In its effort to launch a platform for programmable data privacy, startup Aleo has received some serious financial backing in the form of a $28 million fundraising round led by venture-capital firm a16z (Andreesen Horowitz) and with participation from Placeholder VC, Galaxy Digital, Variant Fund and Coinbase Ventures, among others.
Aleo’s pitch is about developing a web platform that leverages zero-knowledge proofs (ZKPs), a cryptographic technique that allows two parties on the internet, such as an app and a user, to verify information with each other without sharing the underlying data related to that information.
As part of that goal, the team is building a platform to appeal to developers while giving them the tools to keep privacy at the core of whatever apps they create – even if they don’t have a background in blockchain or expertise in cryptography.
The data privacy trade-off
In technology, privacy features are often at odds with convenience. Password managers have become much easier to use, but people sometimes still think it’s simpler to use the same password across most of the sites they use every day, even if doing so is much less secure.
By appealing to developers, rather than creating their own app or the like, Aleo’s platform is intended to foster further privacy applications and use cases that are easier for both developers and users to employ.
Typically, web applications run much of the quiet processes online through back-end servers (like Amazon Web Services), from identity verification to payment portals. Aleo allows developers to incorporate privacy functionality more easily into those processes. The idea is to build out a back-end ecosystem that goes beyond just creating another consumer privacy app, like a virftual private network users can download from the Google Play Store, for example.
Developers can port their apps into Aleo’s platform, which will immediately improve the privacy functionality of those apps by leveraging zero-knowledge proofs. Alternatively, they can build their apps from the ground up right on the platform.
How Aleo enhances data privacy
Rather than requiring a user to share data with a web app, apps using Aleo ensure that data is protected directly on the user's device and verified rather than shared with the service provider.
In a blog post explaining its work on data privacy, Aleo said that “rather than risk leaking a user's password, users can now hash their password on-device, without ever having to send their password over to any web service.”
Incorporating zero-knowledge proofs into apps would allow for this strategy, mitigate the impact of data breaches, keep user data private and help with regulatory compliance. These are just a few of the value-adds that Aleo sees itself as offering.
The funding is accompanied by the launch of Aleo’s Developer Preview II, a line of new tools for developers to build on Aleo ahead of the public launch of the network. Aleo’s testnet1 has successfully mined more than 200,000 blocks with block times now at 30 seconds (down from 80 seconds).
In an email to CoinDesk, Aleo CEO Howard Wu said the most important thing for people to understand is Aleo’s value proposition for both users and developers.
For users, he said, Aleo is the first platform for fully private applications. Aleo uses decentralized systems and zero-knowledge cryptography to deliver a user experience on the web that is both personal and private.
For developers, on the other hand, Aleo is a full-stack web framework for zero-knowledge applications, he added.
“Our fundraise is one of the largest first rounds for any ZK project to date,” said Wu.
Katie Haun, general partner at a16z, said in a statement that data privacy-preserving applications allow users to navigate digital interactions without bias, which, coupled with blockchain technology, will create new opportunities to create value.
“Aleo's tech has solved critical issues in scaling applications built with zero-knowledge technology, enabling any developer or organization to build and scale a truly private application," she said.
Wu said the funds will be used for community growth and for starting a developer grants program and expanding the Aleo's engineering team as it produces the first full-stack framework for zero-knowledge and prep for mainnet launch.
“This fundraise will allow us to seed a developer grants program to grow our ecosystem of Leo developers and Aleo core developers,” Wu said. “It will enable us to begin actively engaging and cultivating our ZK community and become a resource for education around various aspects of zero-knowledge technology.”
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.