How to use Aztec for DeFi privacy

Aztec Network is a privacy-focused zkRollup that lets you access L1 DeFi applications in a private L2. This article will show you how to use the Aztec Network so that you can achieve DeFi privacy.

Aztec Network Beginner’s Guide

“Aztec has an off-chain UTXO architecture that operates like cash. Functionally securing a token means depositing it into an Aztec Ethereum smart contract, which then communicates with the Aztec off-chain UTXO’s state system to generate a cash-like encrypted note.

The state tree updates encrypted banknotes when assets are deposited into Aztec, withdrawn from Aztec, sent within Aztec, or exchanged for other assets through Aztec. Because no one but the owner can see inside the ticket, the user identity and account balance are fully preserved. ” – from Aztec FAQ

What is Aztec Network?

Aztec Network is an Ethereum scaling solution with privacy in mind.

At the heart of Aztec is its “PLONK” zero-knowledge proof system, through which zkRollup users can access DeFi anonymously and with 100x lower transaction costs than Ethereum L1 transactions.

What is zk.money?

zk.money is a privacy token trading protocol built on Aztec L2. In other words, it’s an overlay system that easily interacts with the underlying zkRollup.

To date, zk.money has facilitated over 250,000 private cryptocurrency transactions. Aztec currently has a total value locked (TVL) of around $2.8 million, mostly ETH and DAI deposits, which are made possible by zk.money.

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What is Aztec Connect?

Aztec Connect, an extension of zk.money, is a privacy bridge for DeFi on Ethereum.

What makes this privacy bridge work is Aztec Connect’s special bridge contract, which enables users to interact with L1 DeFi projects from within a private L2.

This design is powerful because DeFi projects don’t need to port code for separate deployment as they do at other L2s. In this way, Aztec Connect avoids liquidity fragmentation or trust fragmentation issues as it gives you secure access to L1 DeFi’s superior liquidity and proven smart contracts.

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Basic Mechanism of Aztec

When you make a deposit through zk.money to secure cryptocurrency, what you receive on Aztec is a cryptographic note such as zkETH or zkDAI.

If you send these notes to other people on zk.money they will receive zkETH or zkDAI on Aztec, if you send encrypted notes to non-zk.money users they will only receive ETH on Ethereum L1 or Dai. In the latter case, your sending is also private, as the recipient can only see that the funds came from the Aztec smart contract, not your specific address.

Currently, users can only protect up to 5 ETH or 10k DAI per transaction. As long as you’re ready to withdraw, Aztec will let you withdraw within 4 hours, but if you raise transaction fees high enough, you can shorten the withdrawal process to around 10 minutes.

It is recommended not to withdraw money to the address where you have deposited money. Also note that it is best to stick to unobtrusive integer withdrawal amounts like 0.1 ETH etc. For example, if you made a series of deposits and withdrawals of 0.069420 ETH in a row from the same address, it would be fairly easy to de-anonymize your address.

How to create a zk.money account?

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1) Visit https://zk.money/ and click the Shield Now button.

2) Go to the next page, click on MetaMask or WalletConnect, use your wallet to sign subsequent transactions to generate a zk.money account.

3) Select your account name and press Register, you will then sign two more transactions to generate your account privacy and payment keys.

NdEjAFw9tiiVYylcVBWRy3QQlreltvraRMs7etmu.png 4) Next, you will enter the amount of ETH you want to fund your Aztec account, confirm that you understand the risks, and press “Shield”.

5) You will be prompted to submit your deposit transaction and then sign the proof of protection transaction. After this, you can see when your deposit is settled at zk.money/balance.

How to achieve DeFi privacy with Aztec?

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1) Visit https://zk.money/earn and sign up with your wallet.

2) Check the available opportunities, the current rate of depositing zkDAI in ElementFi or staking stETH in Lido is fixed, and then click the long-awaited Earn button.

3) Enter the amount of zkETH or zkDAI you want to store on the next page, and then select the transaction fee level (the fee is from low to high, and the processing speed is from slow to fast. The options are Batched, Fast Track, and Instant).

4) When you are ready to proceed, press Next to perform the deposit step.

5) Use the Earn Positions feature on the https://zk.money/balance page to track your Aztec DeFi investments.

Protect financial privacy for all

The blockchain world desperately needs more privacy tools, and in this regard, Aztec Network is the most promising rising star in Ethereum tools.

To be sure, the Aztec system is fairly young and experimental, so keep that in mind. But if you value the privacy frontiers of cryptography, Aztec is certainly a project worth exploring and supporting.

Going forward, L2 will become more and more decentralized, and there will be more and more DeFi projects using Aztec.

While there are currently no token plans for this privacy zkRollup, if it does eventually issue tokens, then trying to use it now will likely benefit you in future airdrops.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/how-to-use-aztec-for-defi-privacy/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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