applications but this like net new type of application is you know I think how we bring the world on chain over the next kind of like what to five years >> that's very cool and uh that is a

11:44perfect example of the OTC networks I was actually just going to ask about so the early use cases because OTC especially with more money coming in sometimes they don't especially if you have a lot of money you don't want to just go on a DEX and and make a huge market by because it can really move the market depending on how much you're spending. Um, but at the same time, you

12:04don't want to just either trust a third party or give away all your information uh that you might be spending a billion on a coin and you you want that privacy aspect. So to go further with that with the early use cases like for example the OTC desk or other things uh where is that actually at with um is it possible to be that it's already built or it's

12:28can be built today? >> Well we've I mean we've already built a an OTC does proof of concept um which is live on our test net I believe. Um so yeah um you know we we have ecosystem partners building this stuff out um for production settings um uh ideally when we launch if not shortly shortly afterwards like when transactions go live but yeah this stuff isn't

12:47completely possible to build today you know um like the the privacy primitives are built out where you can you can do these swaps privately and we're also building out the layers of the identity stack so that um even um uh like regulated entities can perform some of this um I think the first the first kind of um keystone stone um piece of technology for this is ZK passport again

13:08an ecosystem project where I think with our with our with our token sale we're the first um first users of this product on chain where we're using these zero knowledge passport proofs to validate that users aren't um on an effect list and also that they they're unique users um because in Aztec because we want a a fair a fair token sale we're capping how

13:31much individuals can bid and then we're using ZK passport civil protection which is not something that's been possible before on blockchain. Um, so this is kind of like the first time that that the identity stack is starting to be integrated into a public blockchain and we're going to see a lot more of that over the next few years. >> Definitely. Yeah, I'm looking forward to

13:50seeing how Ethereum itself evolves with privacy. And you know, I didn't, you guys probably are following it close closer than me, but I didn't see the exact details, but it seemed like in the most recent Ethereum uh DevCon plus the new Ethereum updates that just happened this week, there's more of a privacy aligning with privacy. Does it seem like the the vision of Ethereum on the

14:15privacy aspect and Aztec are sort of like merging into one? >> I I absolutely think so. I think um to be a little bit arrogant I think that the Ethereum community is starting to see what we saw several years ago um which is that if you don't have privacy um this is just surveillance technology >> you know um and the the scope of the applications that you can build on on a

14:36blockchain are very restricted because you have to be comfortable with everything being public and we've reached a point we've we've reached a threshold where a this is now a very critical barrier to growth and b um the the actual technology privacy technology is advanced enough that people can start to actually think about a future um that incorporates it. Whereas before when I

14:59was talking about privacy 5 years ago, it was much more hypothetical um because we had to do a lot of like us and the rest of the community had to do a lot of original research to get the technology to the point where you can actually build useful systems with it. >> Yeah. Yeah. It's it's cool to see. And I guess you know it's worth mentioning um you mentioned there that that without

15:20privacy it's a surveillance technology and part of maybe a subsector a niche of the crypto industry that are very privacy focused uh you know or at least the inceptions of the crypto industry back in the day in sil in the silk and dark markets and stuff um that privacy was like what you know it's it's a balance like is it you want privacy because there's illicit activity or you

15:44just want private privacy cuz privacy is a human right and you want to protect your personal information and from what I understand with Aztec you know it's private but compliant right privacy but compliance merged together that's well I mean there's as you mentioned there's a spectrum here and what we think is most important so what I what I say when I

16:04talk about Aztec and and like how I want it to be used um I'm giving a very like biased opinion about what I think is like important what's valuable but in order for any of these ideas to be to be brought into life. It's very important that the actual network layer itself is completely neutral and doesn't care about any of this as in this is a debate

16:23that other people should have. Um and I think that like responsibility is to make sure that that that there's a completely neutral network where it's permissionless, it's private, there's no kind of central custodian of the network that can see what's going on. And I want to make sure that on our network we can provide the tools and the technologies

16:41to allow app developers to build compliant apps if they need to if they want to. I want to make sure that there is those tools and technologies so that application developers can ensure their users know that they're not helping bad actors because I think that's important. But um I do want to just prefer like to to kind of separate that from what the

17:00actual network is doing and enabling >> um because um yeah that neutrality um it's extremely important for us and that's why we're deploying like day one fully decentralized. >> Yeah, I can go a bit further. I mean like you can view it as a bit of a spectrum like so Ethereum has the same neutrality. Um and you can build privacy apps on Ethereum. It's just very

17:21difficult. they're not composable and you have to have a team like Aztec to be able to do it. Um, and so like Aztec is a privacy app on Ethereum to think of it in another way and we we chose Ethereum because it's neutral. It it it can't be stopped and and it's a great home for those those types of applications. Um, the only difference between uh like us

17:42and us and Ethereum in that case is that we've made it easier for developers to build those applications by, you know, building tools that are specific for the job. So we have noir, we have uh loads of primitives, loads of libraries, loads of great dev tools that you know mean that you don't have to be a cryptographer anymore to write an application. You can just write a

18:01function and put private above it. Uh and and and it it becomes um a private uh function. And this is very powerful because you know it gives developers these tools and they can decide for their use case um how they need to to follow the rule book. If you're a game that's trading trading kind of meaningless assets or um like a social network, um you're kind of you don't

18:25need to have compliance over the assets because you're you're just you just have information. If you have USDC um and you have like a you know a federally regulated like asset, you're going to have a very different level of kind of compliance you have to you have to kind of adhere to. And yeah, the goal of the network is to give developers the tools

18:43to make that choice. And um there's a there's a huge spectrum of uh things they can implement to do that. So I think another way of thinking about it as well is um this question of kind of like how do you deal with compliance or elicit activity comes up a lot and I think the reason it comes up is because the early days of kind of privacy on blockchains were very primitive. Um and

19:05and what you could really do was encrypt a balance like we live through this. We we had earlier versions of of Aztec and you couldn't build a fully functioning programmable smart contract. You could have like uh like a poor like version of privacy basically where you could only do a limited amount of compute. Now you have like true incomplete smart contracts. Um you can do what Zach was

19:28saying earlier. you can tie your identity to your cryptocurrency account uh with tools like ZK Passport and that actually really helps um uh kind of boost the the the compliance you can add to an app if your if your app needs it. And I think it's a bit uh it's a bit strange to think about because sometimes you're like wait if I put my identity on on a blockchain that's going to be

19:48public I don't want to do that but uh you kind of have to make that step sometimes to um actually get more privacy which uh is a little bit of a jump people have to go through. Well, it's like crypted, >> but yeah. >> No, I was going to say I feel like, you know, yeah, it's a b there's definitely a balance, but at some point if you, you know, if you want to transact a large

20:08amount of money, I think it's unreasonable that everyone thinks that they could just be completely anonymous and now now X has even implemented, you know, which country you're from, even if you have an anonymous account. Um although I bet that could probably be improved with ZK uh proofs somehow. >> Oh, immensely. I mean the current the current X thing in my opinion is is is

20:28going to create more problems than it solves the long term because >> it's very easy to bypass with VPNs. So if you're actually like a bad actor so let's say you're you're in I don't know you're some somebody in Sri Lanka that's like just like spreading American fake news and ragebait because it gets engagement and money right like well >> you're going to use a VPN you're going

20:45to make it pretend like you're in America pretty easily. Um so so I think this will just catch out um like the people who aren't creating problems and we're already starting to see on X right like it's creating this dynamic people are like oh look this person's a foreigner he's not one of us so I mean with with Zika technology yeah you can actually like you could if you want to

21:04go down that road you can make it um much more robust so that you know you can't get around to the VPN you could use things like passports saying okay you got to you got to show me your citizenship um to to to get like a flag next to your profile um but Yeah, I think jury is still very out on whether that's actually going to be a good thing or not. >> Definitely. I want to jump back to the

21:24network uh a few points. You mentioned that the OTC app could be uh running you know on the test net right now and then I know you know the huge news of of the show which we should talk about more is the live uh CCA clearing option with unis swap. We did mention unis swap and then the token launch and the and the main launch of of the whole network. Can

21:50you talk about this cuz this is very unique. I haven't seen this before. Uh unis swap continuous clearing auction versus traditional token sale. >> Yeah, maybe I can take a stab like starting with the network and then getting into the auction. So we, you know, uh, as we said earlier, we wanted to make sure that Aztec was credibly neutral and this privacy wasn't

22:13controlled by by anyone. And as a result, we we strongly kind of believe in decentralizing the network. That doesn't mean just decentralizing kind of who's running the nodes and the sequencing. It also means decentralizing governance and economic ownership of the network. And so um when we kind of when it came time to launch the network, we were looking at different mechanisms uh

22:34on on how to do this. And um you know there's obviously airdrops, there's traditional token sales and they all didn't really fit the bill because um they either you know in an airdrop you like you kind of give away tokens for free and that doesn't really work in a proof ofstake network where people need to have skin in the game. And traditional token sales like usually

22:55have um a multitude of problems around uh you know bots taking all the tokens, sniping, gas wars, whales. They're actually quite bad for distributing tokens. they're they're good for raising money uh if if you create the right dynamic, but they're they're bad for distributing tokens to a broad base of people. And we ended up speaking to Uniswap because they were building this

23:17this new um auction type called a continuous clearing auction. And so after over the last 3 months, we've um kind of helped them uh launch it uh as a core contributor. And the the goals of the auction are to have an auction that lasts multiple days. Um, and over the course of that auction determine a fair price for the token. >> Uh, and as a result, you kind of uh you

23:41remove all of these kind of uh gas wars or whale attacks or sniping that come about from traditional auctions. Um, just based on the auction mechanic and it's a really new novel mechanism, but I think in in the next kind of one to two years it will become a default for uh token launches. Um, and it's just an exciting thing to see it live. uh uh we're the first project to go through it

24:05um as as a as a kind of live live token launch. >> Yeah. Yeah. No, it's really interesting and I think the auction methods can be more fair for sure. Um I think there's been a lot of attempts over the past seven eight years on you know different mechanisms and um I have seen some auctions uh in different ways not with this CCA style but they seem like

24:29they're successful and then after that you know it's just a matter of after you're live that's the whole next step. Um and you guys have been running this you know it's only open for a few more days. Um what's the what is that next step like after it's closed and like you know where the real real work begins? >> Yeah. Um so I mean I I can start maybe

24:52you can continue. So we um the next step is we're currently going through our internal audits of the network. So um ignition is currently live on Ethereum mainetware. The asset network is producing blocks but the block gas limit is zero because we're still finishing our audits. We're validating everything is secure. Um and then um ideally when that happens sequencers on the network

25:14will vote to increase the gas limit on Aztec sorry mono limit. Um and uh um then the network will be live you know um we already have I think it's like 18 20 people building ecosystem partners building applications on Aztec uh and our goal over the next 18 months is to uh basically just increase the developer experience of Aztec increase the downstream user experience scale the

25:37network reduce the block times improve its security there's there's an enormous amount of work that is going to be ongoing just like Ethereum today is nothing like it was in [clears throat] 2016. >> Um, you know, we're going to constantly be pushing this state-of-the-art here because as you said, like the the hard work is only just beginning. Um, and we

25:57want to make sure that the asset network is as easy to build on top of as Ethereum or Salana. We want to make sure that it's uh completely scalable. Um we we're building an application specific L3 rolloff stack on top of it called the Aztec stack so that you can do extraordinarily fast applications for things like microp payments or um like uh AI intent payment settlement stuff.

26:19>> Yeah. Um, and so yeah, like the um it's it's it's it's a it's a big it's a big world out there and we just want to take what we want want to do fundamentally is take a lot of economic activity that's not happening on chain right now and bring it into Aztec as opposed to the current model of L2s old L1's where you're trying to like kind of almost like parasitically steal other people's

26:42liquidity on chain. >> We're not interested in that. We want to do completely new stuff. >> Yeah. No, I agree. the the token side. Um so yeah, the sale uh lasts uh for two and a bit more days. Um maybe two days now actually by the time this goes out. Um and yeah, by the end of the auction, we'll it will find a fair market price. Uh then there's a unis swap v4 pool that's created at that

27:07price. Um and then eventually the token's not transferable uh in that pool um for uh a few a few kind of uh months and then early next year uh coinciding with network launch TGE will happen and uh you can then use the token uh for fees on the network um and before then you can stake it on the ignition chain to make sure that everything's working uh as intended on on mainet gearing up

27:31to the enablement of transactions. So yeah, it's going to be a busy kind of Christmas period um as all of this wraps up and and we finish our our audits, but uh it's good to have something else to do over the holidays other than just uh eat turkey and [laughter] drink drink too much uh uh eggnog or other things like that. So I'm I'm excited for it. >> Yeah, definitely. That's exciting. And I

27:53feel I feel the same way. I think I think you know the regular 9 to5 people, they're like they can't wait for a break and we're like we just want to keep going. like it it's nice to have other things to do, but like we just love this technology so much and I know there's so much more to be built uh with, you know, if we're going to change and evolve the

28:10the financial system and the world uh with this tech that um there's lots to be done. So, I'm I'm glad to see you guys, you know, at this stage and all to your future success. >> Thank you so much. Um yeah, it's been a pleasure to be on and agree completely with you. you know, um we need to bring the world's like all of the world's finance and activities onto blockchain.

28:34Um you know, uh get it out of the hands of these centralized um data custodians and and third parties we can't trust. >> Definitely. And one last uh thing about the the auction as well, you know, you mentioned earlier about the ZK passports. We were talking about it. From what I understand, you've actually introduced that into the, you know, it's like you're using the technology with

28:57the auction. Do you actually get to use the ZK passports? >> Yeah. So, there's there's kind of I think it's the first time you can prove uh you're not on a sanctions list, you're not a terrorist by taking a ZK passport proof um you make that proof locally on your phone and you send it to an Ethereum smart contract uh to to verify uh before you can participate in

29:18the auction. if you don't have a passport that works with Ziki passport or an ID card, you can always use, you know, traditional web two um credentials um to to to get through. But it's it's really exciting to see this kind of new way of of of actually uh doing these checks and doing it in a way where you know your data can't be like lost in a data breach. like so many times, you

29:40know, you send your a photo of your passport to a server and it, you know, it could just get hacked in two years and uh as a result it it's just like a really poor end user experience. Um and so yeah, I'm just excited to see this this new way of doing things. Um, it's the same technology that lets you go into countries. And so, like, you know, we have these signatures in our in our

30:02passports and these NFC chips that we go through e-gates with and now you can kind of view Ethereum a bit like an e-gate. Um, and we we can validate these these proofs there. And so, I think it's going to be very common place in the next uh year that this will be just a norm. Um, and that's another another thing that's uh on the exciting list for 2026.

30:23>> That's super exciting. And yeah, I'd love to e-gate into every potential 100x unicorn investment, make it as easy as possible and use ZK technology at the same time. That's super cool, gentlemen. Thank you. And what's the best way for people to follow along with these updates of like the entire network as well as just the token sale for while it lasts?

30:44>> Yeah, so uh X is probably the best for just general updates. We're Aztec network uh on on X and then for the token sale specifically, it's sale.c.network. network. Um, and you can kind of, you know, see the see the auction uh in real time there. You can see the tokens clearing continuously, which is, uh, kind of the whole point of CCA. And, uh, even if you're not

31:04bidding, it's a fun thing to watch. I've Yeah, it's fairly addicting watching the tokens stream in real time. >> Very cool. Thank you guys so much. I will leave those links in the description box below. would love to follow up uh you know post launch closer to the TGE and the and the main launch and see what else because I feel like the the possibilities are uh almost

31:23endless. There's so many things that need to be updated with more privacy and uh I'm glad you guys have been, you know, doing well so far and uh all the best to you guys over the holidays and let's definitely follow up in the near future. >> Awesome. Thanks so much for the time. >> Absolutely. Thanks a lot. It's been great.