Three privacy-focused Ethereum L2s arising in 2024

They may use different cryptographic techniques, but all privacy-centric L2s hope to be the first on Ethereum


Artwork by Crystal Le


Several crypto startups are looking to develop the first-ever privacy-centric Ethereum L2. 

On Ethereum today, transactions and other smart contract executions are all publicly visible. Transparency is a core principle of blockchain technology, meant to allow verification of systems and instill confidence, but it can also be a double-edged sword.

While transparency ensures accountability, it also means that the details of these transactions and contracts are exposed to everyone, including malicious actors and hackers who can analyze transaction patterns, identify vulnerabilities in smart contract code, and exploit these weaknesses for nefarious purposes.

Privacy solutions offer dapp developers the opportunity to build applications that shore up these shortcomings without compromising security. 

In the process, these privacy-first applications must endeavor to prevent harmful actors from concealing their identities, while protecting the rights of law-abiding citizens. In short, to avoid the fate of crypto mixer Tornado Cash, which allegedly was used to launder over $455 million stolen by sanctioned North Korean hackers. 

Read More: Tornado Cash Developer’s Arrest Sparks Protest in Amsterdam

Here are a few teams that are hoping to build a functioning privacy-centric L2:

  1. Aztec

Aztec is a privacy layer of Ethereum. It’s referred to as a hybrid solution using zkSNARKs and its very own programming language, Noir, to offer private transfers, meaning that the network is designed to validate transactions without revealing any sensitive information about them, such as the amount and parties involved. 

Unlike other zero-knowledge (zk) rollups on Ethereum, Aztec combines private and public execution in one single zk rollup. Meaning that a user’s own device is responsible for encrypting the transactions before it is processed by the blockchain.

Its primary focus, for now, is to design a platform for engineers to write private smart contracts without requiring in-depth mathematical knowledge of zk proofs. It recently revealed a new testing environment, Aztec Sandbox, for interested developers and plans for a testnet launch early next year. 

  1. Fhenix

Encryption start-up Fhenix hopes to bring fully homomorphic encryption (FHE) to smart contracts.

Unlike privacy startups that use zero-knowledge technology, where data must be moved off-chain and decrypted in order for a prover to verify its accuracy, FHE encryption performs computations directly on encrypted data. 

By keeping data on chain, the network will have the capability to process computations that come from various sources, such as an on-chain poker game or a sealed-bid auction contract. 

Fhenix launched a developer testnet in July and plans for a full-scale testnet launch of its FHE rollup in early 2024.

  1. COTI 

COTI is a privacy L2 building on Ethereum. Unlike Aztec, which uses zkSNARKS and Fhenix with FHE, COTI V2 will use so-called Garbled Circuits to enable private transactions.

Garbled Circuits enable two different parties to evaluate information, even if they distrust one another. The parties can each submit their ‘garbled’ or encrypted inputs, computations are conducted on these inputs and an outcome is obtained. 

COTI will launch a developer testnet V2 in Q2 of 2024, and its mainnet launch will come soon after.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg


In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.


Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile


The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally


While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders


Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume


DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit


The Boston Globe reports that lawyer John Deaton is weighing a possible bid