What You Can Build on Aztec Alpha

Transcript

[music] one. My name is David. I'm the product marketing lead here at Aztec. And I'm joined by Joe, who is the co-founder of Aztec. Welcome, Joe. >> Thanks for having me. Yeah, this is a great setup we've got here. >> We're going to go into one of the biggest questions in web 3 in this segment, which is where are the apps? Uh, you know, we've been trying to solve this for many years, adoption, uh, what's going to finally bring us there?

What's going to bring the real world on chain? And we're going to go through that with some use cases. And I've got a couple questions for you on that front. Um, but we're going to start with um how Aztec has privacy built in at the uh infrastructure level, at the protocol level, and what makes this different from other chains that are sometimes bolting on privacy or jumping on the privacy narrative. Um, so could you talk a little bit about Aztec building privacy in at the fundamental level and why that's important?

>> Sure. I I think the the best way to to answer this is yeah going go going to the real world as you said said earlier and and thinking about how we get privacy in in the real world for financial transactions. Um and and by real world I mean kind of web two and I think most of web 2 relies on an intermediary to get privacy. So you know you have a bank um you send requests to a bank you you have your passport with a bank and they they let you open an account um and then that account starts with zero balance. you send them some money and you know they increment your balance but the world can't see it and so they're kind of acting as this intermediary to to give you privacy and you know that's enabled most of the kind of real world finance we have today we

also have that beyond like kind of finance we have it for you know the normal tech client server model with databases and you know there's an there's an intermediary in the middle that's kind of safeguarding your data um and I say safeguarding in kind of inverted commerce because It's all good whilst you know you're on the happy path and everyone's everyone's aligned and happy but at some point time and again either human greed comes along and someone decides to sell that data usually for advertising or to market products to you or worst case that data is exploited and um you know we've seen this time and again with with hacks and I think you know when when we start to think about privacy in the web 3 space we see a lot of people jumping on the

narrative um And their first kind of like attempt at solving it is to do the exact same as web two. They stick an intermediary in between a user and the blockchain and they use that to get privacy. So providiums work like this. um you know more kind of permission chains or DT technologies like the old kind of R3 corder and new newer chains like Canton work like this where there there's kind of a closed set of nodes and only those nodes can see the data and so they get privacy through intermediaries with Aztec we've built a very different system we we we use cryptography strong cryptography guarantees to to enable privacy and those primitives mean that you can do a

lot more you can always build these other chains and kind of like I guess lower models on top of Aztec, but the the starting point is um kind of cryptographic privacy um and you can layer in or reduce that guarantee if you want to. So I think that's the main the main point I wanted to kind of get across around the differences of how we do this. I think you know what the world needs is any form of privacy. These can all be used together, but I think starting from a point where you have the strongest form of privacy and cryptographic privacy the same way that we have on SSL uh with the internet and HTTPS is is the best place to start.

Then it's up to a developer then to conditionally reduce that privacy um through smart contracts. Like if they you know they want to leak information to a regulator or to counterparties, they can do that. Um but it's it's in their control, not mandated by the chain's design. So that's the main differences I think between how we approach privacy and how a lot of kind of bolt-on chains approach privacy. >> Great. Um yeah and it's worth reminding everyone that Aztec launched as a fully decentralized network. So from day one this isn't prom making promises for later. We are uh the network is live as a fully decentralized network where people can start building on top of right now. It's actually worth kind of

like on that point, the only type of privacy you can get on a fully decentralized network is cryptographic privacy. So, you know, if you if you try to um at the network level have uh privacy through intermediaries, well, anyone can be a sequencer in in a fully decentralized um network. So in effect like these kind of permission blockchains that have limited validator sets or providiums where there's usually one validator who is kind of compressing everything into a into a proof. Um they just don't work because you'll be broadcasting your data to all of the validators which you know we've been there with public blockchains and it's it's not private. So I think that's a key point and so yeah our our validator

set is currently close to 4,000. Um, and I think yeah, we we need cryptography to get privacy. >> Great. So, I want to get a little bit more concrete and talk about some of the specific use cases. But first, I think we're so deep in the weeds that sometimes we forget that even simple things on Aztec like sending a private transaction are actually big breakthroughs for the industry. And so, talk to me a bit about sending private transactions on Aztec and how we enable that, how we do that. Yeah, it's a great question. So, I think the there's a lot of projects kind of in the Ethereum space that are adding some form of privacy. Um, even in in other chains like Salana that are trying to add some

some privacy, but no one's really got close to kind of Zcash privacy. Like Zcash is kind of like the trailblazer of like what is private. We we used to be there with Aztec Connect and and older versions of Aztec. Um, but really there's not projects today that kind of have all aspects of a private transaction. So some may have anonymity but you can't do internal transfers or the amounts are fixed um to have a privacy set. Other other projects kind of may um you know they may allow transfers and and kind of have more flexibility on on what you can send but the transaction graph is known to someone or or multiple people. Um, and so there's not really at the moment, um, until Aztec is is now live a way to do kind of private like value transfer

where it's actually private. Um, and you know, the great thing about Aztec is the the token standard that's been built. Any asset you bridge in can have public transactions or these fully private transactions. And and I think that's like it's kind of understated because that's one tiny contract on Aztec and it it's like moving the industry forward kind of a very long way and it can be composed with other contracts but that on its own is like >> is now the state of state-of-the-art of what's possible on Ethereum and it's taken a while to kind of get that back. Um but it's it's really exciting that it's now here because >> we can pay each other privately now which is like it's why we're here, right? Like so >> yeah. So, breaking news, you can now send private transactions on Ethereum.

Yeah. >> And that's uh a really big deal for the industry and >> and like I don't want to do like a disservice to the the the other products which are are doing like similar things in the space, but it's not it's not complete privacy. Um and and so for me, complete privacy is, you know, you have to have the balance as confidential. U the sender and recipient have to be hidden. Um, and like you have to do all of those and allow kind of you to effectively have the same level as um functionality as a bank account, but you don't have to leak all that data uh if you don't want to to um a counterparty.

Um so that's that's kind of what I mean by complete privacy. So let's go into a few of the more complex use cases, how we're going to see this play out in the real world, apps we expect to be built on Aztec and use cases. We like to think of the primitives that we're shipping the privacy primitives as uh identity. You can build with private identity. You can build with private data and you can also build with private compute. So who you are can be private optionally. Who what you store or send can be private option optionally. And also what you do and what's computed can also be optionally private. So this is really a feature complete uh privacy L2 that we're shipping. And so let's go into

some of those different pillars and some of the use cases with them. >> Maybe we can start with identity. So why why do we need private identity on chain? What is this going to enable? What are some of the use cases that you see being built on top of Aztec? >> Yeah, I think if I go back to the the bank analogy I had at the start, it's it's the same, right? like to to kind of um the way I can open accounts and interact with uh the real world is based on me being Joe Andrews having a passport from a a country um and and that being kind of valid. um when I get to like a web 3 kind of world like having like 0xa ABC whatever um is not

really um it's useful for kind of like um like basic payments but to reach into the real world and start to replace you know like the the trust pillars we we we we rely on in the real world we need a form of identity um and identity doesn't have to be just a passport or a driving license or an ID card it's It's kind of multifaceted and I want to get on to that more more in a second. But I think the the main point is we haven't been able to tie on public blockchains um a identity document to a cryptocurrency address which means that you know the reason we haven't been able to do that is because everything's public and so you wouldn't want to kind of broadcast your passport number or your social

security number on onto a public uh blockchain. But now you have um kind of these identity primitives in inside Aztec and you have the ability to do compute uh privately and and kind of prove things about your identity document with inside an Aztec transaction. You can actually bind um your cryptocurrency account to your real world identity which unlocks a huge amount of use cases. Um and it's not just kind of passports, it's also like pseudo identities. So things like email accounts, social handles, um uh like the data inside your bank account like is kind of linked to your identity. So like credit scores can be derived from that.

So it's not just one kind of like hey we need to do kind of like a form of like ID check to to use Aztec. That's not what we're saying here. You can do that if your use case wants it. There's great projects like Exe Passport that enable um like private proofs of passport, but you don't need to just use one one type of identity proof. There's there's other projects that you know it may be sufficient that just having uh social proof that like I own the X handle JSF is is enough for me to do something or a proof of email like I have an email address that belongs to Aztec protocol.com for example and and and that that's enough to bind my identity to a cryptocurrency account. So, it really depends on what you're doing. But

I think the main the main point I want to hammer home is you weren't able to do that previously because the underlying things you need to bind your um your account to your identity couldn't be broadcast publicly. >> With a execution environment like Aztec, we can now do this inside private transaction. I think maybe the final point is the reason it's so so powerful is a lot of these identity primitives they they don't use nice cryptography like they use kind of like ugly web two cryptography like RSA signatures or like passing JSON like all of these things are really hard to do in a smart contract. Um but inside Aztec because we have I think you mentioned it earlier

private compute you can do a lot more inside a transaction. So you can actually start to pass these complex data structures and prove things about real world identities which you couldn't do previously. >> Yep. And you you already got to private compute there. We'll get there in a second. One thing to note is that these are all uh you can think of them like the new Lego blocks of the web 3 space. And these these are all composable. You can use them how you want. You can build with some of them. you can leave some of them out uh to build brand new types of use cases. So I want to actually just there's uh one specific use case that I want to drill down on on identity which is proving salaries or uh doing payroll or things like that that

>> are things that we should have been able to do and that we've been promising for a long time in the space. So what does it actually look like to do something like proving salary or uh bring identity on chain for doing payroll and things like that in with these new primitives? >> Yeah, it's a great it's a great question. So like salary is the easier one. It's kind of like you know there's there's multiple things that are needed for private salary. Like the most basic one is people feel uncomfortable about their salary. like I'm British is is maybe maybe more of a British thing, but I think generally around the world like people don't put in their Twitter bio like I earn X like or and I spend Y each month. Like that's that's not a thing you do, right? And so if people get paid

on chain today, they're inadvertently doing that. Like there's maybe some oification based on using a fresh address or paying into a centralized exchange, but it's like you basically have no privacy. Um and so that's a bit of a social taboo. Um, and then worse than that, you can also see what your competitor's employees are earning. Um, and you can poach them. And so it just doesn't work today. So just the basic use case of private payments we talked about earlier, private token transfer can just enable you to actually be paid on chain. So that's like that's quite easy like you get that out the box. Um, I think what that unlocks once you start having people getting their monthly paycheck on chain is things around private salaries. Like you know what do

you do in the real world? you you use your salary to get a loan, um a mortgage, a credit score, and those things require a little bit more plumbing. But the the main initial thing is you need to have money on chain and you need to be able to prove from um uh from like the history that you know you've had regular payments from uh a certain address which constitutes a salary. Um so that's kind of like one way of thinking about it. The other maybe more interesting thing is also then tying the real world um on chain. So, you know, you may only want to get 30% of your salary on chain and have some of it offchain because you have mortgages or you have obligations, you have a credit card. And, you know, we're not going to go overnight to kind of fully on chain. It's going to be it's

going to be gradual. And in that world, um you can use um proofs of kind of banking in in Europe and um the UK there's open banking. And I've talked about this before where effectively all bank data is signed. And so you can get a kind of API call back from your bank and it will come with a signature that says you're David, your monthly, you know, your monthly inflows are X, your monthly outgoings are Y, you spent, I don't know, $1,000 on hot dogs. Like you shouldn't you shouldn't get a loan.

[laughter] So but that you can prove these things about your your kind of um salary that you wouldn't before broadcast on chain. And so you can kind of layer these together in a way where now people are getting paid on chain. They're proving things about their outgoings offchain and you can actually build a very reliable kind of credit score without revealing all of that information to credit card companies or um uh kind of banks and and it actually has a stronger guarantee because um everything's happening through through these smart contracts. So yeah, it's really exciting where we're going to end up.

>> Well, great. That's so that's private identity, but you you touched on I need to get one more question in here because you touched on something really interesting which is the topic of selective disclosure and selectively being able to disclose things because on Aztec you can have some things private, some things public, you can prove certain things. So >> how tell us a little bit about selective disclosure in that type of environment where you may need to reveal some things but you don't want to reveal all of your activity. Yeah, I think the best way to to think about this is is kind of the the age-old like proof of age, right? It's like when you go into um into a bar, they don't actually need your date of birth um and

your actual age. Like they just need to know you're above 18 or you're above 21. And so it's the simplest kind of version of selective disclosure where you're revealing just enough information for [snorts] the use case that that's required. And for a bar, it's, you know, is this person like above the legal age to to enter the bar? They don't need the photo, your full name, your address, like your date of birth. Um, and usually in kind of web two worlds, because we don't have selective disclosure, >> the way that people verify this tiny bit of information they actually need is you send them everything. So, like, you know, you send them a utility bill that you send them like um your full passport, two copies of it, like all >> a picture holding the ID.

>> Yeah. All this information they get about you and it's normally just to verify that you're actually a real person and your name matches. So, I think >> when you have selective disclosure, you can basically inside an Aztec transaction, you can prove this is a valid document. You can prove that like the the trust authority, the trust anchor that this this document is is valid. um but only reveal just what you need to. So passport examples are age, the country you're in, you're not on a sanctions list, but nothing else. So it's like it's the minimum needed to kind of um pass the check that the smart contract needs. I think there's other ways of thinking about this like um uh kind of email is a good one like uh it's

like I have an email that belongs to this kind of domain name, but I'm not saying who I am. Um, and like you know for the Epstein files that are ongoing at the moment be very easy to see which emails are real and fake especially when you're going through Twitter these days and you're seeing kind of these like screenshots of like redacted emails. Well, I don't know if that's real or not, but you you could use selective disclosure to verify the RSA signature inside an email, prove that was a White House email or or not. Um, and not reveal who sent it. um which is kind of very very powerful for things like whistleblowing and and other other forms of kind of like new use cases that Aztec can enable.

>> Yep. Okay, great. So the next pillar uh the next privacy primitive is data. So this is what you have uh what you store um and what you're transacting. So everything from private payments to uh what you're holding. So maybe within this context, talk a little bit about maybe you could tie this to the original vision of Aztec and and bring things onchain and why it's important that we have private data on chain and what you're holding is is optionally private.

>> Yeah. So I think the best way to think about this is, you know, all of the use cases we talked about other than private payments earlier were kind of ephemeral, right? that they're proving things about um documents at a moment in time and Aztec is validating that at that moment in time and you know giving you giving you kind of a a yes or no answer about the disclosure is true. um to do kind of more interesting things, the system needs state. And I think what this question is really getting at is like, you know, how do we how do we record things um onto Aztec in a way that's encrypted for me, but I can come back to it later and, you know, have a transaction history or have contracts

where multiple users can interact and the state is changing. Um, and so in this area, I think there's a lot of interesting properties that that Aztec has. You can have state that's just for one user. So I can have my state where I can write things into the blockchain which are encrypted just for me. Only someone with my uh encryption keys can uh decrypt those and find that state. But that's not very kind of interesting. Like if there's only one person on the blockchain, you can't you can't do much. Like in the real world, we need to interact. And so there's ways to forcefully encrypt things for different users on Aztec. So if you are a kind of regulator or um uh kind of an overseeing authority and and we're two banks, um we

may want to transact, but the transaction can only happen if this third party over here has a copy of the data. Um and we can now write a smart contract that says Joe, David, and the regulator must see the contents of this transaction. We encrypt data uh for these people, distribute it via Aztec and write state to the ledger, which means that at any point in the future, people can come back in via one of those three people and uh decrypt the private state. And so I think that's it's very powerful because like privacy is not a one-sizefits-all kind of equation. And this is a primitive that lets a developer look at their use case, figure out who needs to see what, and actually write an application that that enables

that. And you can go all the way to a point where we have public state like um most most blockchains have but we now have this spectrum all the way from like it's private only I can see it through to everyone can see it and the the kind of execution environment lets you decide for every use case every smart contract where you want to be uh between them and write stuff into the chain with those properties which is just we've never had that before which is crazy. And maybe to to a follow-up question there is around compliance. So privacy often, you know, has is is a loaded term. There's a lot of different takes on it and uh history with it in the in the space. But the way we really think about it is opening up new possibilities and and um could you

just talk a little bit about compliance in that setting and and why that will open up uh a new wave of opportunities for people? Yeah, I think the compliance can mean a lot of things here. it can mean like you know you're not transacting with sanctioned individuals but I think in in the kind of um private private state and kind of like encrypting information for different people it's it's maybe better to think more about kind of like supply chains or um uh even in kind of yeah the early example we had of um putting loans on chain like uh a loan has a borrower um a lender and usually like a loan agent who like facilitates real world things about the loan in in that world, you have the three person kind of like trilmma. They

all need information. And so the audit log of what's happened always needs to um be encrypted for the loan agent. So if I if I trade my loan um well the loan agent needs to know that like you know I've sent it to a new person. And so when we talk about compliance, it's usually about a history of what happened and um proving that nothing uh kind of nefarious happened. And so this ability to encrypt information for different people just is a core primitive that enables like systems to be built that can only be compliant. Uh so I think it's this this shift from reactive compliance where it's like hey we need to monitor everything and see what happened to now I can codify the rules

of compliance in my contract and um make sure that you know if this transaction is mined then I know it followed the rules and was compliant. So, it's it's a nuance topic, but I think um yeah, maybe the the best way to think about it is is all transactions like on Aztec can do this. So, it's like it's up to you like and you don't you don't need to leak information on >> games, but you may do on um some of these kind of more financial use cases. >> Yep. Okay, great. So, the the last the third privacy primitive is compute. And this one it's you know kind of an abstract uh idea or concept to people but it's extremely mind-blowing when you

can really think about what is possible now. So you know it's it's possible to think about okay you have private identities on chain somehow that's enabled you have private data you know what you're sending is private but >> to also have this third one where what you're doing like the full call stack privacy everything that happens can also be totally private is I think extremely mind-blowing that it's possible now so can you go into what does this mean private compute what does it enable and how do you think about it?

>> Yeah. So, so maybe comparing it to p private state. Um, so private state you're you're reading things that exist on the blockchain and you're saying, "Hey, I want to maybe do something with this." Even within private state, right? Like if I'm sending a a balance to you, I'm doing a very small amount of compute. I'm saying decrement from my balance and add to your balance. Like how we actually do that is not quite um compute, but it you you get the idea. What private compute enables is you to pass in arbit any arbitrary data that you want to do computations over. So you could pass in medical records and you know you could make a giant loop that kind of like goes through all the medical data and proves that like my

heartbeat from the last 30 days is you know X so I'm healthy or not. And so you can pass in all this very sensitive data, run a computation over it and that computation happens in a private context which is the Aztec transaction and um it doesn't have to be data that's on chain is a great thing. It's like data the user feeds in and is by definition sensitive data >> and so I think the the compute is interesting when you can start to do compute over sensitive data. We have kind of um uh someone on test net has built like a um very simple like neural network like and so you can do like very basic machine learning where you're you're proving that the inference has

occurred correctly on this neural network. So it's really >> you can do anything inside one of these transactions as long as you can prove it. um then you get a guarantee from Aztec that you know this happened correctly and uh yeah people are using that to kind of do all sorts of things. Um I think from a practical perspective it also means that >> the mental model of what you can achieve in a transaction is is is much higher than kind of a standard blockchain. Like we have gas limits on Aztec they mostly apply to public transactions. Y >> for private transactions and the private side of Aztec if you can prove it that's the limit. So you can do crazy things like you know verify passport signatures

you can you know verify email signatures you can do neural networks all inside an Aztec transaction and we're not limited by hey some sequencer has to execute this somewhere. Um the user is just like the limit. And so on on your phone, you may be limited by what you can prove there. But for, you [clears throat] know, more institutional use cases that are running on on servers, but still need privacy, you can feed huge amounts of data into these proofs and make massive proofs um uh and proofs of massive computations. So I think it's not just kind of like basic user retail payments. It's like you can build very complicated things inside um Aztec with with private compute.

>> Great. Well, you you heard it here first. You can do anything. You are unlimited. You could do crazy things. >> That's a good way of putting it. Yeah. [laughter] I It's the first time we've actually been there. So, I think the design space is it it's going to change very very quickly. Like we could sit here and kind of like hypothesize about the different ways this is going to be used. But like we've never had these ingredients in in in one place. And I >> it's not any one of them that makes uh kind of Aztec special. It's like the unique way a developer can combine them are going to make these applications which can only exist on Aztec and I think that's the the most exciting thing about the network going live.

>> Yep. >> So last question. You are now the CEO of Aztec Labs. Tell us a bit about what Aztec Labs is up to and just your journey going through this this full process and now stepping into this this role leading Aztec Labs. Oh, it's been it's been a journey for sure. But I I think like we looking back we my focus has always been around building products. Um and whether that's kind of uh the original like genesis of like building products for institutions like uh banking products like originating debt on chain through to kind of more retail products uh like private payments and and kind of private DeFi. Like that's kind of been like the angle I've

I've tried to bring to things. We weren't able to do that always because the tools we had weren't sufficient and so you know Ethereum didn't have strong privacy and so we've had to build it and it's taken many iterations but now it's here. So kind of the purpose of Aztec labs is to really go back to that kind of um those roots and start building products on top of the network. We will always remain kind of like uh core contributor to the network. We maintain the client and a lot of the developer tooling. Uh, but we want to start branching out into kind of actually using that amazing feature set to show the world what's possible. And so there's a lot of things coming this year. Um, I can't say them now, but uh, yeah, watch the space.

>> Great. Well, thank you so much, Joe. Coming up next, we're going to be talking with Kira and with Rob about how to start building on Aztec, how to get started, what you can do as a developer. So stay tuned for that and thanks again so much, Joe. >> Awesome. That's