Thread by @expctchaos

0/ @aztecnetwork is a #zk rollup that acts as a privacy shield for ERC20 token transfers & $ETH smart contract interactions 🥷✨

zk & #privacy is the next bull narrative & @aztecnetwork enables private txs & #DeFi in the biggest ecosystem

dont sleep anon 👀

$AZTEC 🧵 (0/33)👇

1/ first of all, let's quickly recap the basics. @aztecnetwork is a zero knowledge rollup

similar to optimistic rollups, zk rollups are scaling solution that "rolls up" transactions into batches on an off-chain execution layer rather than executing on L1

https://twitter.com/expctchaos/status/1527419760593584136

2/ from a tech perspective, it is worth mentioning that @aztecnetwork's rollup is secured by a PLONK-based #zk proof system

learn more about #PLONK in the thread linked below 👇

https://twitter.com/expctchaos/status/1611718204480712706

3/ @aztecnetwork has made significant improvements to the #PLONK proof system and developed #UltraPlonk to prove the validity of off-chain transactions

4/ the cost of posting a proof to $ETH has been reduced to approximately 550,000 gas, a decrease of around 30%, since protocol launch

today, @aztecnetwork is also working on a next-generation proving system, that is expected to bring the proving cost down to around 180,000 gas

5/ in the same time, the network's throughput has been increased from 112 transactions to 896 transactions per rollup, which equals an 8x increase

6/ in addition to the proof, @aztecnetwork also posts call data to $ETH L1 for each tx, allowing anyone to reconstruct the state of the network's rollup and verify the validity of off-chain computation

7/ currently, the cost of posting call data is 16 gas per byte. However, it is expected to be reduced to 3 gas per byte with the implementation of EIP-4488

https://twitter.com/expctchaos/status/1532100096111824901

8/ there is two major types of zk rollups

- app-specific zk rollups

- generalized zkEVM rollups

9/ while the former has been around for a while already, building an EVM compatible (or rather equivalent) virtual machine that supports zero knowledge proofs has been more difficult

however, 2023 will likely be the year of #zk EVM 👇

https://twitter.com/expctchaos/status/1569717615282782209

10/ but @aztecnetwork is not a #zkEVM

rather, @aztecnetwork falls into the app-specific rollup category

however, that does not make it less interesting

11/ @aztecnetwork provides two key features

- private (shielded) transactions for any ERC-20 asset

- private (shielded) #DeFi through #Aztec Connect

let's have a closer look at why this matters and how it works

12/ remember that #Ethereum is a public blockchain that keeps a publicly accessible and transparent ledger of all transactions in the network

and with transparency comes a lack of #privacy

https://twitter.com/expctchaos/status/1484546240108969995

13/ so what is the solution to this?

can we just have encrypted accounts & transactions all over $ETH?

unfortunately that is not so easy to achieve. How would the network check the accounting and ensure no double spending is taking place?

14/ but that doesn't mean there are no ways to bring #privacy to $ETH

@aztecnetwork uses an UTXO (unspent transaction output) model instead of an account model restructuring the attribution structure to a certain amount of money (a note), having an owner that can spend this note

15/ this is similar to how @RAILGUN_Project's transaction model works, which I have described in the thread linked below 👇

https://twitter.com/expctchaos/status/1612360130762526722

16/ but back to @aztecnetwork

as mentioned earlier, txs are carried out using a system of notes. Instead of updating the balance of an account to reflect a tx (like on $ETH), the network simply reassigns ownership of the notes to the appropriate parties

17/ let's use an example to make this easier to understand:

suppose Alice has three notes worth a total of 100 (shielded) $ETH & Bob has no notes. If Alice wants to send Bob 20 $ETH, two new notes will be created: a note for Alice worth 80 units & a note for Bob worth 20 units

18/ to protect the privacy of the tx, Alice publishes it with a lock that only Bob can unlock with his private key. This is similar to putting the note in a lockbox that only Bob has the key to

19/ while Alice and Bob both know the value of the transaction (20 $ETH), they don't have to reveal it to the rest of the world, keeping the transaction private

20/ to prevent Alice and Bob from colluding to double-spend the asset, Alice must prove to @aztecnetwork that the value of the new notes (80 + 20 = 100) is equivalent to the value old notes

21/ I won't go into the details here, but basically this is done through a process called a "join-split transaction", in which Alice generates an #UltraPlonk proof locally to prove equivalence

22/ once the proof is validated by the network, the old notes are destroyed and the new ones are recorded in the note registry as an encrypted commitment, ensuring that the tx is properly recorded

23/ but what really makes @aztecnetwork sick is #AztecConnect that unlocks private DeFi with the help of three components

- L1 DeFi protocols:

- Aztec Connect Bridge Contracts

- Aztec Connect SDK

24/ L1 DeFi protocols

#AztecConnect is bringing privacy to #Ethereum protocols like @LidoFinance, @AaveAave, @compoundfinance, @Uniswap & more

25/ Aztec Connect Bridge Contracts

provide an interface that enables the Aztec rollup contract to talk to any L1 DeFi protocols on $ETH

26/ Aztec Connect SDK

allows users to create & submit transactions to the #Aztec rollup. It's basically a library for app front-ends or the zk-equivalent of ethers.js, which lets users send txs to $ETH nodes via their favourite dApps

27/ so basically, the #AztecConnect toolkit is a proxy service that enables anyone to take advantage of cheap privacy while interacting with $ETH DeFi, benefiting from the trusted contracts, liquidity & execution of L1

28/ it's important to understand that #Aztec Connect relies on L1 for tx execution and uses batching of DeFi transactions to achieve cost savings

29/ these design choices offer several benefits to apps that want to provide their users with zk-enabled privacy & cost-savings:

- no need for additional audits / contract redeployments

- simple interface with a Bridge Contract

- ability to retain L1 liquidity & composability

30/ in conclusion, #AztecConnect enables developers to access cheap #privacy while still retaining composability with other protocols, unlike alt EVM L1 implementations or #L2 systems with their own execution environments

31/ to keep costs low despite executing everything on L1, #AztecConnect simply uses the Aztec #zk rollup to spread the costs of proof verification across a large number of users

32/ I'm very bullish on privacy and zk tech in general

but especially on @aztecnetwork because I think it is in a unique position to provide cheap & accessible privacy for $ETH L1 DeFi (biggest eco)

might be worth using #Aztec a bit, just in case there is an $AZTEC airdrop 🪂👀

33/ In any case, stay tuned for more on privacy-preserving technologies that will shape the future of crypto! 🥷✨

If you liked this thread, please support by retweeting the first tweet (linked below) 🙏

https://twitter.com/expctchaos/status/1613189029004181504