The Race for Private Ethereum | Zac Williamson

Can Ethereum become private without giving anyone a master key? Aztec co-founder Zac Williamson joins David Hoffman to discuss the race to build private smart contracts, why transparent blockchains struggle with tokenized finance, and how ZK Passport could bring identity checks onchain without exposing personal data. --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🛡️VIZOR | THE WALLET ZCASH DEVS USE https://bankless.cc/vizor 🔓NEAR | TRADE CONFIDENTIALLY, GET 20% BACK https://bankless.cc/near2026 🌍 RIPIO | LOCAL CURRENCIES, ONCHAIN https://bankless.cc/ripio 🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://thedefireport.io/bankless --- TIMESTAMPS 0:00 The Race for Private Ethereum 07:21 Why Crypto Still Isn't Private 15:01 ZK Passport and Private Identity 21:29 AI-Powered Attacks and Trustless Infrastructure 29:44 Private DeFi and Institutional Adoption 35:42 Aztec Tokenomics, MEV, and Transaction Costs 40:52 Aztec Tierra and the 2027 Roadmap 43:43 Getting Started With Aztec --- RESOURCES Zac Williamson https://x.com/Zac_Aztec Aztec Network https://aztec.network ZK.money https://zk.money --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02David Hoffman?

  Bankless Station, I'm joined with Zach Williamson. He is the co-founder of Aztec. Zach, welcome back to Bankless.

• 0:07Speaker 01

  Thank you so much. It's a pleasure to be back.

• 0:09David Hoffman?

  Zach, we're inside of a privacy meta. Aztec has been building in privacy for an extremely long time. I want to ask, is there like an arms race for private smart contracts? So Zcash is firmly in the lead for private money, a private store of value. Is there a same, is there a similar fight happening in the world of private smart contracts?

• 0:33Speaker 01

  Yes, I would say there is, kind of. So there's lots of protocols that are advertising privacy these days, but that is a very nebulous term. That's poorly defined because, for a reason, because then all these outfits can kind of get away with using the word without really having quality privacy. But just as Zcash really is that private Bitcoin, private digital gold, there is a, I would say, a race to be the private Ethereum, where you have that smart contract capability of a blockchain network, where you can define your own assets, but you have strong privacy guarantees as well.

• 1:14David Hoffman?

  How do you position Aztec in this race then? Like, what about Aztec makes it competitive inside of this arms race?

• 1:22Speaker 01

  The thing about Aztec is that outside of Zcash, we're the only privacy preserving blockchain that doesn't have backdoors in them, that doesn't have centralized actors, doesn't have third-party auditors that can control you or censor you. We're the only ones where you can have genuine private smart contracts, where you can have private data, private information, identities, credentials, whatever it is, and it just works out of the box. It's composable, and there's no third-party snooping on you and looking at your transactions.

• 1:57David Hoffman?

  That feels like a big claim. So one of the reasons why I like Zcash is like it's in the Zcash ethos of no backdoor, no compliant privacy, no backdoor, so that it's private for everyone else, but it's public for whoever has this viewing key. You're saying there's no other private smart contract or based chain, no private blockchain, that exists in a fully private paradigm that does not have viewing keys, does not have some sort of trusted authorities. Aztec is the only one?

• 2:28Speaker 01

  Yes, I'm willing to make that claim. If anybody disagrees, you're welcome to come at me. I'm very happy to have a public debate over this.

• 2:35David Hoffman?

  Why is that the case? Why is there, if that's, because there's a bunch of private projects out there that I'm aware of. Why is the seeming like backdoor, third-party viewing key seemingly the normal equilibrium for everyone else?

• 2:50Speaker 01

  So there's two reasons. One of them is technologically, it's very hard to do. If your transactions are private, then that means that you're building these super complicated zero-nons proofs that needs to be abstracted away from everybody. It adds different loads on your network. And the easiest way to solve this is by just having third-party actors involved to kind of help get those transactions on-chain, so minimize the demands on your network. But if you're relying on those actors, then they now have a responsibility to censor, to monitor, to surveil, because it's not decentralized. And the other one is, honestly,

• 3:31Speaker 01

  it's kind of, it's path of least resistance. If I want to do a private stablecoin, and I want to integrate with, say, Circle, they're going to say, okay, great, put a viewing key into your code, so that it can see everything and plug it into TRM and do all the compliance monitoring. Otherwise, we're not interested. And so generally, if you want to get integrations with other components in blockchain, you need to work with the infra that already exists, and that infra is used to surveillance and full transparency. We're taking a very

• 4:12Speaker 01

  different path, but it's the harder road and the one that's less traveled.

• 4:17David Hoffman?

  That's what I've known Aztec as, the brand that you guys have, is like you guys have always been doing the hard thing. I think that's also exemplified, when Aztec launched, it launched as a stage two rollup on Ethereum, or at least very far down the path of being pretty hardened and decentralized from day one. You guys have always kind of done the hard thing.

• 4:38Speaker 01

  Yeah, yeah. There was some minor debate about the stage two thing with L2P. But

• 4:45Speaker 01

  yeah, we intended to be stage two, the current version that's live now, it is stage two. So yeah, straight off the top, stage two, because for us, it's important. If you're a privacy network, then if you're not fully decentralized, then, as I said before, the centralized actors have a responsibility to surveil and monitor your network. And we just didn't want to be in that position at all.

• 5:09David Hoffman?

  So when you come, when you talk to institutions, and you tell them, hey, like, we are fully private, and we don't have a viewing key for you, no one has a viewing key, does that scare them? Or does that actually interest them? Is that a carrot or a stick?

• 5:23Speaker 01

  It would scare them if that's what Aztec was, but it's different. The Aztec protocol at the network level doesn't have any viewing keys. But we're fully programmable and privacy preserving. So if you, as an application, if you're some bank or some TradFi institution, you don't care about decentralization, you're like, yeah, I love censorship. And you just, you want blockchain because it's a more efficient way of settling transactions, or because you want access to liquidity. Well, you're in charge. When you're building your app, your code, you can put in a viewing key if you want. Aztec is a neutral network. We don't get to have a say on what you do with it. It's kind of the point.

• 5:59David Hoffman?

  And so what you're saying is that if they want to have a viewing key, they can have one, they just need to build it into their application layer, because it's not being given to them in the protocol layer. It's not on the layer one, but they can have it in their app.

• 6:14Speaker 01

  Precisely. And I think where we differ from a lot of other chains is like, we are genuinely focusing on and building solutions that don't have these backdoors. Generally, most other apps, they're like, okay, privacy is to see, call it a. It's like, well, okay, fine, but A is backdoored, and B, you've got a private token, but you're not a privacy preserving network, because you don't have this concept of private composability. You don't have this rich way of writing smart contracts, financial instruments, whatever it is, where you can define your own private checks. Maybe it's, I want to do some, I want to do something with identity. Maybe I need to get a credit score from Web2. Maybe

• 6:56Speaker 01

  I need to check digital passport signatures. Maybe I am doing some weird like TradeMax algorithm that's privacy preserving. And I want other people to use my smart contract as an ingredient in other products, like in a DeFi ecosystem. That facility doesn't exist anywhere else in a way that's remotely decentralized. But it does on Aztec.

• 7:22David Hoffman?

  We kind of exist in this equilibrium in crypto, where like 99% plus of crypto transactions are done on public blockchain ledgers.

• 7:29Speaker 01

  Oh, yeah.

• 7:30David Hoffman?

  And I think if you asked me back in like, you know, 2018 through 2022, it's like, hey, David, what will the future of privacy on crypto be? And I'm like, oh, yeah, eventually it'll just flip. It'll go from 99% public to 99% private. The public side has been really sticky, and we haven't really made too much progress in flipping the equilibrium from public chains to private chains. Where do you think that, do you think that we can make that flip to at least 50/50, anywhere close to that? And what will it take to get there?

• 8:03Speaker 01

  I think we can make that flip. But I'm not surprised at where things currently are. I've been working on privacy Texas 2018. And even back then, I knew that individuals don't pay for privacy. If you have two comparable products, but one is spying on them and selling all that data and doing God knows what, and the other one is like super privacy preserving, the user will pick the one that's cheaper and has the better user experience. And this is very much a tragedy of the commons like situation, where people don't really fully understand just how their data is being harvested and weaponized and used against their interests.

• 8:41Speaker 01

  And so it's hard to fight against that. My thesis has always been that privacy is going to win because it enables products and applications that cannot exist without it. It's not a feature, it's a requirement for a lot of different types of applications, financial instruments and assets that you don't see on public blockchains today. And that's going to be what tips of balance, in my opinion.

• 9:11David Hoffman?

  What are those applications? What are those applications that require like cypherpunk levels of privacy?

• 9:16Speaker 01

  Well, I would say it's the majority of TradFi eventually. Because if you want to do anything that touches the real world, so let's say you want to trade a real world asset, like mortgages or bonds or something like that, then generally, you need an understanding of who the holder is. You need some level of compliance, because these assets exist in the real world, in a real legal system. And so right now, if you want to tokenize those assets, you make some rather fatal trade-offs, because you have to have a data custodian in the mix. You have to have somebody that which understands who your user is and what they're doing and what their accounts are, and like says, okay, fine, you're allowed

• 9:59Speaker 01

  to trade this asset. But then you can't easily then use those assets in a DeFi ecosystem, right? I can't build applications and products that use those assets. And so what we've seen over the last year, it's, one of the taglines has been the institutionalization of crypto. What's really happening is crypto's moving off-chain. It's moving into proprietary networks and other L2s, where you can perform these kinds of checks, because it's not going on a public network that everybody can see. But the downside is, A, it's not happening on real blockchains. But what you sacrifice is composability. You no longer have a world

• 10:41Speaker 01

  where I can, like, I've got some novel, new, interesting asset or DeFi primitive, and I can plug that into all these other assets and protocols that other people have built, almost like Lego bricks. This is how DeFi summer originally happened. Instead, you're getting off-chain mega apps, really, where maybe it might be something running on Robin Hood chain, or it might be, it might be hyper liquid, or it might be Polymarket. But generally, people will be using one crypto application, and they won't be using anything else. And that application is going to be very vertically integrated. And

• 11:19Speaker 01

  I think this is a fundamental bottleneck on how quickly crypto can grow, how many assets it can access the total liquidity you can get on chain. And I think privacy is the necessary ingredient to really solve this.

• 11:34David Hoffman?

  Can you illuminate that just a little bit more? Because I think people, you called like an application on Robinhood is like off-chain activity, but people on Robinhood chain was like, what do you mean? That's on-chain stuff. What's the actual off-chain component that you're talking about? Could you make this a little bit more tangible?

• 11:50Speaker 01

  Well, I mean, it depends what you mean by chain, right? But it's a pretty like, Robinhood is not a permissive, completely like open ecosystem. And generally, like if you're, if you have, if you, if there's like compliance credentials that you need, like KYC that you need to do, right? Like that's that, those records aren't on chain. So if I want to, if I want to integrate with those applications as assets, like I need a relationship with that data custodian, which is, you know, complicated. And if you have multiple different custodians for different app's platform services now, I as an app developer, if I want to use all these components in my app, I now need relationships with all these entities for on behalf of my users, it doesn't really scale.

• 12:36Speaker 01

  And, you know, and this value has not been captured by, you know, distributed blockchains, you know, ones like Ethereum, where, where they're not like operated by relatively centralized actors.

• 12:54David Hoffman?

  So it's the data that you're talking about. I think what you're referring to is assets and financial activity that is highly tradfi as opposed, because like when I, when I send you Zach Ether on the Ethereum layer one, there's no data custodian there. That's not what you're talking about. You're talking about like tokenized stocks that need to do a KYC check. Or when you're talking about mortgages, there's some, there's some provider there. So, so, but how, how does Aztec fix, fix this? Cause you guys aren't a data custodian either. And so like, what, what about Aztec actually fixes this problem of allowing composability with compliance?

• 13:32Speaker 01

  It's simple. You put the data on chain and you don't worry about it because it's encrypted and it's private. So the-

• 13:38David Hoffman?

  Oh, and you can't put the data on chain in any other context because it's public?

• 13:41Speaker 01

  Precisely.

• 13:43David Hoffman?

  Okay. But how do you actually put data on chain? So like KYC check? How does that standard actually emerge on a private chain?

• 13:52Speaker 01

  Well, this is devil's in the detail, isn't it? So we have to, we have to put, almost put it together from scratch. You know, we're doing this, world is doing this as well. But generally, there's a lot of traditional flows you can just replicate on chain. You know, like if you're doing a passport check, you can do that on chain with a, you know, digital signatures in your passports. We already have that with something like ZK Passport, you know, or a lot of, a lot of identities around things like uploading documents, doing document scanning. Yeah, you can do that. You can do that in a smart contract if it's private. So it's certainly not going to be instant, but I think that this is the inevitable future

• 14:32Speaker 01

  if we want to preserve the, a lot of the, the value as that made blockchain success from the first place. If you want to, if we want to preserve this concept of composability, which allows for like a wide ecosystem of applications to be built upon shared primitives with shared liquidity, and you want access to that liquidity, this is going to be very important. It's going to be important to stop this, this fragmentation that we're currently seeing in these, in this siloing of liquidity.

• 15:01David Hoffman?

  Maybe now's a good moment to talk about the ZK Passport product that comes out of Aztec so that listeners kind of understand what that is and how that works.

• 15:09Speaker 01

  Totally. So it's, it's a little app on your phone. So, you know, generally if you're, you have to sign up for something like, you know, relatively important, you might be asked to download some kind of KYC app. What it does is, you know, you tap your passport to your phone and then it takes a picture of your face, you know, you go left, right, blah, blah, blah. And it matches your face to the passport picture and then it validates you. Okay, fine. This is a legitimate passport. It's got a, all modern passports have little chips in them where, where you can get attestations.

• 15:38Speaker 01

  So you look, you read the chip, you check that the face match works, et cetera. And great, congratulations, you've been identified as a human being. Only problem is generally that works today by, you know, all of that data, including your passport information is sent to some random server somewhere, but you don't, you have no idea what's going on. It could be left unencrypted, it could be insecure. Usually it is, usually this stuff gets attacked and hacked. And obviously you can't put that on a transparent blockchain. What ZK Passport does is it runs all these checks using zero knowledge privacy tech. So what's leaving your phone isn't your passport data, it's a proof, it's a mathematical proof saying, yeah, like the, the phone's camera like took a picture and I matched

• 16:21Speaker 01

  it to this, to this passport's data. And this passport data has been signed by a specific government. And so I can now prove to you that there is a human being who is a citizen of like a country, or you could, like the proof could, the claim could just be as simple as this person is not on a sanctions list and you don't know anything else. Nothing else leaves your device. And then that, that, that, that can then become a credential inside an Aztec smart contract that can be repeatedly reused and queried by a whole ecosystem of applications.

• 16:50David Hoffman?

  Right. And so if you're an institution who is interested in, in privacy, because that's how their current systems work, this is how you can offer them compliance. Whereas like, well, how do I know that North Korea isn't buying my tokenized security or whatever? It's a, it's a contract call to the ZK Passport smart contract that, that has a hook to the, the web app or the mobile app?

• 17:16Speaker 01

  Yeah, precisely. Or like the mobile app like uploads a credential onto the asset blockchain and then you can just query that inside your smart contract. You know, that's like, that's kind of like that, that's the, the highest quality way of doing this, you know? There's much simpler solutions as well. It could just be simply like, you know, you, you run some off-chain process, right? And some guy that you trust gives like, has a little stamp and go, yes, okay, fine. This person is legit. And then, but then with Aztec, you can put that credential on chain and use it without it, it being linked to any of your, your crypto accounts. And for restrict, like for restricted tradfi type activities, this is quite important

• 17:57Speaker 01

  because we're talking about like asset classes or, or users where, you know, portfolios can be extremely large, extremely sensitive. You don't want people to know about what's being traded or how it's being traded. You don't want yourself open to the kind of transparent analytics that exist on chain. And you can, you can get that privacy on Aztec.

• 18:18David Hoffman?

  So the answer as to like, why can't we do that same system on Ethereum where you do a passport check or a general credential check? And you can do it in the public context? The answer is, well, there, if you do that with enough activity, you can kind of Sudoku puzzle your answer into who that credential is. So the credential doesn't tell you, hi, I'm JP Morgan, but with enough activity on chain, somebody could like, kind of just like trace, figure out with enough data who this credential likely is associated with. And so that's why you can't do it in the public context. Is that right?

• 18:51Speaker 01

  Precisely. And this goes, this also goes back to when I was talking about how privacy wins when it's a requirement and not a feature. For example, right now, David, would you be willing to take your passport and put it up to your camera and show the whole world your passport details?

• 19:07David Hoffman?

  I'm not willing to do that.

• 19:08Speaker 01

  Precisely. That's why it doesn't go on chain today.

• 19:11David Hoffman?

  Even though I do have my password right here.

• 19:15David Hoffman?

  Closed, closed for the listener, did not see it. Yeah.

• 19:20Speaker 01

  So privacy is important in some respects. Things like that are important. You know, people don't want their identity to be stolen. And, and so you, that flow I talked about, you can't do it on a transparent blockchain. You can do it on Aztec.

• 19:32David Hoffman?

  Your checking account isn't public, so why should your crypto be? As AI gets more powerful, your privacy gets weaker. Connecting your identity to your financial history on chain or off is the easiest it's ever been and will only get easier from here. Every data breach adds another piece to the puzzle and every public transaction leaves a trail back to you. And when your wealth is visible, you become a target. Money that can be seen can be stolen. Being in control of your money should include controlling who sees what you do with it. Zcash fixes this. Zcash is private digital money with privacy enforced by zero knowledge cryptography. Zcash shielded transactions let you send and spend without publicly revealing who you're paying or how much. When it comes to privacy, there is no second best. Get started with Zcash using Vizer, the wallet Zcash devs and enthusiasts use to encrypt their money.

• 20:17David Hoffman?

  Zcash wallets are non-trivial and Vizer goes the extra mile to make sure your money and privacy are fully protected. Open source, self-custodial, fully private. Use the link in the show notes to download Vizer on mobile or desktop. Protect your future, use Zcash. Dollar stablecoins taught Latin America how to store value on chain. Ripio is taking that same idea and bringing it to the currencies people actually use every day. With wrapped fiat, Ripio is putting more than a decade of experience powering crypto infrastructure for leading companies across Latin America behind a suite of six local currency stablecoins covering Argentina, Brazil, Mexico, Colombia, Chile, and Peru. Each is pegged one-to-one to its local currency and fully backed by reserves held in regulated financial institutions with independent attestations published for each token. But wrapped fiat is not just designed to sit there, it's built to move.

• 21:02David Hoffman?

  The suite is live across 10 EVM chains with liquidity and integrations already spanning platforms like Morpho, Uniswap, and Chainlink. Users can move between local payment rails like Pix and Spe and matching wrapped fiat one-to-one in real time with zero fees on both on-ramps and off-ramps and no FX conversion. Local rails in, on-chain in the middle. And for builders, Ripio offers APIs, webhooks, widgets, and a sandbox just from day one. Start building with wrapped fiat today at platform.ripo.com. I see, I see. Is there, I suppose there's also a conversation here about, there's been just a growing crescendo of AI-driven exploits with a PHP exploit.

• 21:43David Hoffman?

  This topic feels adjacent to what we're talking about now, because like, that's how you would probably back into who this credential is in the, the public context.

• 21:52Speaker 01

  Yeah.

• 21:52David Hoffman?

  How does this, the rise of like data breaches or just the rise of AI capacities to exploit vulnerabilities? How does this conversation relate?

• 22:01Speaker 01

  This is going to change the world and the world is not ready for what's going to be happening with all these AI attacks. What used to, maybe even six months ago, what used to require like very high skilled, highly paid labor to like, to find all these bugs and exploits? Now you can spin up millions of little minions that are just as capable or almost as capable that can just scour the web for you for every single little vulnerability and, and exploit an attack and then find a way of using them and even autonomously executing on these attacks, possibly even billions of these little minions soon. And it's going to change the web because right now, most internet applications are slop.

• 22:45Speaker 01

  Either it's AI slop or it's human slop, but very little attention is being paid to security. Because there's this principle of obscurity. Because who is going to be looking at some random ass website where there's like a server in Utah that's running some old PHP code like that's managing, I don't know, like a customer order book of like $10,000. You know, it's not worth anyone's time to look into that. It's worth an AI agent's time to look into that now. And yeah, we are, we're not ready for what's going to happen. The whole trusted operator model of the internet is going to get destroyed. And the idea that you can just trust websites with your sensitive information, with your card details,

• 23:26Speaker 01

  with your passport, you know, with anything is going to, it's going to rapidly erode. Blockchains are part of the solution here because blockchains, they've already existed and live in this highly adversarial environment where, you know, if somebody can attack you, it's going to happen. And, you know, as we've seen with the Binance hack, blockchain tech is certainly not, not, not immune to these problems. But they are going to become hardened and secure much, much faster than the rest of the internet. You know, we're already seeing that Zcash, their, their circuits are formally verified.

• 24:07Speaker 01

  Aztec, we formally verified large parts of our protocol and we're not going to stop until we formally verify everything. So you've got basic mathematical theorems about what this protocol should be doing that you've proven mapped to the code. And so that mathematically can't be any, any, any bugs there.

• 24:24Speaker 01

  This is the environment that blockchains live in. And so we're going to see a move where people are going to stop trusting third party operators and they're going to want to use decentralized hardened infrastructure, these ledgers where, you know, the transactions are completely trustless. You massively minimize the number of third parties and middlemen you need to trust because that's going to be really, really dangerous.

• 24:48David Hoffman?

  I've been looking for an articulation about why this rise of AI driven vulnerabilities, discovery of vulnerabilities, but also exploitation of vulnerabilities. It feels like it is a boon to crypto, but I've never really heard it articulated so clearly as what you've said just now is, is, well, the internet, the internet has always been in an adversarial environment. You know, Facebook, for example, Facebook servers gets attacked, you know, everyone's trying to attack the Facebook servers and it's been that, that way for a decade. But that's really like the largest honeypot that's out there, one of them, until crypto came along. And then, you know, Bitcoin and the whole innovation of like decentralized systems exists

• 25:32David Hoffman?

  in, with the assumption that people are trying to attack it all the time, every, every moment of the day, every second of the day. And that's been the way that Bitcoin and blockchain systems have been built to under. And it's kind of been unique to crypto that we exist in this like inside out world where we have like the, the normal world, the web two world, where it's just like security. Like I remember Andreas Antonopoulos called this like the bubble boy world, where the silos, all the valuable data was contained in this bubble, but they were really fragile. And so if the, if the virus ever got in, they were, they were, they were, it was dead, you were exposed. Whereas, whereas like Bitcoin is like the sewer rat version where like, yeah,

• 26:15David Hoffman?

  Bitcoin has 10,000 diseases on it in every one given moment, but it's immune because that's the environment that is, that's born in. And what you're saying is like, because the cost to attack these systems has dropped so dramatically low because of the reduction of token costs. Well, actually the web two world now exists, like the, the diseased rat is inside the bubble and all of these systems are now inside of our world.

• 26:40Speaker 01

  Yeah.

• 26:40David Hoffman?

  And this is a boon to decentralized, open source code, because this is the, this exists because this is the environment that we live in.

• 26:48Speaker 01

  Exactly.

• 26:48David Hoffman?

  The question I have for you is, why is that any better for Aztec than it is, you know, Bitcoin, Ethereum, Solana, any other public ledger? Why does Aztec benefit uniquely more than, than the, the public chains?

• 27:01Speaker 01

  Because it's private and this is the really, this is the core part. If I want to migrate more of my like web two type systems, right? Into something which is a little bit more hardened and trusted. Maybe, you know, I want to use payment rails that aren't, that aren't, aren't using Visa. I want to use blockchain and I want to do a lot more checks and, and, and, and queries directly on that blockchain layer, because I don't want to trust that. But I don't want to trust some rickety server somewhere. I want to trust the blockchain as a, to quote a very overused phrase, the world computer. Well, how do you like enforce transparency? Because, because the internet doesn't run on enforced transparency.

• 27:45Speaker 01

  You know, like this, we're now talking about a very, very different environment to the, to, to the regular blockchain environment. We're talking about one where you have proprietary information, you have custom data. You have sensitive user information. All of this information is required to construct and execute these transactions, to create these records that you just can't, you can't put that stuff on Ethereum, you can't put it on Solana because it's, it's, you know, you'll get sued by 50 million people because you've just put all that sensitive data on a transparent network, just doesn't work, doesn't compute. But it does compute on Aztec and that's the difference.

• 28:18David Hoffman?

  One of the conversations I've been having with John from Venice is that like, one of the best strategies to reduce your company's vulnerability of getting your data exploited is to just not put the data on the internet in the first place. And it seems like that's kind of similar. It was just like, well, if, if, just don't reveal it. Just, and the way that Venice's solution is like, we'll never, ever put it on a trusted, trusted third party operator service, Venice being the third party operator. And what you're saying is like, well, any system with a third party operator is going to be attacked, exploited. That's what we just talked about. But in addition to that, if you just don't reveal the data at all, you don't have an attackable surface area.

• 28:59Speaker 01

  Yeah, I would even go further and say it's, it's like from the application's perspective, it's not their data, right? If, if I'm as a user, if, if I, if I'm putting encrypted credentials, like sensitive information that is encrypted inside a smart contract and I hold the decryption keys, nobody else holds the decryption keys, right? And they don't leave my device, they're not leaving my laptop. Then it's, you know, and I'm using some site like Venice, it's not Venice's data, it's my data. And, and so it's exactly the same. And this is all about effectively risk arbitrage, where you can use a network like Aztec to de-risk your application and remove like this, the, the, the stony problem of how, of potentially holding all of this data which can get hacked and attacked and leaked.

• 29:44David Hoffman?

  So Zach, we've talked, I think a bit about like kind of the macro tailwinds behind privacy and private chains, like the, the big underlying theses, you know, the fundamentals behind why private chains are valuable. Let's talk about the short term. How are, like, what, what is the incentive for like the average Bankless listener, who's a typical, you know, retail ledger button presser? What's, what's in it for them? Or for the people who listen to Bankless inside of Wall Street and like are a part of like larger Wall Street institutions? Why should they come on to Aztec in, in 2026?

• 30:19Speaker 01

  Well, there's only a couple of months left to 2026, but why does she come on in 2026?

• 30:23David Hoffman?

  And 2027, yeah.

• 30:24Speaker 01

  Why should they come on in the next year? So part of it is, you know, there's, there's going to be very little reason why not to, you know, already with apps like ZK Money, you can just get privacy for free. You can earn your yield in, in L1 DeFi the same way you normally do. You just, it's, it's private. And so it makes you more secure. Right now, we're in a world where everybody's throwing all their data on chain. You know, everybody can see the transactions, trade histories, portfolios, blah, blah, blah. Another danger of AI is it's making it much cheaper to make sense of this data and to categorize or systematize it and actually use it in adversarial ways. And so the less data you're putting out, the better, the safer you're going to be.

• 31:09Speaker 01

  But even, even with, you know, Aztec only launched in April, you know, we're doing a major upgrade, which I think will have landed by the time this goes out. It's called Aztec Tiara, but it's still pretty new technology. But even with its novel state, there's still new capabilities that you're going to be able to do on Aztec. You can't get anywhere else beyond things like, simple things like private yields, things like private AI inference, where, you know, we're going to have ways of paying for, for, for, for inference without that leaking, without that like going all over the internet. Which again, I think in this very adversarial environment that we're working, we're working in, that's going to be pretty important.

• 31:51Speaker 01

  And, you know, we're, we're also, we're ramping up what you can do on Aztec. You know, we're, we're going to have private Pups, private futures. And we're just growing that ecosystem of giving people, step one is just giving people what they already have, but just making sure that they're more protected than they currently are because people can't see what they're doing, you know, in, in the, if you're, if you're a DJ and trader and you're really good at it and people are starting to copy you, well, this protects you from that. In the near term, you know, I'm really bullish on being able to connect as, what we're building with Aztec with private identities, things like reputation networks that will allow

• 32:38Speaker 01

  people to be building and deploying products and services that go far beyond what you normally get on transparent networks. Because they're going to be able to know things about you without, without that data really leaving your control. And it's, it's going to open up a lot, a lot of new things, things like, you know,

• 32:58Speaker 01

  basic things like under collateralized lending and novel forms of DeFi primitives. You know, something that we're going to see in Aztec very soon, I'm pretty hopeful about is a fully endogenous private stablecoin with private issuance and settlement, things like that. So we're just going to be opening up Aztec to just a world of new capabilities that hasn't been seen before.

• 33:23David Hoffman?

  When you think about onboarding new users, new transactions, new assets, do you think that this, it's the idea here is to bring on a lot of existing crypto users? Or are you also trying to go to the world of Wall Street and be like, hey, I know you've never touched a blockchain before, but we actually have the solutions to the reasons why you haven't? Like, is it net new users or existing users?

• 33:47Speaker 01

  We're doing a phase draw that right now, it's going to be, it's going to be, we're focusing on web three users because they already understand the blockchain paradigm and that it's, it's, it's much easier to communicate with them.

• 34:00Speaker 01

  We want to focus a lot more on hardening our network and making it a lot more turnkey before we start going to Wall Street. You know, like I said, we formally verified major parts of our protocol. I want to formally verify everything. I don't want, you know, because when I'm talking to somebody who has very little literacy in blockchain, they have zero risk appetite to like, even the idea of having a private key is like scary. I want a solution to them, which is this turnkey and white label where, you know, they can get their team, they have some weird derivative or trading policy, whatever they want to do, right? Like they can just get their team. It does not blockchain native. They're not, they're not like, they don't care. They don't know anything about privacy. It just works out the box and it's secure. I've been in this industry for many, many

• 34:43Speaker 01

  years and doing privacy, doing the same thing, because I'm not, I try not to be a bullshit merchant and I don't want to make claims that that can't be backed up. Like a technology like Aztec, I think is unbelievably compelling and powerful for institutions and enterprise. But it needs to conform to their expectations, to like, to traditional expectations, not to web three expectations, which means we have a little bit more work to do there, a few more months of work to do before it's fully ready for that. But, you know, it's, it's only a matter of time. Everything is falling into shape with our, with our formal verification work.

• 35:20David Hoffman?

  I do think that as exploits, kind of like, it kind of feels like just that the world is exploding as we are walking through it, or at least that's what we're going into according to the AI researchers, which everyone seems to agree with.

• 35:31Speaker 01

  Yeah.

• 35:32David Hoffman?

  The formal verification is going to move from just like something aspirational to like something urgent.

• 35:37Speaker 01

  Oh, it's already, people don't, people don't realize it yet, but it is so incredibly urgent.

• 35:42David Hoffman?

  I want to ask about the network, the Aztec network, like the economics of the, of the network. One of the interesting things about Aztec is that you guys launched stage two, like fully decentralized. What that comes with is that the Aztec token is a proof of stake token in the same way that you would expect a layer one proof of stake token. It's just like a layer two on Ethereum. But because privacy is more, as I understand it, computationally intensive, how does the, just the economics of transactions on Aztec and the Aztec staking token for validating the network, is there anything different there because of the privacy? Or how, how, how do people think about this in the Aztec context versus what is kind of the status quo?

• 36:25Speaker 01

  Yeah. So honestly, from the, from the, from the tokenomics side and from the staking side, it's, it's, it's pretty straightforward. Not much changes. You know, we have a token which powers the network. The Aztec token underpins everything on the network. All activity requires Aztec for gas and we get the security through staking Aztec. If you want to be a validator and all the governance decisions go through Aztec. When it comes to the, the, the economics of like, operating the Aztec network, right now, the privacy requirements, they add a small amount of overhead because you need these prover entities to prove blocks which you don't normally have on a network. But their computation requirements

• 37:07Speaker 01

  are pretty light. We've just recently made a governance change to, to, to fix what was effectively just more of an, we hadn't quite got the economics right. So we were, we were overpaying our provers. So that's, that's now been, that's now been fixed. Over the next year, we're going to be making some relatively minor changes to make proving much, much cheaper. So, yeah, I think the, the, the kind of the additional overheads of serving privacy from, from a, from a network operator perspective are basically going to trend down to zero very quickly.

• 37:45David Hoffman?

  What about just kind of the, the network when it comes to like UX, for example? Is it, is it fast? How, what was it like to trade tokens on Aztec? Like, is there MEV on Aztec? What about all of these kinds of things?

• 38:00Speaker 01

  Yes, there is, there can be MEV on Aztec. Because typically, if you're doing trading on Aztec, you, you want to keep identities private, but the actual protocol needs to be somewhat public for price discovery and that does allow for MEV. There are solutions around that using multiple party computation and that we very much are exploring. But that's kind of a, a next level thing. The, when it comes to things like latency, transaction speed, that's where the privacy right now adds a little bit of an overhead. You know, on my laptop, for example, I need to generate this, this transaction proof because, because the sensitive data is not leaving my computer. It's only, only the proof is. And that takes

• 38:44Speaker 01

  roughly five seconds in a web browser on my machine. Takes one second if I'm running a native app. So that is, that is one of the costs. We are, we're working to, to get that down. We've got a big, we've got an engineering roadmap to, to, to squeeze that down. There's a lot of, a lot of low hanging fruit, particularly opened up through AI. So, yeah, there's going to be progress there.

• 39:08David Hoffman?

  I've been trading crypto for almost a decade and I've used so many different wallets, exchanges, aggregators or front ends. And I'm basically always looking for the same thing, just one interface with a deep liquidity across a bunch of chains and assets where I can access markets like perps, earn yield, trade confidentially and still control all of my funds. And I've never really found it. And I'm just always switching wallets, juggling gas fees or getting eaten by slippage. But near.com feels fundamentally different to me. I can do anything I want from any chain and keep all of my activity confidential. Crypto, tokenized assets, perps, payments, I can even earn yield confidentially. One account over 30 chains confidential by default. It's the way that crypto ought to work and it's powered by near, which has moved over $30 billion cross-chain, uses post-quantum

• 39:52David Hoffman?

  signatures and has run over five years on mainnet with zero downtime. Near.com is the best way to be on-chain and be in control. Get 20% of your trading fees back on near.com using the bankless link in the show notes, not investment advice.

• 40:05Ryan Sean Adams?

  Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 10-10 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year, we started recording weekly podcast episodes. Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes. They're short. They're punchy. I think this crypto cycle is harder to navigate than most. So let's do it together. Go subscribe to this podcast, search the DeFi Report, wherever you get your podcasts,

• 40:47Ryan Sean Adams?

  YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now.

• 40:52David Hoffman?

  What are you guys' goals? What are you guys working on in, in the short term? So you guys are launching Aztec V6, Aztec Tiara. Talk about like the upgrades that, that Tiara is bringing. And then once those are up and running in the network, what are you guys working on next?

• 41:07Speaker 01

  Yeah. So as a Tiara, it's, it gives, gives a lot of security. Like, it gives, it gives the upgrades, right? Like lots more formal verification. We've run AI audits on our code 24/7 for months now, like throwing, throwing the best models at it. We have halved our pruning time. So basically an overall 100% increase in the performance of our tech. We have much faster final, like, like transaction confirmations. Like, I guess you could say soft finality where a sequencer is checkpointed onto Ethereum, saying this transaction is going in the block. That's now between six and 12 seconds, I believe. So pretty, pretty

• 41:52Speaker 01

  Ethereum-like, which for, for privacy transactions, that's, that's quite, quite impressive. That was, that was very hard to do, but we've done it. So those are the main things from the net, from the, from the protocol side. You know, faster transactions, prudent and like less, less load on your computer to make them.

• 42:12David Hoffman?

  Yeah. And then, and then what's the roadmap? So like, what are the things that you guys have left to optimize? What are you guys thinking? The, the work you guys are focused on for 2027?

• 42:20Speaker 01

  Yes. The work we're focusing on is, at the protocol level, a lot of it is, is security, security, security, security. We live in the most hostile adversarial environment you could possibly imagine, far worse than anything we've ever seen before because of AI. So get the thing formally verified. Make sure that, you know, it's, it's completely ironclad and reliable. While we're doing that, you know, we want to do things like, we want to enable faster withdrawals. We want to, we want to improve the, again, prove a speed. There's still a lot of, a lot of soft engineering we can do there. We want to make it cheaper to run a prover and basically get to real-time proving so that we can, we

• 43:02Speaker 01

  can produce our blocks much faster. We want to improve hard finality from, right now it's 40 minutes. We want to get that to five minutes where basically you, you have a, like the actual, like a full Aztec block proven settled on chain on L1. That's basically the time limit for how long a withdrawal. You have to wait. Right now it's 40 minutes. We're going to get it down to five minutes, but then include a, effectively a tipping system. So as a user, if I want a fast immediate withdrawal, I can pay a little bit extra, like 10 or 20 cents to get that proof made instantly and put on chain. So, yeah, from the protocol perspective, that's what we're focusing on right now.

• 43:43David Hoffman?

  Would you have any main like C to A, CTAs or just a request for the listener? If they want to come on to Aztec, what should they do first?

• 43:52Speaker 01

  Yeah.

• 43:53David Hoffman?

  What activities do you have for them?

• 43:55Speaker 01

  Go to zk.money and give that a whirl. You know, by the time this podcast goes out, you know, we should be also having quite a few other applications you can try. There's something called P inference for private inference. Give that a whirl. Pay for your AI privately and have it secure, run a secure enclave so that you don't need to worry about, about all your, all your secret information being leaked. You know, we, we have a native web wallet called Nolo. Give that a go. If you just want a metamask experience, just get to transfer and trade around tokens privately. We've got NIX, which is going to be private, private DeFi, private yields. So NIX, X, Y, Z is another one. Man, I'm probably playing favorites here because there's probably a few I've not mentioned yet, which

• 44:40Speaker 01

  I should be. But, yeah, just go to aztec.network. That's where, where we're going to be broadcasting what you can do with, with, with Aztec. Why privacy is valuable is going to be describing the tokenomics in more detail as well, if you're curious about that.

• 44:56David Hoffman?

  Zach, I, I do hope that this is the year, maybe this year or 2027, per your point, that we get off of 99% public transactions and hopefully we can get to 90-10 at least by the end of 2027 and hopefully it goes far beyond that. So I wish you guys the best. You guys are really moving the ball forward. I do really like the point that if this is true, that Aztec is the only smart contract chain that has no viewing keys. That kind of puts you in a league above everyone else.

• 45:25Speaker 01

  Check it out. Ask your AI. Ask your AI. It'll agree with me.

• 45:29David Hoffman?

  Yeah, I believe it. I believe it. Best of luck, Zach. Hope you guys get all the success you guys deserve. You guys have been working on Aztec as long as I've been in crypto. And so I think now's the time.

• 45:41Speaker 01

  Now is the time. Thanks a lot, David. Thanks for having me on. It's been a pleasure.

• 45:44David Hoffman?

  Bankless Nation, you guys know the deal. Crypto is risky, but if you make it private, it's a little bit less. You can lose what you put in. It's the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.