ConsenSys Labs conducted a $ 2.1 million seed round for AZTEC, a startup that is working to make ethereum transactions private, so that financial institutions can comfortably use the largest blockchain.
Announced Thursday, other investors in the round include Entrepreneur First, Samos Investments, Jeffrey Tarrant (Mov37) and Charlie Songhurst.
AZTEC, created by mathematician Tom Pocock and nuclear physicist Zachary Williamson, uses zero knowledge tests (also known as zk-SNARKs), the cryptographic technique popularized by the zcash currency, to improve privacy on a shared ledger. But the startup states that its protocol is "twice as efficient as other known technologies on the network".
The protocol is intended to be used by banks, Pocock told CoinDesk, and will be able to use the technology through a partnership with CreditMint, an ethereum platform for the issuance of corporate debt and the exchange created by the same AZTEC.
"We spoke with over 20 leading financial institutions specializing in corporate private debt, including the top 10 global banks," said Pocock, adding that the first wave of users would be announced in January 2019. In addition to improving privacy, technology AZTEC will also contribute to increasing the speed of liquidation in the loan markets, the startup statements.
Currently, large banks tend to gravitate towards authorized private blockchains like the one launched Tuesday by CLS, with Goldman Sachs and Morgan Stanley as the first users. However, Pocock believes that consolidated financial institutions would benefit from the use of public blockchains.
He told CoinDesk:
"The immutability, single-source data and the elimination of settlement risk are stronger on public chains – but clearly, financial institutions require full privacy of transactions".
Until now, he said, it was not possible on the public ethereum chain ", and therefore capital market activity was limited to private blockchains".
The AZTEC team discussed with ConsenSys for several months after graduating in Entrepreneur First, the technology accelerator in London, in March 2018, said Pocock.
"We were impressed by the resilience of zero-proof knowledge technology created by AZTEC, and based on what we are seeing, AZTEC is the production closet and the most cost-effective in terms of gas cost," he told TilDesk Min Teo, executive director of ConsenSys Labs Investments Europe, referring to the small amount of ether that must be paid to fuel a blockchain transaction.
Joe Lubin, the founder of ConsenSys, said in a press release that his Etna design studio "is proud to support this breakthrough of AZTEC and CreditMint, bringing privacy, privacy and scalability based on zk-SNARKs into a 39, wide variety of asset transactions on the public Ethereum ".
Speed and resizing
Taking a step back, it remains to be seen whether a zero evidence-based system can be quick and scalable enough for businesses, especially considering that even without this increase in computationally burdensome privacy, ethereum has well-known challenges.
But Pocock says the AZTEC protocol is working with a decent clip.
"Without downsizing we can put a transaction per second through the public network – this will be an order of magnitude faster with imminent scaling to the network," he told CoinDesk, referring to the continuing efforts of ethereum developers to increase throughput on the blockchain. "Even today, it's more than enough for CreditMint to move private corporate debt markets to the public blockchain – it takes milliseconds to build and verify AZTEC evidence with zero knowledge."
In September, the founder of ethereum Vitalik Buterin suggested that the use of zk-sharks ("Zero-Knowledge Succinct Non-Interactive Argument of Knowledge", a variant of tests with zero knowledge that do not require interaction between prover and verifier ) can potentially help the ethereum scale up to 500 transactions per second.
AZTEC is not the first attempt to add privacy to the ethereum protocol using zero-knowledge tests: more than a year ago, JPMorgan revealed the addition of the zk-snarks technology developed by zcash to Quorum, the private blockchain of the megabana ethnological series.
Jack Gavigan, responsible for product and regulatory relations with the Zcash Company, said in a video posted on the startup blog last month that the technology is still immature, but hopes to see him deployed in the real environment "within 12-18 months ", with the problems of scalability effectively solved.
Another attempt was the October announcement of EY's Ops Chain Public Edition prototype, which, according to the consulting giant, uses zero-knowledge evidence to allow companies to create and sell "token products and services" on the public blockchain ethere without revealing their transaction records.
Another project, Adhara, also supported by ConsenSys, explored the zero-proof technology of knowledge for an industrial-level payment mechanism of the South African Reserve Bank.
According to Pocock, AZTEC is different from previous projects because it is working on ethereum mainnet (ie not a test environment or a private chain) and is "significantly more efficient in terms of gas costs".
AZTEC plans to implement additional features to increase the efficiency of the protocol over the next few months and open-source technology, collecting additional funds in the meantime, says the company.
Image of Joe Lubin via CoinDesk archive