Guide to Aleo
September 18, 2024
Introduction
Transacting on major blockchains is public, however, many would argue that we need some level of privacy in order to achieve exit velocity for crypto adoption. Aleo is one of the many protocols working on enabling privacy in DeFi and transacting. More specifically, it’s an L1 smart contract blockchain focused on enabling building private decentralized applications using zero-knowledge.
Aleo Components
zkCloud
This is the core of Aleo, and includes snarkOS and snarkVM:
SnarkOS is what powers the Aleo blockchain. It validates transactions with a single proof of execution and maintains the immutability of Aleo. The Aleo blockchain uses a novel consensus mechanism called AleoBFT. It leverages Proof of Stake to achieve instant finality for block confirmation and leverages Proof of Work (via provers) to incentivize proof generation. With AleoBFT, provers (separate from validators) solve and produce proofs on the network in exchange for rewards from the blocks.
SnarkVM is an off chain private environment that processes transactions at scale. The only thing required onchain is the verifiable proofs of computation that are generated.
Leo
In order for developers to seamlessly write private applications, Aleo created a programming language, Leo, alongside Leo Playground, the world’s first IDE for zero-knowledge proofs.
Leo abstracts low-level cryptography so any developer can easily write zero-knowledge logic to deploy private, scalable decentralized applications.
Leo was influenced by programming languages like JavaScript and Rust to elicit a sense of familiarity for developers and to emphasize readability and ease of use.
Accounts
An Aleo account is composed of an account private key, an account view key, and an account address. The private key is used to authorize a transaction which updates the global state of account records. The view key decrypts account records which are encrypted under the user’s account address.
AleoBFT and Validator Nodes
AleoBFT is a consensus mechanism based on Narwhal/Bullshark.
Stakers lock up (delegate) Aleo Tokens to help validators participate in consensus and secure the network. Rewards are earned and distributed with respect to the proportion delegated. In addition, validator nodes include proofs from prover nodes when creating blocks.
Proof of Succinct Work and Prover Nodes
Provers use specialized hardware to generate proofs and solve puzzles using Proof of Succinct Work to earn Aleo Tokens. You can consider provers "zk miners".
Aleo Provers compete with each other to generate solutions to Coinbase puzzles. Once these puzzles (which are unrelated to Coinbase the company) are solved, the winning prover gets a reward, also known as a Coinbase. To solve these puzzles, Aleo Provers must generate SNARK proofs that will satisfy a difficulty threshold as determined by the Aleo network. The more efficient and effective the provers are at generating solutions to these puzzles, the higher the chance of earning Aleo Coinbase rewards. Multiple provers can earn a portion of the Coinbase reward in proportion to the number of valid puzzle solutions submitted. Provers provide 1/3rd of the Coinbase solution to validators to incentivize their inclusion and reward receipt.
Tokens, Rewards, and Staking Dynamics
The Aleo Token is the official token of the Aleo network and is used for staking as well as payments for fees.
Aleo is a delegated Proof of Stake (dPoS) protocol with a 10M Aleo Token stake minimum for the validator to be considered active and a 10K Aleo Token minimum to be a delegator. Rewards are distributed proportionally based on a stake weight in a non-custodial manner. It is important to note that slashing is not live at mainnet.
Governance
There's no concept of onchain governance. There are Aleo Request for Comment (ARCs) which are similar to EIPs or PIPs (Polygon).
Conclusion
Aleo is an L1 smart contract blockchain that focuses on enabling privacy in dapps using zero-knowledge proofs. Through the use of its core components, it enables private transaction processing so developers can quickly write private applications.
Coinbase is happy to support the growing ecosystem of protocols like Aleo and work closely with protocol communities to bring clients deep insights into each of our supported networks. Our performant staking infrastructure provides enterprise-grade security and a 99% uptime guarantee, so that your assets continue to earn rewards.*
Delegate to our validator or get in touch with our team to stake Aleo.
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