Aztec Protocol

[decanus]

The main goal of this thread is to research Aztec and create a general understanding which should later be summarized in a research post.

Questions

• How exactly does the cryptography used by AZTEC work?

Literature

• Confidential transactions have arrived, a dive into the AZTEC Protocol - post
• AZTEC under the hood: range proofs - post
• How To Keep A Secret: Confidential Transaction With AZTEC Protocol - video
• The AZTEC Protocol - paper

[decanus]

Confidential transactions have arrived, a dive into the AZTEC Protocol

AZTEC hides both your balance and how many of a specific token you have sent to a recipient. It does this in a smart contract on-top of ethereum and does not require any changes to the existing protocol.

it’s not a ZK-SNARK, it’s an algebraic zero-knowledge proof that utilizes Boneh-Boyen signatures to create a commitment scheme with a highly efficient range proof embedded into each commitment.

Balances in AZTEC are represented through notes. These notes contain an AZTEC commitment (an encrypted representation of how much ‘value’ the note holds) and the address of a notes owner. It then also contains private information, what the note's value is and the viewing key, allowing the decryption of the note (but not the spending). Owners can have multiple notes.

Notes are spent by destroying old notes and creating new notes whose value must be equal to the sum of the value of the old notes. The AZTEC smart contract validates that the balancing relationship holds through a zero knowledge proof provided by the sender. Once done, the input notes are destroyed and then the output notes are created.

Tokens are added and removed from AZTEC using the commitment, if a transaction is issued with a negative value, then tokens are transferred from the user to the contract. If the value is positive, then tokens are removed from AZTEC and transferred to the user.

[decanus]

AZTEC under the hood: range proofs

Notes - Used to represent balances. An owner can have one or multiple notes, they can be merged or split.