ConsenSys Backs $2.1 Million Funding Round for Ethereum Privacy Startup

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ConsenSys Labs has led a $2.1 million seed round for AZTEC, a startup that's working to make ethereum transactions private so financial institutions can comfortably use the second-largest blockchain.

AZTEC, created by the mathematician Tom Pocock and nuclear physicist Zachary Williamson, uses zero-knowledge proofs, the cryptographic technique popularized by the zcash currency, to enhance privacy on a shared ledger.

In addition to enhancing privacy, AZTEC's tech will also help boost the speed of settlement in loan markets, the startup claims.

AZTEC's team had been in discussions with ConsenSys for several months after graduating from Entrepreneur First, the London tech accelerator, in March 2018, Pocock said.

"We were impressed with the resilience of the zero-knowledge proof technology that AZTEC created. Based on what we're seeing, AZTEC is the closest to production and the most efficient in sense of gas cost," Min Teo, executive director at ConsenSys Labs Investments Europe, told CoinDesk, referring to the small amount of ether that must be paid to power a transaction on the blockchain.

Joe Lubin, the founder of ConsenSys, said in a press release that his ethereum design studio "Is proud to support this breakthrough from AZTEC and CreditMint, bringing zk-SNARKs-based privacy, confidentiality and scalability to a wide variety of asset transactions on public ethereum."

Stepping back, it remains to be seen whether a zero-knowledge proof-based system can be fast and scalable enough to suit enterprises - especially considering that even without this computationally expensive privacy enhancement, ethereum has well-known scaling challenges.

In September, ethereum's founder Vitalik Buterin suggested that using zk-sharks can potentially help ethereum scale up to 500 transactions per second.

AZTEC is not the first effort to add privacy to the ethereum protocol by using zero-knowledge proofs: more than a year ago, JPMorgan revealed adding zk-snarks technology developed by the startup behind zcash to Quorum, the megabank's ethereum-based private blockchain.

According to Pocock, AZTEC is different from previous projects because it's working on the ethereum mainnet and is "Significantly more efficient in terms of gas costs."

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