Aleo series of blogs-the future of zero-knowledge cryptography

1 Introduction

The Aleo series, the preface blogs include:

• Welcome to follow Aleo
• Use Zexe to build Aleo privacy applications-How Zero Knowledge is Rebalancing the Scales of the Internet
• Aleo series of blogs-the price of transparency

This series of articles explores the evolution and value of privacy in today's digital world, and the opportunities that zero-knowledge technology provides for fair competition.

2. Privacy is the key to a complete user experience in Web3

Although the current public chain provides a huge financial channel, because its transactions are open and transparent, everyone can see all the details of the transaction, causing problems of exploitation and arbitrage.

The solutions are:

• Absolute privacy: By obfuscating all content of the transaction, absolute privacy is achieved while sacrificing programmability.

Taking decentralized finance (DeFi) as an example, it illustrates the importance of programmability to any expressible blockchain network.
However, people are still facing the problem of choosing one: privacy OR programmability.
For example, Zcash can provide users with complete privacy, but has limited programmability. Ethereum provides strong programmability, but only limited privacy.
We hope to implement a protocol that has both privacy and programmability-to ensure that user data is not used, while supporting powerful applications on the chain and composability between them. This is also the original intention of building Aleo.

3. Aleo-the first distributed, open source, privacy and programmability application

By defaulting to opt-out privacy, Aleo has realized a sustainable and fair Web3 world that can meet the needs of developers, consumers and enterprises.

Aleo uses zero-knowledge cryptography technology to achieve privacy and programmability.
Zero-knowledge cryptography and zero-knowledge proof allow third parties to verify the correctness of certain information without directly revealing the information. Aleo calls this ZEXE (Zero Knowledge EXEcution).
In ZEXE, users perform state transition offline, and a proof is also generated during the process, and the proof will be bundled into the corresponding on-chain transaction, which updates the state of the system by using/creating on-chain records. Makes:

• But like Zcash, it provides a strong privacy guarantee, because the transaction only contains the proof, not the input that generated it.
• Like Ethereum, ZEXE can support smart contracts, allowing users to interact or transfer value in a predefined way.

Take
the decentralized exchange (DEX) decentralized exchange on the public blockchain system that supports smart contracts
as an example:
DEX is a decentralized application that allows users to buy and sell on the chain without needing to find a specific buyer Or the seller.
Unlike centralized exchanges (such as Coinbase or Binance), DEX allows users to maintain the custody of their assets.

Decentralized finance (DeFi) will explode in 2020, putting DEXes in the spotlight. So far, Uniswap, the largest on-chain DEX, has processed more than 25 billion U.S. dollars in 2021.

However, on the public blockchain, a person's identity and complete financial history transaction details can be traced. As mentioned earlier, the transparency of the public blockchain makes the user's information available.
Of course, you can cycle accounts, making it more difficult to connect your real identity with the identity on the chain, but doing so is complicated and inconvenient for users.
Even in the best case, there are still many ways to associate your identity with a pseudonymous address on the chain. Since the data stored on the blockchain is permanent, once this association is established, it will never be broken.

Aleo can mitigate this risk by applying privacy to the most basic components of any application-users and transactions.

To put it simply: each application in a decentralized network is a series of users (people or smart contracts) that trade with each other with varying degrees of complexity.
Therefore, any privacy solution must ensure that the atomic components of these applications have privacy attributes.

Still taking DEX as an example, this means that the counterparty needs to be made anonymous. This means that user activities should not be associated with specific addresses or specific accounts in the Aleo blockchain. By hiding the details of the transaction, Aleo can ensure that even the outline or pattern of financial activities will not reveal any identity information.

When you buy and sell in Aleo's DEX, you can update your account balance based on the exchange rate calculations off-chain. The transaction can be ended by providing a zero-knowledge proof transaction to the Aleo network, which means that a certain action has occurred. The proof itself does not contain the content of the action-such as which exchange it was executed on, or who participated in it. However, the underlying encryption technology should convince all participants that the transaction has been executed and all balances have been updated correctly.

For example, if you want to sell Token A on Aleo's DEX and buy Token B:
1) First, you need to prove to the DEX that you have enough Tokens to complete the entire transaction. It can be proved by zero-knowledge proof, without directly revealing the wallet balance or transaction history information. In other words, you can prove that you have enough balance to complete the transaction by providing an on-chain proof record of the previous transaction. During the entire process, the exchange was unable to know the following information:

• 1. The total amount of tokens you own
• 2. The source of these tokens
• 3. Have you ever traded on DEX?

In short, this creates a DEX ecosystem that not only has complete privacy, but also supports user scalability, while replicating a key feature similar to smart contracts in Ethereum: composability.

Composability refers to:
On an open platform, applications can communicate with each other in an increasingly replicated manner.

Composability is a powerful concept that supports the DeFi ecosystem of Ethereum. Although Aleo can ensure complete privacy, some applications can use public data resources (either records disclosed in the proof, or off-chain data) to implement the privacy combination of smart contracts.

This optional opt-out privacy mode can eliminate many information extraction and utilization problems of transparent blockchains. It allows users to control when and how to interact with the application, while only revealing the information they choose to disclose.

Therefore, Aleo makes applications programmable, composable, and private.

4. Aleo's toolset

Aleo provides industry-leading infrastructure and tools for writing zero-knowledge applications.

Our goal is to provide developers with an end-to-end pipeline, with the help of our programmable zero-knowledge set of tools, so that they can seamlessly complete the process of writing, running and deploying private applications. The specific Aleo toolsets are:

• Leo programming language: Based on Aleo's intuitive and simple programming of privacy applications, the provided programming language becomes Leo. Leo looks and uses like a traditional programming language. At the bottom of Leo, it is more complicated than traditional programming languages. Leo has a low-level abstraction of the underlying cryptographic concepts, making it easier to integrate with privacy applications.
  At the same time, Leo provides a high-level grammar, which makes it easier to write and intuitively express zero-knowledge related logic.
  Leo language is inspired by traditional programming languages ​​such as JavaScript, Scala and Rust, and is more readable and usable.
  At the bottom level, Leo converts the developed high-level code into zero knowledge circuits.

• Aleo Studio IDE integrated development environment: In order to speed up the development cycle, Aleo Studio-the first IDE for writing zero-knowledge applications is provided. Aleo Studio is an interactive development environment for writing zero-knowledge applications in Leo. For developers, Aleo Studio is designed to simplify the development cycle so that Leo projects can be released into the production system in a package.

• Aleo Package Manager: In order to simplify packaging and sharing, a package manager was built for Leo. Aleo package manager is the first zero knowledge circuits package manager. It includes features such as collaboration between teams and organizations, and easy collaboration with friends and colleagues on privacy applications again and again. In addition, the Aleo Package Manager is integrated with Aleo Studio, making it easy to import and publish new packages without having to leave the editor.

• snarkOS decentralized operating system: Aleo runs on a distributed operating system that supports privacy applications, which is called snarkOS. It forms the logical backbone of state transitions and enables applications to verify and store the state on the Aleo blockchain in a publicly verifiable manner. snarkOS enforces data availability checks on all programs and transactions in Aleo. In addition, this consensus mechanism ensures that Verifiers calculate zero-knowledge proofs for the checkpoint state on the chain.

These tools will enable developers to build the next generation of smart contracts. Aleo can express powerful DeFi primitives, such as stablecoins or decentralized exchanges. All transactions are completely private and completely controlled by developers and users.

Reference

[1] Aleo博客 The Future of Zero Knowledge with Aleo