Aleo: First Look

December 8, 2023

What is Aleo?

Aleo is a privacy-focused, zero-knowledge proof based Layer 1 blockchain. With standard, non-encrypted blockchains, all of a user’s transaction history is fully visible to the public. With built-in cryptographic proofs called ZK-SNARKs, Aleo allows for hidden but verifiable activity and truly private transactions.

One of Aleo’s main goals is to be the world’s leading developer platform for zero-knowledge based applications. To achieve this, Aleo is launching with a number of unique developer tools and software to make ZK-app programming fast and easy.

Along with its own blockchain, Aleo runs its own virtual machine (snarkVM), operating system (snarkOS), and programming language (Leo). These are all tools designed to make integrating ZK proofs and cryptography into Web3 development easier than ever.

  • snarkVM: The decentralized Virtual Machine created by Aleo. Easily downloadable as a Rust crate.
  • snarkOS: The core protocol behind Aleo’s peer-to-peer network. Allows users to quickly spin up nodes and connect directly to peers by bootstrapping connectivity to beacon nodes.
  • Leo: Aleo’s proprietary programming language. Leo is a statically typed language inspired by the security and speed of Rust but with the ease-of-use and readability of Javascript. Additionally, Leo includes built-in ZK capabilities, making it easy for non-crypto native developers to incorporate ZKs and privacy into their programs. 

What Problem does Aleo Solve?

First and foremost, Aleo gives users and applications privacy. Zero-Knowledge proofs are a cryptographic function at the core of the protocol that shield user information and transaction history when verified.

ZK-proofs have been generating an increasing amount of buzz in web3 for a while now, and several Layer-2 solutions have been built using ZK tech. Aleo is unique for its native ZK integration, decentralized proving market (more on this later), and heavy emphasis on developer experience. Developers on Aleo don’t need to learn how to create ZK-proofs from scratch; instead they can focus on app-building and use built in ZK functions and libraries to add new levels of privacy to their apps.

Apps & Use Cases

  • zPass: Secure and private digital identity that allows you to prove details about yourself without actually revealing any info. For example, prove to a crypto exchange that you are over 18 and a resident of Canada without actually giving your name or date of birth.
  • Leo Wallet: An easy-to-use wallet built for the Aleo ecosystem. Automatically create ZK-proofs for transactions directly in your browser.
  • ZKML: Aleo is launching with a transpiler to easily convert Python Machine Learning Models into Leo code. Using the power of ZK, models can access and train on sensitive data such as health or financial info without revealing specifics to the outside world.

Testnet Usage

Aleo’s first public testnet (called Testnet 2) went live in December 2021, has since progressed through multiple stages, and a third public testnet. To prevent spam on testnet and incentivize developer usage, Aleo uses a system called Aleo Credits. Transactions are denominated in different tiers of Aleo Credits and testnet rewards are rewarded to incentivized testnet participants in credits. Once mainnet goes live, credits can be used to pay for services on the Aleo network. Across testnets 2 and 3, a large chunk of credits were allocated to miners to help bootstrap the proving and verifying market.

Transaction size and Credit cost equivalent

Aleo has seen real usage during its three testnet phases. As of this writing, the snarkVM has been downloaded ~439,000 times from Over 44,000 provers connected to Aleo in Testnet 3’s second phase. The third phase of Testnet 3 was heavily focused on app developers to ensure there are unique things to do on-chain upon mainnet genesis. Over 1,000 verified Github repos were submitted during this stage and Aleo selected 130 for Credit allocation.

Testnet 3 app submissions by category

Network Tokenomics

We expect Aleo will release a token upon network genesis. Aleo is currently in its Series B and has raised nearly $300M from top crypto investors including Polychain, a16z Crypto, Galaxy Digital, Variant, and Coinbase Ventures.

Though no tokenomics have been publicly announced, there have been testnet incentives in the way of Aleo Credits. In total, there will be a 1 Billion credit supply. Throughout the testnet process, credit allocations have been distributed to everyone from app developers to mining pool operators to individual provers. So far they have been distributed as follows:

Staking and Consensus

Though it offers staking, Aleo is not a purely Proof-of-Stake network. Instead, Aleo consensus is a combination of mining and staking called Proof-of-Succinct Work (PoSW).

Aleo’s proprietary consensus algorithm is called AleoBFT. The staking portion of consensus is based on DiemBFT, created by the Diem blockchain team once housed at Meta. DiemBFT is organized into rounds, with a leader first proposing a block. Validators then vote for the leader of the next round. Once a vote quorum is reached, the next round’s leader creates a quorum certificate and includes it in its next block proposal.

Stakers will contribute towards consensus and block production but will not be hands-on in the ZK-proof generation process. By moving the computation required for proving off-chain, Aleo aims to keep the chain itself fast and efficient. 


Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (ZK-SNARKs) are cryptographic proofs that can allow a user to verify the validity of information to third parties without actually revealing what that information is. The succinct portion is crucial to why these proofs are scalable – ZK-SNARK proofs can just a few hundred bytes even for large and difficult problems. 

First conceptualized in an academic paper in 2012, several crypto protocols have since incorporated them into their design with varying degrees of success. ZK-SNARKs first came to prominence in crypto with the creation of ZCash, a Bitcoin fork where users can opt to add privacy to transactions using proofs. However, as of this writing, the vast majority of transactions on ZCash choose not to opt into privacy, with only ~6% being fully shielded. While many ZK L2s rely on a centralized service for generating ZKs, Aleo has created a decentralized and trustless market to create proofs and verify their validity.

Proving & Verifying

On Aleo, provers generate cryptographic proofs while verifiers check the validity of the proof. Verifiers never learn any of the underlying data at the base of a proof due to its Zero-Knowledge nature. For most transactions on the network, users will need to generate a proof either themselves or by outsourcing work to a prover.

Proof difficulties are set by a version of the algorithm created by the Bitcoin Cash team called ASERT. When a proof exceeds the current difficulty limit, a coinbase reward is shared among all provers who contributed. The computational work done by provers includes Multi-Scalar Multiplication and fast-Fourier transforms.

There are parallels between the work required for proving in PoSW and for mining new tokens in a traditional PoW chain. In both cases, participants will have to operate specialized hardware and dedicated computational resources. However, with Aleo, proof miners will be using their machines to create a zk-SNARK rather than participate in a PoW algorithm.

In terms of hardware, today Aleo provers are using various types of FPGAs and GPUs, including ones repurposed from Ethereum mining. Assuming Aleo is successful, the Aleo team expects that ZK-mining optimized ASICs will eventually be developed, as happened with Bitcoin mining.

The Team

Aleo was founded by their current CTO, Howard Wu, who co-authored one of the foundational papers in applying ZK to web3, Zexe: Enabling Decentralized Private Computation. Its current CEO is ex-a16z partner Alex Pruden.

Aleo Systems is the team behind the development of the Aleo blockchain. Upon launch, the project will decentralize as an open protocol and Aleo Systems will pivot to focus on building products for the ecosystem.

Figment involvement

Figment will support staking on Aleo from network genesis. If you are interested in staking Aleo, Figment offers a host of services aimed at delivering safe and reliable staking rewards for your assets. 

Over 250 institutional clients rely on Figment to provide best-in-class staking services including seamless and easy integrations, detailed rewards reporting, insights, double sign slashing, and downtime penalty coverage. Figment’s team has extensive Aleo knowledge intended to help dive into the specifics such as rewards and staking information. Meet with us to learn more about Aleo staking.

The information herein is being provided to you for general informational purposes only. It is not intended to be, nor should it be relied upon as, legal, business, or investment advice. Figment undertakes no obligation to update the information herein.


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