Ethereum Privacy-Focused Startup AZTEC Raises $2 Million
ConsenSys Labs, an Ethereum incubator by ConsenSys, was the lead investor in a $2.1 million seed investment into London-based startup AZTEC, a protocol developer that wants to add privacy to public ethereum transactions.
Founded by Tom Pocock and Zachary Williamson, AZTEC uses the zero-knowledge proofs technology (zk-SNARKs) for privacy and hopes that it will help global financial institutions begin using the public ethereum blockchain.
zk-SNARKS is a cryptographic technique that is most commonly associated with privacy-focused cryptocurrency Zcash.
Other investors to contribute to the seed round included Samos Investments, Entrepreneur First, Jeffrey Tarrant, and Charlie Songhurst.
However, AZTEC has claimed that their protocol’s efficiency is unmatched by any of the “known technologies on the network.”
And apart from adding enhanced privacy to the transactions, the startup claims that its technology will also significantly boost settlement speeds in the loans market.
According to Pocock, the AZTEC protocol is targeted for use in banks and that to achieve this goal, the startup will partner CreditMint, another Ethereum-based project that facilitates debt issuance and trading for corporate.
AZTEC is said to have widely consulted with several top financial institutions that specialize in private corporate debt, including top-10 banks. The firm expects to have attracted the first wave of customers by January 2019.
The public Ethereum blockchain cannot, at the moment, guarantee “full transaction privacy” that top banks demand, hence the desire by banks to work with private/permissioned blockchains.
But the AZTEC team wants to change all that, using the zero-knowledge proofs technology.
Min Teo, ConsenSys Labs executive director for Europe, has said that AZTEC’s zk-SNARKS technology is very impressive, while founder Joe Lubin said that his firm supports the breakthrough protocol being used by AZTEC and CreditMint.
Lubin added that the tech would bring “zk-SNARKs-based privacy, confidentiality, and scalability to a wide variety of asset transactions on public ethereum.”
Min Teo added:
“Based on what we’re seeing, AZTEC is the closest to production and the most efficient in the sense of gas cost.”
Ethereum has had challenges with its scalability, and some analysts have pointed out that AZTEC’s breakthrough technology may not work on a network that is not fast or scalable enough.
But according to Pocock, AZTEC’s protocol is already working on Ethereum, and that it can handle one transaction per second but will dramatically improve with upcoming network improvements. He added that the protocol’s speed is sufficient enough and that it takes just “milliseconds to both construct and verify AZTEC zero-knowledge proofs.”
Speed and scaling may not be a big problem for AZTEC’s tech, especially with several scaling solutions in development that should see throughput on the ethereum network significantly increase.
Incidentally, the AZTEC protocol isn’t the first effort aimed at adding transaction privacy to the public ethereum blockchain via zero-knowledge proofs.
Among those already using the technology is Quorum, a private blockchain developed by banking giant JPMorgan. The other project is EY’s Ops Chain prototype that uses zero-knowledge proofs to help companies keep their transaction records private.
And in September, Ethereum founder Vitalik Buterin suggested that zk-SNARKS could play a role in helping ethereum hit 500 transactions per second.
But according to Pocock, AZTEC’s protocol is significantly different from the other projects and proposals; primarily because it’s already being used on the Ethereum’s mainnet and as opposed to being just “theoretical.”
“This, at last, gives the capital markets access to Ethereum’s public blockchain, without giving up privacy. Strong consensus and strong privacy guarantees will no longer be mutually exclusive.”
AZTEC is currently working on additional features that should see it provide greater privacy and liquidity, with a potential release date set for the second quarter of 2019.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.