Existing first-level blockchains either provide anonymity of transactions, but do not provide an opportunity to implement decentralized computing using smart contracts, or have great capabilities in terms of their functionality, but they do not care at all about user privacy. Ether was the next step in the development of decentralized computing, but it did not advance in privacy. ZCash and Monero solved the problem of maintaining data privacy in transactions, but in terms of "programmability" they remained at the same stage of development as bitcoin.

The Aleo project was founded in 2019 with the aim of creating a completely private and at the same time functional blockchain, which is based on the technology of "Zero Knowledge Proof" (hereinafter – ZK). Aleo provides all the necessary tools to create modern decentralized applications, while ensuring complete confidentiality of data transmitted on the network.

Aleo strives to combine these two areas and implement them in one network. His task is to integrate ZK technology at every level to create not just a secure network, but also to develop ideas of privacy on the Internet in general. Aleo's vision extends beyond scaling and aims to embed ZK into any application, giving users control over how and when they share their data.

Such an ambitious project certainly requires ambitious investments. The Aleo team raised $298 million, the best result for L1 solutions based on the implementation of ZK. Funds such as Kora Management LP, SoftBank Vision Fund 2, Tiger Global, Sea Capital, Samsung Next, Slow Ventures, and the notorious Andreessen Horowitz (a16z fund) have invested in the project.

From the point of view of decentralization, Aleo has a very large infrastructure, more than 10,000 active validator nodes, which is already more than most L1 networks in the mainnet.

Let's take a closer look at what problems Aleo is going to solve and in what ways.

Building a private network

The main problem of the blockchain stems from its main advantage - since data is stored in a decentralized manner, they are transparent and visible to everyone. As a result, network explorers open up data on personal and commercial financial activities on the network to everyone. This data can be used in bad faith and lead to the loss of money of participants in the money exchange. For example, in DeFi applications, all data about which orders are placed by which users is visible – analyzing such data, automated bot systems can place orders in such a way that they always close deals more profitably than others.

"Front-running" is a well-known and extensive problem when a transaction can be "knocked out" promptly by offering exactly the same, but with a higher gas, to the network. If mining is used on the network, then miners can select transactions from the mempool in such a way as to have the maximum benefit for themselves – thus raising gas in the network and making transactions unreasonably expensive. This phenomenon is called asymmetry – when one participant in the process has more opportunities than another due to the fact that he exploits the features of the process. This means that trained technical teams have the ability to aggregate more information for decision-making per unit of time than a regular user.

The solution that Aleo offers is to eliminate such asymmetry by encrypting all data in such a way that only the direct participants in the information exchange have access to only the information that they need to conduct this exchange. All other information should be hidden from other users. At the same time, the issue of compatibility is critically important – all decentralized applications must work correctly with such limited information. Therefore, the Aleo network initially encrypts all the information that the user sends to the network at the lowest level. To interact with decentralized applications, he chooses what information to disclose for them. This approach allows you to give the user full control over their data, while using the Aleo toolkit it is possible to achieve the functionality of smart contracts that is in no way inferior to Ethereum.

It is for this purpose that Aleo uses ZK technology. In general terms, the essence of this technology is as follows: one side of the information exchange (the prover) provides the other side (the verifier) with proof that some information is reliable, but without disclosing exactly how this information became reliable.

Let's take an example from the "ordinary" world – COVID certificates. You can prove that you are immune from covid by presenting a QR code issued by a government agency in your country. The QR code does not contain information about exactly how you received immunity (got sick or got the vaccine), and also does not disclose information about when exactly you received this immunity. It only tells you the verifiable fact that for a certain period of time you are immune from this disease. However, this scheme requires a centralized data source, which is not available in the blockchain.

Therefore, in the "crypto world", encryption and electronic signatures, that is, mathematics, come to the rescue. You can provide encrypted and signed data about your credit history to your borrower, without having to give your entire financial history to some centralized organization, which, based on this data, will assign you not only a rating, but also sell this data to everyone. That is, in this approach, the number of your data required for the operation is greatly reduced, as well as the number of possible options for the inappropriate use of your data is reduced.

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However, the approach itself is not even half of the solution to the problem. Tools are needed, and at the technical level they are completely new. The Aleo team also understood this perfectly well, so they focused on creating not only a network with anonymous transactions, but also a set of tools that will help developers fill this network with functional decentralized applications.

Programming language

First of all, Aleo uses its own programming language Leo. It is optimized for fast execution of low-level cryptographic operations, and also contains the necessary libraries for working with ZK, which simplify the integration of this technology into the application. Its syntax is quite high-level, which simplifies development on it, and makes it easier to read someone else's code, and it is inspired by such popular languages as JavaScript and Rust.

IDE

Also, Aleo has its own IDE (development environment) for this language – Aleo Studio.

It is much easier to share the development results with the community when there is no need to search for github code and assemble it manually. Therefore, the Aleo team has prepared its own package manager and integrated it into its development environment, allowing you to install the packages necessary for development without leaving the editor, as well as simplify joint development within a large team.

The operating system

And finally, the nodes of the Aleo network run on their own snarkOS OS, specially designed to work with ZK-proofs of network state changes without reducing the availability of this data.

An example of Aleo's work Let's look at how the combination of all these technologies changes the usual mechanism of operation of decentralized applications. For example, users trade on DEX, a decentralized exchange.

The Aleo project is currently in the final phase of the testnet, and access to the mainnet is scheduled for 2024. The solution stands out technologically from other L1 blockchains and has great prospects for the development of its ecosystem. You can already try out the first applications on this network, such as Arcane Finance, Shadow Finance, AleoStore, AleoSwap, by installing and creating a Leo wallet.

Official links:

• Website ~ https://www.aleo.org/

• Twitter ~ https://twitter.com/AleoHQ

• Community Twitter ~ https://twitter.com/aleocommunity

• GitHub ~ https://github.com/AleoHQ

• Community Forum — https://community.aleo.org/

• Community Calendar ~ https://www.aleo.org/community/calendar

• YouTube — https://www.youtube.com/channel/UCS_HKT2heOC_q88YQLiJt0g

• Developer Documentation ~ https://developer.aleo.org/

• Leo Playground ~ https://play.leo-lang.org/

• Aleo Block Explorer ~ https://www.aleo.network/

Existing first-level blockchains either provide anonymity of transactions, but do not provide an opportunity to implement decentralized computing using smart contracts, or have great capabilities in terms of their functionality, but they do not care at all about user privacy. Ether was the next step in the development of decentralized computing, but it did not advance in privacy. ZCash and Monero solved the problem of maintaining data privacy in transactions, but in terms of "programmability" they remained at the same stage of development as bitcoin.

The Aleo project was founded in 2019 with the aim of creating a completely private and at the same time functional blockchain, which is based on the technology of "Zero Knowledge Proof" (hereinafter – ZK). Aleo provides all the necessary tools to create modern decentralized applications, while ensuring complete confidentiality of data transmitted on the network.

Aleo strives to combine these two areas and implement them in one network. His task is to integrate ZK technology at every level to create not just a secure network, but also to develop ideas of privacy on the Internet in general. Aleo's vision extends beyond scaling and aims to embed ZK into any application, giving users control over how and when they share their data.

Such an ambitious project certainly requires ambitious investments. The Aleo team raised $298 million, the best result for L1 solutions based on the implementation of ZK. Funds such as Kora Management LP, SoftBank Vision Fund 2, Tiger Global, Sea Capital, Samsung Next, Slow Ventures, and the notorious Andreessen Horowitz (a16z fund) have invested in the project.

From the point of view of decentralization, Aleo has a very large infrastructure, more than 10,000 active validator nodes, which is already more than most L1 networks in the mainnet.

Let's take a closer look at what problems Aleo is going to solve and in what ways.

Building a private network

The main problem of the blockchain stems from its main advantage - since data is stored in a decentralized manner, they are transparent and visible to everyone. As a result, network explorers open up data on personal and commercial financial activities on the network to everyone. This data can be used in bad faith and lead to the loss of money of participants in the money exchange. For example, in DeFi applications, all data about which orders are placed by which users is visible – analyzing such data, automated bot systems can place orders in such a way that they always close deals more profitably than others.

"Front-running" is a well-known and extensive problem when a transaction can be "knocked out" promptly by offering exactly the same, but with a higher gas, to the network. If mining is used on the network, then miners can select transactions from the mempool in such a way as to have the maximum benefit for themselves – thus raising gas in the network and making transactions unreasonably expensive. This phenomenon is called asymmetry – when one participant in the process has more opportunities than another due to the fact that he exploits the features of the process. This means that trained technical teams have the ability to aggregate more information for decision-making per unit of time than a regular user.

The solution that Aleo offers is to eliminate such asymmetry by encrypting all data in such a way that only the direct participants in the information exchange have access to only the information that they need to conduct this exchange. All other information should be hidden from other users. At the same time, the issue of compatibility is critically important – all decentralized applications must work correctly with such limited information. Therefore, the Aleo network initially encrypts all the information that the user sends to the network at the lowest level. To interact with decentralized applications, he chooses what information to disclose for them. This approach allows you to give the user full control over their data, while using the Aleo toolkit it is possible to achieve the functionality of smart contracts that is in no way inferior to Ethereum.

It is for this purpose that Aleo uses ZK technology. In general terms, the essence of this technology is as follows: one side of the information exchange (the prover) provides the other side (the verifier) with proof that some information is reliable, but without disclosing exactly how this information became reliable.

Let's take an example from the "ordinary" world – COVID certificates. You can prove that you are immune from covid by presenting a QR code issued by a government agency in your country. The QR code does not contain information about exactly how you received immunity (got sick or got the vaccine), and also does not disclose information about when exactly you received this immunity. It only tells you the verifiable fact that for a certain period of time you are immune from this disease. However, this scheme requires a centralized data source, which is not available in the blockchain.

Therefore, in the "crypto world", encryption and electronic signatures, that is, mathematics, come to the rescue. You can provide encrypted and signed data about your credit history to your borrower, without having to give your entire financial history to some centralized organization, which, based on this data, will assign you not only a rating, but also sell this data to everyone. That is, in this approach, the number of your data required for the operation is greatly reduced, as well as the number of possible options for the inappropriate use of your data is reduced.

Pro subscription for business.

However, the approach itself is not even half of the solution to the problem. Tools are needed, and at the technical level they are completely new. The Aleo team also understood this perfectly well, so they focused on creating not only a network with anonymous transactions, but also a set of tools that will help developers fill this network with functional decentralized applications.

Programming language

First of all, Aleo uses its own programming language Leo. It is optimized for fast execution of low-level cryptographic operations, and also contains the necessary libraries for working with ZK, which simplify the integration of this technology into the application. Its syntax is quite high-level, which simplifies development on it, and makes it easier to read someone else's code, and it is inspired by such popular languages as JavaScript and Rust.

IDE

Also, Aleo has its own IDE (development environment) for this language – Aleo Studio.

It is much easier to share the development results with the community when there is no need to search for github code and assemble it manually. Therefore, the Aleo team has prepared its own package manager and integrated it into its development environment, allowing you to install the packages necessary for development without leaving the editor, as well as simplify joint development within a large team.

The operating system

And finally, the nodes of the Aleo network run on their own snarkOS OS, specially designed to work with ZK-proofs of network state changes without reducing the availability of this data.

An example of Aleo's work Let's look at how the combination of all these technologies changes the usual mechanism of operation of decentralized applications. For example, users trade on DEX, a decentralized exchange.

The Aleo project is currently in the final phase of the testnet, and access to the mainnet is scheduled for 2024. The solution stands out technologically from other L1 blockchains and has great prospects for the development of its ecosystem. You can already try out the first applications on this network, such as Arcane Finance, Shadow Finance, AleoStore, AleoSwap, by installing and creating a Leo wallet.

Official links:

• Website ~ https://www.aleo.org/

• Twitter ~ https://twitter.com/AleoHQ

• Community Twitter ~ https://twitter.com/aleocommunity

• GitHub ~ https://github.com/AleoHQ

• Community Forum — https://community.aleo.org/

• Community Calendar ~ https://www.aleo.org/community/calendar

• YouTube — https://www.youtube.com/channel/UCS_HKT2heOC_q88YQLiJt0g

• Developer Documentation ~ https://developer.aleo.org/

• Leo Playground ~ https://play.leo-lang.org/

• Aleo Block Explorer ~ https://www.aleo.network/