Research report on Aleo, the project with the largest financing in the ZK track

1.Project Overview:

Aleo is the first Layer1 blockchain that uses Zero-Knowledge Proofs (ZKP) technology to provide fully private applications, offering users unlimited computation with absolute privacy. By building a blockchain that is private by default and open-source, Aleo addresses the shortcomings of privacy protection in blockchain. With Aleo, users can access a truly personalized web service world, manage their own data while enjoying efficient and secure network services with privacy protection.

Balancing privacy and programmability is Aleo’s biggest innovation.

2.Project Vision:

The Aleo team believes that in the next decade, web services will be ubiquitous, no longer limited to browsers, and will be used for intelligent computing of every private detail in people’s lives. Personal lives have become a “public commodity,” becoming more personalized with the development of network services no matter where people live. Therefore, people’s relationship with their own data and how they manage their data is a question that every individual should consider in the future.

Information leakage and data privacy issues are frequent occurrences on the internet today, and Aleo’s vision is to solve this problem while building a truly individual and private network user experience. Aleo strongly advocates for privacy technology in the blockchain ecosystem and provides a service platform that embodies privacy technology in network applications, increasing digital freedom and access worldwide. Aleo CEO Alex Pruden said: Providing the world with secure and scalable applications.

3.Features and Advantages:

Aleo’s uniqueness and distinctiveness from other public chains lies in its privacy protection and on-chain scalability. Current smart contracts deployed on blockchains have two major limitations:

They are designed to be completely open and transparent, thus not allowing for privacy to exist;

They cannot scale to millions, let alone billions of users, meaning they cannot support online real-time games or activities at the level of billions of users.

To address these issues, the Aleo network is based on zero-knowledge proof cryptography, solving the problem of both privacy protection and the ability to handle massive amounts of data (scalability) on current public chains.

Aleo not only solves the dilemma of current internet data leakage but also improves the shortcomings of the transparency and openness of blockchain data information, while achieving massive data real-time processing and rich scalability comparable to current internet platforms. This is the special feature of the Aleo project that the market is paying attention to.

The following diagram provides a more intuitive and clear understanding of the characteristics of the Aleo network:

4.Development History:

In 2019, Aleo was founded.
On August 19, 2020, it was officially announced to the public and released the developer version.
In early 2021, the official AleoDiscord server was launched.
On April 20, 2021, Aleo raised $28 million in Series A funding.
On June 3, 2021, it received a $1 million grant from the Treasury Department and launched the Aleo Community Incentive Program and Leo Programming Contest.
On August 16, 2021, Aleo officially launched its mining setup and Testnet1 went live.
On December 6, 2021, Testnet2 was officially launched with over 10,000 nodes and millions of zero-knowledge proofs generated.
On February 7, 2022, Aleo raised $200 million in Series B funding.
In March 2022, Aleo launched its ambassador program and Testnet3 was preparing to go live.
On August 19, 2022, AleoDiscord announced that the three testing phases of AleoTestnet3 would be delayed.
On November 10, 2022, Aleo network launched the second phase of its third testing.
On January 24, 2023, Aleo released its 2023 roadmap.

It is expected that the mainnet of Aleo will go live in July 2023.

5. Team Background:

Aleo was officially founded in 2019 by Howard Wu, Michael Beller, Collin Chin, and Raymond Chu, with Howard Wu being the founder. The team consists of world-class cryptographers, engineers, designers, and operators from companies such as Google, Amazon, and Facebook, as well as research universities such as UC Berkeley, Johns Hopkins University, NYU, and Cornell University. On September 20, 2022, Alex Pruden was promoted to CEO of Aleo, having previously worked at A16Z and Coinbase.

6. Financing Information:

The entire Aleo team, including finance and legal professionals, currently consists of over 30 people.

Aleo has announced two and a half rounds of funding, namely Series A, Series B, and Series B+.

Series A funding amounted to $28 million, led by Andreessen Horowitz (a16z) with participation from PlaceholderVC, Galaxy Digital, Variant Capital, and Coinbase Ventures. Other investors include Polychain Capital, Slow Ventures, Dekrypt Capital, Scalar Capital, a_capital, zkValidator, Balaji Srinivasan, and Ethereal Ventures, a new venture fund founded by Joseph Lubin.

Series B funding amounted to $200 million, led by Kora Management LP and SoftBank Vision Fund 2, with participation from Tiger Global, Sea Capital, Samsung Next, Slow Ventures, and Andreessen Horowitz (a16z). The company was ultimately valued at $1.45 billion. Aleo’s Series B funding is the largest round of financing in the history of the zero-knowledge proof field.

Series B+ funding amounted to $70 million, with investments from SoftBank Vision Fund 2 and Samsung Next.

7. Achievements:

Since its inception in 2019, the Aleo project has achieved the following:

On February 24, Aleo released Deploy & Execute on Testnet 3, which allows developers to deploy Leo applications on the Aleo network, marking a milestone achievement in the ZK (zero-knowledge) field. This release represents the ultimate promise of creating a zero-knowledge execution environment as envisioned in the ZEXE research paper co-authored by Aleo CTO Howard Wu and other founding members of the team.

The Aleo project is closely integrated with zero-knowledge proofs (ZKPs), and building applications and ecosystems on the Aleo network is a top priority. Developing ZK applications can be complex and time-consuming, and developers require knowledge of zero-knowledge cryptography, which has a high barrier to entry. Aleo allows developers to use zero-knowledge proofs in their applications as simply as possible, laying the foundation for a private, decentralized ecosystem. The Leo programming language is a statically typed programming language inspired by Rust and built specifically for writing private applications. It is the first known programming language to introduce a testing framework, package registry, import resolver, remote compiler, and theorem prover for general ZK applications.

Aleo has created its own virtual machine, snarkVM, on which developers can build applications using the familiar Solidity programming language.

Aleo does not rely on existing consensus mechanisms, such as proof of work (PoW) or proof of stake (PoS), but instead uses a combination of the two and has made useful adjustments to PoW, known as succinct proof of work, which makes ZKPs much cheaper on Aleo than on Ethereum.

The Aleo testnet’s main achievements in the second phase of Testnet 3 include validating Aleo’s assumptions that separating block production from coinbase generation allows provers to compute proofs at the scale they need; finding that there are many pools of proofs that can contribute to proof generation on the network, making proofs more accessible; and showing that proofs on the network are fairly distributed.

8. Economic Model:

The token economics of Aleo aims to adjust the incentives of all stakeholders in the Aleo system in the simplest possible way to provide services to the Aleo network. Its token represents meaningful value and rewards participants for the security they provide, promotes the development and use of the ecosystem, and decentralizes power. The team also reserves the right to make necessary adjustments when iterating the mainnet.

At the launch of the Aleo network, Aleo tokens will be distributed among early supporters, builders, community members, and foundations or other entities that provide funding and ensure the ongoing development of the network. From the genesis, new tokens will be minted and distributed to miners on the Aleo network through block rewards. Table 1 (below) summarizes the details of the overall economic model (note: the current block time is approximately 20 seconds).

In addition to the initial token supply allocated among the Aleo team, early supporters, and community members, a portion will be set aside for broader distribution at some point after the launch of the Aleo mainnet, with the aim of further decentralizing control and improving the quality of the open-source community while complying with applicable laws and regulations.

To achieve a high level of network security, the Aleo team has set a relatively high inflation rate at the outset and then halved it twice in the first decade. The final halving after the ninth year will result in a tail emission of 12.5 Aleo tokens per block to ensure the security of the network and the economic stability it will support. The table below shows the inflation curve for Aleo’s first 15 years.

Regarding token allocation, as time passes and new tokens are minted, the allocation will change. Table 3 (below) describes the distribution of Aleo tokens assuming block rewards (this chart considers only inflation and does not take into account any initial holders selling their tokens, so the actual distribution of tokens may be more widespread than the simplified representation below).

9. Fundamental Analysis:

The Aleo project is currently in Testnet 3 and has not yet entered its third phase (Testnet 3 is divided into three phases). According to its published 2023 roadmap, the project is expected to enter the third phase of Testnet 3 in April, conclude the third phase of Testnet 3 in May, undergo stress and audit testing and mainnet upgrades in June, and launch its mainnet in July.

In the current hot AI field, the Aleo team has recently stated that the Aleo network is an excellent platform for developers to begin experimenting with ZKML (zero-knowledge machine learning) applications. The official guide released by the team explains how to use Aleo’s Zero-Knowledge Domain-Specific Language – Leo language – to run neural network inference ( Due to Aleo’s permissionless architecture, anyone can become a prover/verifier of their own data in the ML (machine learning) and ZK (zero-knowledge) domains on the Aleo network, “opening the door to a whole new world of potential use cases.”

10. Industry Analysis:

To analyze the industry in which the Aleo project operates, we can start with zero-knowledge proof and Layer1.

In the field of zero-knowledge proof, as hardware acceleration research and infrastructure improvement continue, ZK technology will become more practical and closely related to multiple fields, such as metaverse, Web3, cryptocurrency, finance, and privacy. The development of ZK is still in its early stages, and as a cryptographic algorithm, it stands out among a series of cryptographic algorithms due to its excellent algorithmic properties and ease of use. The application of ZK technology in the blockchain field means faster-running blockchain networks and open/private applications. To some extent, it has also become the core and supporting tool of the blockchain ecosystem. Achieving privacy protection while achieving scalability is crucial for the future development of blockchain and even web3. This is the future application prospect of zero-knowledge proof and also the prospect of the Aleo network.

In terms of Layer1, unlike Layer2 projects such as Starware, zkSync, and Scroll, the Aleo network has its own snarkVM, Leo programming language, Aleo Studio development environment, and PoSW consensus mechanism. This means that in the zero-knowledge field, applications and ecosystems developed based on Aleo far exceed those of Layer2 ZK projects, and the massive market and considerable capital brought by the application ecosystem and system are beyond imagination.

11. Opportunities and Risks:


In the Industry Analysis section, we have discussed the importance and potential of zero-knowledge proof technology. This is not only the potential for widespread use of the technology itself but also the future prospects of the Aleo network, which incorporates zero-knowledge proof technology. The Aleo project has also gained capital appreciation by adopting zero-knowledge proof technology. Therefore, it can be said that the opportunities in the zero-knowledge proof field are also opportunities for the Aleo project, especially for Layer1 blockchains.

From the perspective of Layer1 blockchain, unlike Layer2, Layer1 has its own smart contracts, development environment, programming language, consensus mechanism, economic model, etc. It can attract potential market ecosystems, users and value on a larger scale. This is the opportunity and advantage of the Aleo project positioning on Layer1.


The risk of the Aleo project also comes from zero-knowledge proof technology. Historically, generating ZKP is more expensive than running calculations locally because ZKP requires more complex and computationally expensive mathematical operations and relies on more specialized hardware. This is also why Aleo’s CEO believes that the accelerated development of hardware in 2023 will drive the development of ZK. Whether the Aleo network using ZKP technology can handle massive data in real-world use cases more efficiently than other networks and how to balance costs (Aleo is positioned as 0Gas fees) still need to be validated by the market.

Disclaimer: This article is a web3 Chinese editorial work, and the content only represents the author’s standpoint and does not constitute investment advice. Please be cautious, and if the article/material infringes on your rights, please contact the official customer service for handling.

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