After a seven-year wait, Aztec finally launched its token, but its return with a privacy narrative has been embroiled in controversy surrounding its initial coin offering (ICO).

Author: Nancy, PANews

As signs of a shift from a bull to a bear market become increasingly apparent in the crypto market, more and more projects, such as Monad, MegaETH, and Meteora, are rushing to launch their own tokens in an attempt to seize the last window of liquidity. Recently, Aztec Network, a once-star project, announced its token launch, returning to the market after seven years, riding the wave of the privacy trend, but its token sale has sparked controversy.

TGE's airdrop was absent, and mutual funds with over 70% valuation discounts faced dissatisfaction.

After years of waiting and multiple cycles of change, Aztec has finally announced the launch of its own cryptocurrency.

On November 13th, Aztec disclosed its token economic model, with a genesis supply of 10.35 billion AZTEC tokens. Of these, 27.26% is allocated to investors and early supporters, 21.06% to the core team, 11.71% to the foundation, 10.73% to ecosystem subsidies, 4.89% to future incentives, 2.41% to Y1 Network Rewards, and the remaining 21.96% (approximately 2.273 billion tokens) is allocated to token sales, including the Phase 2 public auction (14.95%), Uniswap V4 liquidity pools (2.64%), the Phase 1 genesis sequencer sale (1.93%), and Bilateral reservations (2.44%). Tokens will primarily be used for sequencer staking, network governance, and network fee payments. The annual inflation cap will not exceed 20%, determined by governance.

As announced by Aztec, it is launching TGE through an AZTEC token sale. The Genesis Sequential round sale will run from 22:00 on November 13 to 22:00 on December 1, while the open auction will take place from 22:00 on December 1 to 22:00 on December 6.

This token sale will be conducted based on Uniswap's newly launched Continuous Liquidation Auction (CCA) . This scheme aims to drive liquidity and facilitate open price discovery for newly issued or low-liquidity tokens on Uniswap v4. It operates entirely on-chain, with a single liquidation price set per block. Higher bids are prioritized for execution, and bids at the same price are distributed proportionally, with all successful bidders paying the same price. Proceeds are automatically pooled in v4 after the auction concludes. Aztec is the first project to adopt this mechanism and can opt to use the ZK Passport module for private and verifiable participation verification.

However, Aztec's token sale plan has been met with criticism from the community. As a privacy project with substantial funding and high visibility, Aztec was initially a prime target for arbitrageurs, but the official announcement that there would be no airdrops rendered the time and money invested by long-term users meaningless. Instead, Aztec emphasizes community priority, opening up early bidding opportunities to network contributors, including testnet node operators, Aztec Connect users, zk.money users, and active community members. Currently, over 300,000 addresses have been whitelisted.

More attention is focused on the valuation and lock-up conditions. Aztec tokens have a starting FDV of $350 million, with a public sale ratio of 14.5%. Although the official statement claims this price represents a discount of approximately 75% to the implied valuation of the latest equity funding round, many community members still believe the valuation is mismatched with the project's current output. Meanwhile, Aztec's initial coin offering (ICO) has been criticized for its long lock-up period. Both the genesis sale (minimum staking requirement of 200,000 AZTEC) and the open auction require a 12-month lock-up period, with tokens from the public auction subject to a governance vote after 90 days to determine whether they should be immediately unlocked. Given the current depressed market sentiment and the poor performance of most projects after their TGE (Time-Based Event), these lock-up conditions amplify the financial risk for participants. It's worth noting that the white paper indicates 0.12% of the tokens (approximately 12.42 million) will be allocated to "non-internal early contributors, community members, and related stakeholders," with most of this distribution to be completed before the token sale begins.

Furthermore, for compliance reasons, Aztec requires participants to complete KYC and mint NFTs before entering the auction process. However, this requirement, which contrasts with its privacy narrative, has become another focal point of community discussion.

After raising over $100 million, the company is transforming its business and launching its own cryptocurrency to capitalize on the resurgence of the privacy sector.

Aztec, a once-popular project, has been dedicated to building privacy solutions on Ethereum since its launch in 2018. Public information shows that Aztec completed four rounds of financing between 2018 and 2022, raising a total of over $119 million. Investors included heavyweight institutions in the industry such as Vitalik Buterin, ConsenSys, Paradigm, a16z, Ethereal Ventures, and Coinbase Ventures.

However, despite its large funding and high market attention, Aztec's ecosystem development has not progressed ideally. Especially after Tornado Cash was sanctioned by the US OFAC in 2022, the regulatory risks for the entire privacy-related project sector increased significantly. In March 2023, Aztec announced a business transformation, gradually shutting down its DeFi privacy bridge project, Aztec Connect, and discontinuing the deposit function of zk.money. The official statement indicated that no regulatory agencies had contacted them, and that this move was driven by commercial considerations, shifting their focus to the development of the zero-knowledge universal language Noir and next-generation crypto blockchains. This decision impacted the Aztec ecosystem, which at the time had accumulated tens of millions of dollars in transaction volume and hundreds of thousands of users through Aztec Connect and zk.money.

After a period of weakening privacy narratives, Aztec continued to update its products, but market enthusiasm clearly declined. According to DeFi Llama data, Aztec's total value locked (TVL) fell from a peak of $21 million to a low of approximately $4 million.

However, the privacy sector began to show signs of recovery at the end of last year. In November 2024, a US court ruled that OFAC's sanctions against Tornado Cash were illegal and removed it from the sanctions list in March of this year, bringing positive signals to crypto privacy projects.

Taking advantage of this opportunity, Aztec announced the establishment of its foundation in February of this year, immediately sparking speculation about its token issuance plans. Subsequently, Aztec launched its public testnet, attracting user interaction and driving a rebound in TVL (Total Value Limit). Within just four weeks, the platform saw the development of over 30 new applications, with more than 17,000 node connections. Following this, Aztec also completed network upgrades, expanded its developer ecosystem, and implemented cross-chain and performance optimizations.

Recently, with the significant price increases of privacy coins such as Zcash, market attention to the privacy sector has risen again, providing a relatively favorable window of opportunity for Aztec's token launch. However, given the current sluggish crypto market environment and rapidly changing narratives, whether Zcash can sustain its ecosystem development and attract long-term developer and user participation after gaining short-term attention and liquidity through its token launch remains to be seen.