Aztec Network, a privacy layer for web3, has raised $100 million in a Series B round led by Andreessen Horowitz (a16z), startup co-founders Zac Williamson and Joe Andrews told gotechbusiness.com exclusively.
“On a high level, Aztecs is an encrypted version of Ethereum,” Andrews said. “Usually on Ethereum everything is public, but we make it encrypted. That journey has taken us many years to play out.
Aztec Network launched Aztec Connect, a ecosystem which will integrate with Ethereum DeFi protocols such as Aave, Lido, and Element Finance, in July 2021. In the future, it will integrate with Compound and five other DeFi protocols, according to the website.
Encrypted blockchains provide transparency for the protocol but privacy for the users, so people don’t have to show their identities when transacting, Williamson said.
“The world is not a nice place to live in without encryption,” Andrews said. “Go through your day and think about how many things you don’t want people to see. Not everything is bad; it’s just your everyday life. But think about how you take that for granted. Doing things without privacy would be a pretty scary world and not one we want.
Aside from a16z, there were “a few big funds and new investors” in the round, but Andrews did not reveal their names.
“We chose [a16z] to lead the round because they’ve been through this before with the start of the internet,” Andrews said. “It’s a similar situation to what we’re in; yes, different, but same problem. We have this exciting new technology and opportunity to transform the lives of everyone in the world, but we need encryption to make it a reality.”
The capital will primarily be used to hire more engineers worldwide to build the network, Andrews said. In the past year, the Aztec team has expanded from seven people to about 40, but it hopes to double that number in the short term, he added.
In general, public blockchains are missing a “missing piece” of encryption, which could enable more use cases by providing privacy on a case-by-case basis, Andrews said. Adding encryption to blockchain technology could, among other things, “create a whole wave of consumer personal finance,” he said.
While there are several encrypted blockchains such as Zcash and Iron fish network, Aztec stands out from them because it’s programmable, Williamson said. “Those are a bit like Bitcoin – what you can do with those networks is determined by those who made it.”
Until recently, the technology for programmable encrypted blockchains didn’t exist, Williamson said. “One of the reasons we were able to raise $100 million is because our in-house research and development made it possible.”
The network is aiming for a testnet launch within 12 months, but they hope to see full mainnet deployment within 8 to 24 months, Williamson said. Aztec Connect will be the first application on the network, Williamson added.
In the long run, the network wants to create a system that allows people to make and coordinate transactions with the level of encryption needed for mainstream blockchain adoption, Andrews said.
“The goal is to make blockchains encrypted and use them to disrupt traditional financial services to the core,” said Williamson. “If that works out, banks will have a lot of sleepless nights in two to five years.”