Vitalik questions Rollup: Can Aztec stand out by offering controllable privacy?

Author: CoinW Research Institute

summary

Aztec is a privacy-first zkRollup built on Ethereum. Instead of focusing solely on scaling, it aims to establish a smart contract system with "default privacy and verifiable execution." Through an architecture combining private execution and on-chain verification, and the Noir language designed for zero-knowledge development, Aztec hopes to create a complete ecosystem of privacy-native applications. The project has completed multiple rounds of funding from top-tier institutions and clearly defines network incentives and community participation mechanisms in its token economic model. Compared to the performance-driven approach of mainstream L2 cryptocurrencies, Aztec's differentiated privacy execution direction gives it a strong uniqueness within the Ethereum ecosystem. However, its long-term value still depends on whether privacy requirements become mainstream, and the evolution of key variables such as regulation, technical performance, and ecosystem expansion.

1. Why has Aztec recently attracted market attention?

Track Prospects: The Structural Resurgence of the Privacy Narrative

Over the past few years, the privacy sector has cooled significantly due to stricter regulations and exchanges' caution regarding anonymity protocols. Many privacy projects have been marginalized, and "privacy" was once seen as a high-risk narrative. However, the environment is changing. With the upgrading of on-chain applications, privacy is returning to the forefront of discussion in new ways. AI agents enable automated strategies, and automated execution means that transaction logic and data cannot be completely public; the entry of RWA and institutions also requires a "verifiable but not overly transparent" model; assets must be real, but business details do not need to be fully exposed. At the same time, technologies such as zkEVM and zkVM are maturing, making verifiable but invisible computation more feasible. Privacy is no longer just a tool for anonymous transfers, but more like a new infrastructure capability. The rise of Aztec is a manifestation of this structural change.

Team background and credibility

Aztec initially launched Aztec Connect to explore privacy-focused DeFi, but subsequently shut it down, shifting its focus to building "privacy-native rollups." This shift sparked controversy at the time, but it also demonstrated the team's willingness to prioritize long-term technology rather than short-term narratives. Since then, Aztec has explicitly focused on the default privacy-focused zkRollup architecture and launched Noir, a programming language designed for zero-knowledge development, gradually building a complete privacy-preserving smart contract system.

Team founder Zac Williamson has long been engaged in research on zero-knowledge proofs and cryptography, and is one of the early contributors to the PLONK universal proof system. For many years, the Aztec team has been deeply involved in ZK technology, from privacy asset protocols to Rollup architectures and Noir language development, consistently focusing on verifiable privacy computation. Even during periods of downturn in the privacy field, the team did not stop R&D, but proactively transformed and restructured its product direction. This continuous investment and technological background makes Aztec more like a long-term infrastructure project than a short-term hot topic that fluctuates with market cycles.

Capital strength

In December 2021, Aztec completed a Series A funding round of approximately $17 million, led by Paradigm, with participation from prominent industry investors including a_capital, Variant, Nascent, and Vitalik Buterin. In December 2022, amidst a general market downturn, Aztec completed a $100 million Series B funding round, led by a16z crypto, with participation from A Capital, King River, and other institutions, bringing its total funding to over $119 million. Both a16z and Paradigm are top-tier institutions with long-term investments in crypto infrastructure, favoring long-term bets on technology and underlying architecture rather than short-term narratives. The completion of such a large funding round during the bear market at the end of 2022 itself is a signal: capital values ​​Aztec's technological path and long-term potential, rather than the prevailing market sentiment.

Aztec's current popularity is driven by multiple factors: the team's long-term experience in the ZK field, a clear product restructuring roadmap, and continued support from leading investors. Capital and market attention have come first, while the true scale of its ecosystem is still under construction.

2. Aztec's core positioning: What exactly is it building?

Not just Layer 2, but a privacy-preserving execution layer.

Aztec is not an independent Layer 1 public blockchain , but rather a zkRollup Layer 2 network built on top of Ethereum. All transaction results and zero-knowledge proofs are ultimately submitted to the Ethereum mainnet for verification, so security still relies on Ethereum. However, it's inaccurate to simply view it as another Layer 2 blockchain. Most Layer 2 networks address performance issues, such as reducing gas costs and increasing transaction speed. Aztec, on the other hand, attempts to solve the problem of the blockchain's inherently transparent structure.

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 difficult to keep secret, and future AI-automated algorithms will also expose details. Real-world business activities do not operate in a completely public environment. Aztec's starting point is to allow blockchains to maintain verifiability while having reasonable privacy boundaries.

Core technology: Private execution, on-chain verification

Aztec's underlying logic 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 action conforms to the rules," not "what exactly was done." The network confirms the calculation is correct but does not need to see the amount, data, or execution details. This differs from traditional Rollups. Ordinary L2 simply compresses and submits transactions, essentially keeping the data public; Aztec changes the execution model itself, allowing state to be private while maintaining trustworthy execution. This structure is called "verifiable but invisible." It doesn't eliminate transparency but rather shifts it from the data layer to the proof layer.

Privacy-preserving smart contracts and the Noir ecosystem

Aztec's goal extends beyond private transactions; it's about supporting "privacy smart contracts." On traditional public blockchains, contract state is public by default. On Aztec, contracts can have private state and private logic, while interacting with the public world when necessary. Developers can decide which information is public and which is private, creating an application structure with "controlled transparency." To make this model truly developable, Aztec launched Noir, a programming language for zero-knowledge applications. Zero-knowledge development is inherently extremely complex, and Noir attempts to engineer this complexity, allowing developers to build privacy applications in a way closer to conventional programming. Aztec isn't just building a network; it's establishing a complete privacy-native execution system, including the execution environment, proof mechanisms, and development toolchain.

3. Economic Models and Long-Term Value

Current token information: total supply, allocation, and issuance mechanism

According to the Aztec white paper, the total genesis supply of AZTEC is 10.35 billion tokens, distributed according to different roles and uses. Overall, the tokens will be allocated to multiple groups, including investors, the core team, the foundation, ecosystem building, and community participants. Approximately 21.96% (about 2.273 billion tokens) will be used for token sales, including public auctions and genesis node sales. This portion is primarily used for early price discovery and participation incentives during the network launch phase.

Structurally, AZTEC's distribution logic revolves around several core areas: a portion is used to reward early investors and supporters, another portion is used for long-term team incentives, the foundation is responsible for protocol development and governance support, and ecosystem subsidies are used to attract developers and application deployment. In addition, there is a dedicated network reward mechanism (Y1 Network Rewards) and reserves for liquidity and future incentives. This set of tokenomics takes into account both early capital support and reserves a large proportion for subsequent network operation and ecosystem expansion, making it more like a distribution structure for long-term infrastructure projects.

The value capture logic of Privacy L2: How will tokens play a role?

AZTEC's functional design mainly includes the following categories:

(1) Network security and staking incentives. AZTEC tokens are expected to be used for staking by 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, 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 ecosystem resource allocation. This makes the token not only a carrier of value but also a tool for community decision-making.

(3) Fee payment and execution incentives: If Aztec’s smart contract execution environment is enabled in the future, tokens may be used to pay transaction or execution fees and to incentivize participants who provide proof and sorting services.

These designs demonstrate that privacy capabilities are an integral part of its value capture ability. Unlike typical L2 networks that primarily rely on scaling, Aztec provides the technological foundation for real-world financial, institutional applications, or scenarios with high privacy requirements through its "privacy," "selective disclosure," and "controlled transparency" models. Theoretically, this makes its network fees and token demand structure more closely aligned with high-value chain activities.

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

Public offering of tokens using the CCA mechanism

Aztec's token public sale utilized the Uniswap v4 Continuous Clearing Auction (CCA) mechanism, co-developed with Uniswap Labs. This is the first token issuance attempt on-chain to fully utilize CCA. The CCA mechanism is designed to allow market participants to price and bid transparently and fairly on-chain, avoiding front-running, gas wars, and monopolistic allocation by a few large holders common in traditional token sales. The entire auction process is verifiable on-chain, neutral, and transparent, facilitating price discovery in the real market.

The public auction, held from December 2nd to December 6th, 2025, attracted over 16,700 participants, selling approximately 19,476 ETH (approximately $61 million) worth of tokens, ultimately allocating approximately 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 team set a maximum bid limit for each participant to restrict excessive concentration by large holders and increase opportunities for ordinary users to participate. After the auction, initial liquidity was automatically matched to Uniswap v4 liquidity pools, including approximately 273 million AZTEC tokens (approximately 2.6% of the supply) for trading pair launches, providing foundational support for future secondary market trading.

Community voting begins on TGE

Following the auction, a significant amount of AZTEC tokens acquired through bidding, node sales, and rewards remain locked until the Token Generation Event (TGE) is triggered. According to the official announcement, the TGE has been approved in the community governance vote and is scheduled for February 12, 2026 (Beijing time). At that time, users who participated in the token sale will be able to freely transfer and trade their AZTEC tokens.

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

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

5. Competitive Landscape

The difference from mainstream L2: It's not about performance, but about privacy.

Current mainstream Ethereum Layer 2 networks, such as Starknet, zkSync, and Scroll, primarily aim for scaling, such as increasing throughput, reducing costs, and enhancing EVM compatibility. They address issues like slow chains and high transaction fees; privacy is not their core selling point. Aztec, also based on the zkRollup architecture, has a different starting point. Officially positioned as a privacy-first zkRollup, privacy is a default feature, not an add-on. It supports private state and privacy-preserving smart contracts, emphasizing a verifiable but invisible execution mode. Therefore, Aztec's relationship with mainstream L2 networks is not one of performance competition, but rather a competition based on differentiation. While other projects compete for the scaling market, Aztec attempts to build a privacy execution layer.

Comparison with other privacy projects: Technological approach and ecosystem integration

Within the privacy space, Aztec occupies a unique position. Zcash represents payment-level privacy, its core being the hiding of transaction amounts and addresses, but it doesn't support complex smart contracts. Secret Network implements privacy contracts through TEE technology, but it's an independent Layer 1, requiring cross-chain bridges for integration with the Ethereum ecosystem. Meanwhile, FHE projects like Zama explore more cutting-edge fully homomorphic cryptographic computation and are still in their early stages. In contrast, Aztec's strengths lie in: it's built directly on top of Ethereum, inheriting the mainnet's security; it supports programmable privacy contracts, not just privacy transfers; and it utilizes the Noir language to create a complete privacy development toolkit. Within the current Ethereum ecosystem, Aztec is one of the projects most systematically advancing towards privacy-preserving smart contracts.

6. Potential Risks and Future Variables

Regulatory Risk: Will privacy be restricted?

Privacy protocols have always been a sensitive issue in the crypto industry. In recent years, some privacy tools have faced regulatory pressure, with policies not entirely favorable towards untraceable technologies. Aztec emphasizes default privacy; while it is verifiable and not a completely anonymous black box, the privacy infrastructure itself may be a focus of regulatory scrutiny. The uncertainty lies in whether regulators will allow this "controlled privacy," and whether exchanges and institutions will be willing to support privacy-focused L2. This will directly impact Aztec's growth potential.

Technological and ecological risks

Zero-knowledge proofs require computational resources. Compared to regular L2, privacy enforcement is more complex, requiring users to generate proofs locally, a process that is not cost-free. Furthermore, the design and development of private state has a higher barrier to entry. While Noir reduces the programming difficulty of ZooKeeper, it is still a new language, and its ecosystem needs time to mature. If performance and user experience cannot be continuously optimized, it may hinder large-scale adoption. In addition, Aztec takes a privacy-native approach, while mainstream L2 already has a mature EVM ecosystem and a large user base. Whether developers are willing to redesign applications for privacy is a real question. Meanwhile, technological competition is accelerating. Higher-performance zkVM, modular solutions, and even FHE technology may all bring replacement pressure.

Reflection: Will RWA increase the demand for "controllable privacy"?

Beyond regulatory and technological risks, the need for "controllable transparency" in on-chain finance may also impact Aztec's long-term prospects. RWA is seen as a significant growth area for the next phase. However, unlike retail DeFi, the core participants in RWA are often institutions. In real-world transactions, institutions typically handle a large amount of sensitive information: counterparties, pricing terms, portfolio structures, and strategic arrangements. If this information is fully disclosed, it could weaken their bargaining power and even influence market behavior itself.

Therefore, 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 disclosed to everyone. From this perspective, Aztec's emphasis on the "verifiable but invisible" model logically aligns with this need. It does not provide black-box anonymity, but rather controlled transparency: public verification results, hidden sensitive data.

However, the reality warrants careful observation. Currently, many RWA projects still opt for permissioned blockchains, consortium blockchains, or off-chain custody, rather than directly adopting public blockchain privacy layers. This indicates that while RWAs do have privacy needs, their acceptance of public blockchain privacy architectures is still in the exploratory stage. If the future trend is towards open public blockchains coupled with compliant privacy enforcement, architectures like Aztec may see structural opportunities; conversely, if institutions consistently prefer closed systems, the space for public blockchain privacy may be limited.