Source: Web3CN

 

1. Project Introduction

 

Aleo is the first Layer 1 blockchain that uses zero-knowledge proof (ZKP) technology and provides fully private applications, providing users with unlimited computing with absolute privacy. Aleo solves the shortcomings of blockchain privacy protection by building a private, open source blockchain by default. Using Aleo, users can access a truly personalized world of Web services, manage their own data while getting privacy protection, and enjoy efficient and secure network services.

Balancing privacy and programmability is Aleo’s biggest innovation.

 

2. Project Vision

 

The Aleo team believes that in the next decade, Web services will be everywhere. They will no longer be limited to browsers, but will exist in many more places, and will perform intelligent computing on every private detail of people's lives. People's personal lives have become a "public commodity", and no matter where they live, they will become more personalized with the development of network services. Therefore, the relationship between people and their own data and how people manage their own data are issues that everyone should think about in the future.

Information leakage and data privacy issues are a common phenomenon on the current Internet. Aleo's vision is to solve this problem while building a truly personal and private online user experience. Aleo strongly advocates privacy technology in the blockchain ecosystem and provides a service platform that embodies privacy technology in network applications to increase digital freedom and access around the world. Aleo CEO Alex Pruden said: Provide secure and scalable applications for the world.

 

3. Features and advantages

 

What makes Aleo different and unique from other public chains is the protection of privacy and on-chain scalability. The smart contracts currently carried by blockchains have two major limitations:

(1) They are designed to be completely open and transparent, and therefore do not allow for privacy;

(2) They cannot scale to millions, let alone billions, of users, meaning they cannot support real-time online games or events with hundreds of millions of users.

In response to the above phenomenon, the Aleo network is based on zero-knowledge proof cryptography to solve the problem of the current public chain both protecting privacy and supporting the processing of massive data (scalability).

It not only solves the current dilemma of Internet data leakage, but also improves the shortcomings of the current blockchain data information openness and transparency. At the same time, it also realizes the real-time processing of massive data and rich scalability comparable to the current Internet platform. This is the special feature of the Aleo project that has attracted market attention.

The following figure can more intuitively and clearly understand the characteristics of the Aleo network:

 

IV. Development History

 

  • In 2019, Aleo was established

  • On August 19, 2020, the official announcement was made to the public and the developer version was launched.

  • Official Aleo Discord server launched in early 2021

  • April 20, 2021, Series A financing of US$28 million

  • On June 3, 2021, the Ministry of Finance granted a grant of US$1 million to launch the Aleo Community Rewards Program and the Leo Programming Competition.

  • On August 16, 2021, Aleo setup (mining) officially started, and Testnest1 was launched

  • On December 6, 2021, the incentive test network Testnet2 was officially launched, with more than 10,000 nodes and millions of zero-knowledge proofs generated

  • February 7, 2022, Series B financing of US$200 million

  • In March 2022, Aleo launched the Ambassador Program and Testnet3 is ready to go online

  • On August 19, 2022, ALeo Discord officially announced that the three testing phases of ALeo Testnet3 will be postponed

  • On November 10, 2022, Aleo Network launched the second phase of the third test

  • On January 24, 2023, Aleo released its 2023 roadmap

The Aleo mainnet is expected to be launched in July 2023.

 

5. Team Background

 

Aleo was officially founded in 2019 by Howard Wu, Michael Beller, Collin Chin, and Raymond Chu, with Howard Wu being the founder of Aleo. The team consists of world-class cryptographers, engineers, designers, and operators from companies such as Google, Amazon, and Facebook, as well as research universities such as UC Berkeley, Johns Hopkins University, New York University, and Cornell University. On September 20, 2022, Alex Pruden was promoted to CEO of Aleo, who previously worked at A16Z and Coinbase.

Currently, Aleo's entire team consists of more than 30 people, including financial and legal professionals.

 

VI. Financing Information

 

Aleo officially announced two and a half rounds of financing, namely Round A, Round B and Round B+.

  • The Series A financing amounted to US$28 million, led by Andreessen Horowitz (a16z), with participation from Placeholder VC, Galaxy Digital, Variant Capital and Coinbase Ventures. Other investors included Polychain Capital, Slow Ventures, Dekrypt Capital, Scalar Capital, a_capital, zkValidator, Balaji Srinivasan and Ethereal Ventures, a new venture fund founded by Joseph Lubin.

  • The B round of financing amounted to US$200 million, led by Kora Management LP and SoftBank Vision Fund 2, with participation from Tiger Global and Sea Capital, Samsung Next, Slow Ventures and Andreessen Horowitz (a16z), and the company's final valuation was US$1.45 billion. Aleo's B round of financing is the largest round of financing in the history of the zero-knowledge proof track

  • It raised $70 million in Series B+ funding, with investments from Softbank Vision Fund 2 and Samsung Next.

 

VII. Development Achievements

 

Since the project was launched in 2019, the development achievements of the Aleo project are as follows:

The Aleo project released Deploy & Execute on Testnet 3 on February 24. This development is of great significance to developers and the ZK (zero-knowledge) field: developers deploying Leo applications to the Aleo network is a first-of-its-kind achievement in the ZK field. With this release, Aleo delivers on the ultimate promise of creating a zero-knowledge execution environment as envisioned in the ZEXE research paper originally co-authored by Aleo CTO Howard Wu and other founding members of the team.

The Aleo project is a network that is closely integrated with zero-knowledge proof (ZKP). How to build applications and ecology on the Aleo network is the first thing to do. Generally, the development of ZK applications is complex and time-consuming, and developers also need knowledge of zero-knowledge cryptography, which has a high threshold. Aleo allows developers to use zero-knowledge proofs in their applications in the simplest way possible, laying the foundation for a private, decentralized ecosystem. The Leo programming language is a statically typed programming language inspired by Rust, built specifically for writing private applications. It is the first known programming language to introduce a testing framework, package registry, import parser, remote compiler, and theorem generator for general zero-knowledge applications.

Aleo created its own virtual machine, snarkVM, on which developers can build applications in the familiar Solidity programming language.

Rather than relying on existing consensus mechanisms, Proof of Work (PoW) or Proof of Stake (PoS), Aleo uses a combination of both, with a useful tweak to PoW called Succinct Proof of Work that makes ZKP much cheaper on Aleo than on Ethereum.

The main takeaways and achievements of the Aleo testnet in the second phase of Testnet 3 are, first, the validation of the Aleo project’s assumption that the separation of block production from coinbase generation allows provers to compute proofs at the scale they need; second, the conclusion that a large number of proof pools can contribute to the network’s proof generation, making proofs more accessible; and finally, the conclusion that the proofs performed on the network are quite decentralized.

 

8. Economic Model

 

Aleo's token economics aims to align the incentives of all stakeholders in the Aleo system to provide services to the Aleo network in the simplest way possible. Its tokens represent meaningful value, reward participants for the security they provide, promote the development and use of the ecosystem, and decentralization. In addition, the team reserves the right to make necessary adjustments when iterating the mainnet.

At the launch of the Aleo network, Aleo Points will be distributed among early supporters, builders and community members, as well as foundations or other entities that provide funding and ensure the continued development of the network. Starting from genesis, new points will be minted and distributed to miners on the Aleo network through block rewards. Table 1 (below) summarizes the details of the overall economic model (note: the current block time is about 20 seconds).

Table 1

In addition to the initial supply of tokens distributed among the Aleo team, early backers, and community members, a portion will be set aside for wider distribution sometime after the Aleo mainnet launch, with the goal of further decentralizing control and improving the quality of the open source community, while complying with applicable laws and regulations.

At the same time, in order to achieve a high level of security for the network, the Aleo team set a relatively high inflation rate at the beginning, and then halved it twice in the first decade. After the ninth year, the final halving will result in the release of 12.5 Aleo points at the tail of each block to ensure the security of the network and the economic stability it will support. The following table shows the inflation curve for the first 15 years of Aleo.

Table 2: Aleo inflation schedule and total supply

In terms of the distribution of points, the distribution will change over time and as new points are minted. Table 3 (below) describes the distribution of Aleo points for a hypothetical block reward (this chart only accounts for inflation and does not take into account any initial holders selling their tokens. Therefore, the actual distribution of tokens may be wider than the simple representation below).

Table 3: Aleo Points Distribution

 

9. Fundamental Analysis

 

The Aleo project is currently in Testnet 3 and has not yet entered Phase 3 (Testnet 3 is divided into three phases). According to its 2023 roadmap, it is expected to enter Phase 3 of Testnet 3 in April and end Phase 3 of Testnet 3 in May. After stress and audit testing and mainnet upgrades in June, the mainnet will be launched in July.

In the current hot AI field, the Aleo team recently stated that the Aleo network is an excellent platform for developers to start experimenting with ZKML (zero-knowledge machine learning) applications. The official guide introduces how to use Aleo's zero-knowledge domain-specific language, Leo, to run neural network reasoning (https://mp.weixin.qq.com/s/cltdBcmqA9wTDeoiQaviiw). Due to Aleo's permissionless architecture, anyone can become a prover/verifier of their own data in the fields of ML (machine learning) and ZK (zero knowledge) on the Aleo network, "which opens the door to a whole new world of potential use cases."

 

10. Industry Analysis

 

To analyze the industry in which the Aleo project is located, we can start from the field of zero-knowledge proof and Layer 1.

In the field of zero-knowledge proof, with the accelerated development of hardware and the improvement of infrastructure, ZK technology will become more practical and closely linked to it in many fields, such as the metaverse, Web3, cryptocurrency, finance, and privacy. The development of zero-knowledge (ZK) is still in its early stages. As an encryption algorithm, it stands out among a series of encryption algorithms, which is inseparable from its excellent algorithmic characteristics and ease of use.

The application of ZK technology in the blockchain field means faster blockchain networks and open and private applications. To some extent, it has also become the core and supporting tool of the blockchain ecosystem. While achieving privacy protection, it can also achieve scalability, which is crucial to the future development of blockchain and even web3. This is the future application prospect of zero-knowledge proof and the prospect of the Aleo network.

In terms of Layer1, unlike Layer2 projects such as Starware, zkSync, and Scroll, the Aleo network has its own snarkVM, Leo programming language, Aleo Studio development environment, PoSW consensus mechanism, etc., which means that in the field of zero-knowledge, the applications and ecosystems developed based on Aleo far exceed the Layer2 ZK projects, and the massive market and considerable capital brought by the application ecosystem and system are beyond imagination.

 

XI. Opportunities and Risks

 

Chance

In the industry analysis section, the importance and potential of zero-knowledge proof technology have been discussed. This is not only the potential for widespread use of the technology itself, but also the future prospects of the Aleo network "equipped" with zero-knowledge proof technology. The Aleo project has also gained the favor of capital by adopting zero-knowledge proof technology. Therefore, it can be said that opportunities in the field of zero-knowledge proof are also opportunities for the Aleo project, especially for blockchain Layer1.

From the perspective of blockchain Layer 1, unlike Layer 2, Layer 1 has its own smart contracts, development environment, programming language, consensus mechanism, economic model, etc. It is more attractive to potential market ecology in terms of scale and volume, and can gain more users and value. This is the opportunity and advantage of the Aleo project positioned at Layer 1.

 

risk

The risk of the Aleo project also comes in part from zero-knowledge proof technology. Historically, generating ZKP is more expensive than just running calculations locally, because ZKP requires more complex and computationally expensive mathematical operations and relies on more specialized hardware. This is also why Aleo CEO believes that the accelerated development of hardware will drive the development of ZK when talking about the development of ZK technology in 2023. Whether the Aleo network using ZKP technology is better than other networks in processing massive amounts of data in real-world application scenarios, and how to balance the fees (Aleo is positioned at 0Gas fee), all need to be verified by the market.