Aleph Zero (AZERO) — Project Review
Earlier this year I came across a peer-reviewed DAG (Directed acyclic graph) consensus layer 1 protocol called Aleph Zero. What caught my attention is the insanely fast time to finality and the team behind the protocol. A newer project on the scene that can be a big competitor in the fast chain race, AZERO is as professional and qualified as it gets. Aleph Zero stands for the smallest infinite integer so the name alone sets the bar for the potentials of this project.
What I like about AZERO is that they are willing to put in the work upfront to set a very strong foundation that will last forever. They’re putting in the time to make sure that this new layer 1 has the potential to compete with the likes of Solana and ADA, while at the same time creating a better user experience. The team consists of 45 people with 5 PhDs making this one of the most educated core team in crypto.
What is DAG? Unlike a blockchain, which consists of blocks, directed acyclic graphs have vertices and edges. Unlike blockchain, that confirms block by block, a DAG based structure creates more of a tree root like structure allowing for insanely fast and cheap verification times. Through this consensus method, AZERO has been able to achieve “89,600 tx/s with a 416 ms confirmation time in a decentralized test setting of 112 AWS nodes spread across five continents.” So although a test environment, the parameters are very close to what we’d see in the real world.
DAG consensus isn’t new and we have seen this across a handful of top projects with IOTA being the first to implement. Please find a list of other DAG based protocols: IOTA, NANO, HBAR, DAG, AVAX, FTM. These protocols have ranged from 6X — 3,200X in returns, so this could give you an idea of the interest for this scalable technology that is gaining market share against blockchain consensus.
With DAG consensus, there has been issues with past projects around the validator sets where some of the past projects have a fixed group while others have been known to be more centralized. With AZERO, they have decided to use a rotating validator set to keep the network as decentralized as possible.
Aleph Zero also has a privacy layer called Liminal that can be implemented to any chains that bridges to AZERO. This feature is also used to solve the MEV problem of validators front running orders. Privacy has always been a concern in the crypto world as everything is fully transparent so I’m interested to see how they implement this while navigating government regulations.
The team decided to build their own blockchain infrastructure versus launching as a parachain but the code is integrated with Substrate which is the language used to build on Polkadot so there is potential of developers flowing over to build on the cheaper and faster AZERO.
Currently they’re working on implementing basic smart contract functions and validator sets to make sure the network is secure before moving onto the next phase of creating their own dedicated web wallet and bridging into Kusama and Ethereum. KSM is an important bridge because that will create the inflows from the DOT networks which holds the developers familiar with the AZERO code. The next step of bridges will be to Polkadot, Cosmos and BSC; the three largest ecosystems following ETH. They also believe they can create one of the cheapest DEX markets which seems to be the foundational product to accelerate dApp developments across every chain.
Staking is live on AZERO which pay 13% yield on a 14 day unstake period. 75% of the circulating supply is staked across slightly less than 36K investors. The project at the time of writing this is trading at $180M market cap so fairly inexpensive when measuring against the competing layer 1s.
To wrap this up, AZERO does have potential to complete with the best although it’s still in its infancy stages of development. The foundational items are still being built and should all be live prior to the next bull run in 2025 (expecting). With the amount of layer 1s that developed over the last few years, the competition is fierce and Azero will need to find a way to attract developers to migrate and build with them versus the 100s of other competing layer 1s with more developed ecosystems.
I like the idea of going for the bridges as the first goal after smart contracts but as we’ve seen across pretty much every bridge, there are exploitation risks; but we won’t know the safety until it is launched and battle tested. A thought would be for the team to also explore implementing IBC into their chain since that bridge comes with a network of chains — ATOM, OSMO, etc. This way they don’t have to worry about securing many individual bridges but utilize the IBC bridge to access the 20+ networks already integrated.
Overall, Azero is a very fundamentally strong protocol and I’m excited to see this develop further once smart contracts are live. They have solved a way to enhance current layer 1 structures to provide lower cost and increase transaction speeds. If all works out as expected, this could be the fastest chain on the block. If you want to find out more, check out the Aleph Zero website — https://alephzero.org
Follow on twitter at UnDisclosed0x for live updates.
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