Key Takeaways
Aleph Zero has always been confused as either a public or a private blockchain.
It is a privacy-enhancing public blockchain that allows any participant to build solutions that drive security and privacy to users' data.
Aside from decentralization, one major difference between public and private blockchains is transparency. Aleph Zero blockchain promoted both decentralization and transparency.
Aleph Zero has an in-built privacy layer, called Liminal that utilizes ZKPs and sMPC to create a multichain privacy framework.
There are differing theories regarding the type of blockchain Aleph Zero falls under. One group will argue that Aleph Zero is a private blockchain, like Zcash. The other school of thought, shield in hand, will contrast the argument. How will you react when you read that the better explanation for these differing schools of thought is that “Aleph Zero is a privacy-enhancing public blockchain”?
Confusing? Let’s get on to it then.
What is Aleph Zero?
Aleph Zero is a layer 1 blockchain that provides an infrastructure for developers to deploy dApps across various niches and use cases like gaming, DeFi, metaverse, security, bridges, and even businesses. It is a layer-1 public (open source) blockchain network that allows developers to create decentralized, scalable, secure, and privacy-focused solutions. It is with this definition that Aleph Zero is regarded as a privacy-enhancing blockchain.
Since its development in 2018 and mainnet launch in 2021, Aleph Zero has experienced remarkable adoption within the developer community especially those out to explore and build innovative projects. With over 40 projects live on the blockchain, Aleph Zero is a continuously growing ecosystem.
Aleph Zero as a Public Blockchain
Contrary to what you might have seen elsewhere, Aleph Zero is NOT a private blockchain but rather it is a public blockchain.
A public blockchain, also called a permissionless blockchain, is a decentralized and open-source network that is available for anyone to build and deploy on. On public blockchains, developers are not required to request permission before they can access the network because they are open for anyone to participate in. Developers can opt-in to join the consensus mechanism, validate transactions, and secure the network. This differs from the other class of blockchain referred to as private or most popularly, permissionless blockchain.
Features of Public (Permissionless) Blockchain
Decentralization: The core pillar of public blockchains is decentralization - a distributed way of delegating authority instead of concentrating it on a single central entity. The open nature of public blockchain allows participants from all parts of the world to come together and see to the growth and safety of a network.
Transparency: Like nightingales, blockchain experts have often sung this song. The very existence of decentralization in itself paves the way for transparency amongst all participants. It is safe to say that permissionless blockchains bring with them a high level of transparency.
Immutability: The blockchain tech is immutable (unchangeable), meaning transactions already recorded there are permanent and cannot be edited or deleted.
Censor resistance: Unlike private blockchains where authority is concentrated in the hands of a few central bodies, with public blockchains, such is not the case. Hence, public blockchains are resistant to censorship from centralized bodies.
Pseudonymity: Transactions recorded on the blockchain do not explicitly reveal the private information of the users, just the wallet addresses. Public blockchains can promote pseudonymity. However, private blockchains are more effective in keeping users’ identities and data private. So, while public blockchains are an upgrade from centralized financial institutions in terms of users’ privacy, permissioned blockchains are a better upgrade to that.
A look at all of the above-mentioned features, we can ascertain that Aleph Zero fits into the picture of what we know as a “public or permissionless blockchain”.
Aleph Zero as a Privacy-Enhancing Blockchain
“Aleph Zero is a privacy-focused blockchain" - This statement has led to the other school of thought that believes Aleph Zero to be a private blockchain. This article section aims to demystify the actual context behind that statement.
Aleph Zero as a "privacy-enhancing" or "privacy-focused blockchain" implies the blockchain’s capacity to provide tools/infrastructures that enable developers to create dApps or projects that ensure the privacy of users' data. Think of it this way: Aleph Zero is a tool that developers can utilize to create solutions that answer the need for users’ data and identity privacy, but that doesn’t make the tool (Aleph Zero) private because it is open to all developers to practice with.
Aleph Zero has two distinguishing techs that make it possible for developers to create privacy solutions, marking it as a privacy-enhancing blockchain. They are:
A native privacy-layer called Liminal
The Shielder
Liminal
Liminal serves as Aleph Zero’s native and interchain privacy layer. Over the years, we’ve heard how blockchain interoperability is the future. We’ve seen a lot of projects (bridges, interoperability protocols) being built for one sole purpose - to ensure seamless interactions between blockchains. All of these solutions address one issue which is blockchain communication at the execution layer. Bitcoin can be transferred to be utilized on the Ethereum chain. Solana can be borrowed via another blockchain. They hardly address the issue at the privacy level.
With Liminal, developers can write smart contracts on other blockchains and store their private state on Aleph Zero by integrating it. For developers who wish to build directly on the Aleph Zero blockchain, Liminal is available to them natively.
Acknowledging the necessity for performance while maintaining stringent privacy for user data, Liminal employs two privacy-enhancing technologies (ZKPs and sMPC) to enable solutions that allow private inter and intra-chain transactions. While sMPCs encrypt data across several computers that cannot access data without unanimous consent, ZK-SNARKs transfer a secret and secure key between users. You can learn more about how Aleph Zero’s Liminal utilizes a formidable pair (ZKPs and sMPC) to create a privacy-enhancing network here.
Shielder
Aleph Zero’s Shielder is a feature of Liminal (hence, it is not a separate technology besides itself) that enables private transactions of PSP22 tokens on the blockchain network. The main objective of the Shielder is to mask the details of transactions that happen on-chain and keep them from the eyes of external observers. Like similar solutions, Aleph Zero’s Shielder is used mainly by DeFi protocols.
Side note: PSP22 is a standard token for any fungible token that runs on blockchains based on the Substrate architecture and is constructed using WebAssembly (WASM) smart contracts. Aleph Zero’s native token is a PSP22 token. So, DeFi protocols and DEXs built on Aleph Zero can utilize this Shielder feature.
$AZERO: A Private or a Public Coin?
Aleph Zero’s native coin is $AZERO, the currency that powers the blockchain ecosystem. It is a public coin that promotes pseudonymity of identities like every other public coin out there. $AZERO is an inflationary token whose supply isn’t fixed, unlike other deflationary cryptocurrencies like Bitcoin. There is an annual 30,000,000 token release used for staking rewards, where 90% of the token release is distributed back to the validators and nominators, whereas the remaining 10% is stored in the Aleph Zero Foundations ecosystem treasury. The utility of the $AZERO token is as follows:
Staking: Aleph Zero uses the PoS consensus mechanism to validate transactions and ensure the security of the network. $AZERO is used to secure the network through staking. Stakers delegate their tokens to validators who in turn, are responsible for running nodes on-chain, verifying transactions, and preventing malicious transactions from entering the blockchain. Both stakers and validators receive rewards for this.
Gas fees: As with any other blockchain, activities on Aleph Zero require the use of the $AZERO token as payment for gas fees for transactions carried out on the network. Aleph Zero is widely known to have some of the cheapest gas fees, and in fact, it boasts of offering users close to zero gas fees on each transaction made within the network.
Payment: Most dApps on Aleph Zero utilize the $AZERO token for participating in activities.
Governance: Users who stake $AZERO can participate in various voting proposals that concern the ecosystem.
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