Aztec Staking

AZTEC is the native utility token of the Aztec network, a privacy-preserving Layer 2 rollup on Ethereum. The token serves multiple purposes within the ecosystem:

• Staking: AZTEC is staked by attesters on Ethereum L1 through the GSE (Governance, Sequencing, and Execution) contract to secure the network and validate blocks.
• Governance: Token holders participate in network governance decisions that shape the protocol's development and parameter adjustments.
• Gas Fees: AZTEC is used to pay transaction fees on the Aztec Layer 2 network.

The total supply of AZTEC is 10.35 billion tokens with a circulating supply of approximately 2.96 billion. Stakers earn rewards from the attester allocation of checkpoint block rewards, currently yielding around 20.61% APR.

Aztec is the first privacy-preserving Layer 2 rollup built on Ethereum. It uses zero-knowledge proofs to enable encrypted smart contracts, allowing transaction details, balances, and contract logic to remain confidential while still benefiting from Ethereum's security guarantees.

Key features of the Aztec network include:

• Encrypted Smart Contracts: Developers can build applications where on-chain data is shielded from public view, enabling private DeFi, confidential voting, and shielded token transfers.
• Noir Programming Language: A purpose-built language for writing zero-knowledge circuits, making privacy-preserving application development accessible to a broader developer community.
• Attester-Sequencer Model: The network uses a dual-role consensus system where sequencers propose and order transactions (earning 70% of block rewards) and attesters validate blocks (earning 30% of block rewards).
• L1 Staking: Unlike most Layer 2 networks, Aztec staking occurs directly on Ethereum mainnet through the GSE staking contract, leveraging Ethereum's security for the staking mechanism itself.

The network has approximately 3,721 active attesters and over 100 registered staking providers, with checkpoint rewards of 500 AZTEC issued every 72-second slot.

The AZTEC token has a total supply of 10.35 billion tokens with a circulating supply of approximately 2.96 billion. Key tokenomics details include:

• Checkpoint Rewards: 500 AZTEC are minted per checkpoint block, issued every 72-second slot, creating new supply to reward network participants.
• Reward Split: Block rewards are divided between sequencers (70%) who propose and order transactions, and attesters (30%) who validate blocks.
• Inflation Rate: The current inflation rate is approximately 2.12%, driven by the ongoing checkpoint reward emissions.
• Staking Yield: Attesters currently earn around 20.61% APR on their staked AZTEC tokens.
• Minimum Stake: A minimum of 200,000 AZTEC is required to become an attester on the network.
• Provider Commission: Staking providers typically charge a 3-5% commission (called "takeRate") on delegated staking rewards.

Aztec uses a Proof-of-Stake consensus mechanism with a dual-role architecture consisting of sequencers and attesters:

• Sequencers: Responsible for proposing and ordering transactions into blocks. They receive 70% of the 500 AZTEC checkpoint reward issued every 72-second slot.
• Attesters: Validate and attest to the correctness of proposed blocks. They stake AZTEC on Ethereum L1 through the GSE (Governance, Sequencing, and Execution) contract and receive 30% of checkpoint rewards.

The consensus process leverages zero-knowledge proofs to ensure both privacy and correctness of transactions. Block validity is enforced through cryptographic proofs that are verified on Ethereum mainnet, inheriting Ethereum's security guarantees. The network currently has approximately 3,721 active attesters participating in consensus.

Staking AZTEC involves delegating your tokens to an attester through the GSE (Governance, Sequencing, and Execution) staking contract on Ethereum mainnet. Here is how to get started:

• Choose a Staking Provider: Browse available Aztec staking providers on Staking Rewards. Compare providers by commission rate (takeRate), performance, and total stake.
• Acquire AZTEC Tokens: Purchase AZTEC on supported exchanges and transfer them to an Ethereum-compatible wallet.
• Delegate to an Attester: Use the staking provider's interface or interact directly with the GSE contract on Ethereum L1 to delegate your AZTEC tokens.
• Earn Rewards: Once delegated, your tokens begin earning a share of the attester's 30% block reward allocation, currently yielding approximately 20.61% APR.

Note that staking happens on Ethereum Layer 1, not on the Aztec L2 network itself. A minimum stake of 200,000 AZTEC is required for solo attesters, but staking providers may allow smaller delegations.

Selecting the right Aztec staking provider is important for maximizing rewards and minimizing risk. Consider the following factors:

• Commission Rate (takeRate): Providers typically charge 3-5% on staking rewards. Lower commissions mean higher net returns for delegators.
• Performance & Uptime: Check the provider's historical attestation performance. Consistent uptime ensures you receive steady rewards.
• Total Stake: Providers with a well-balanced stake are less likely to be over-concentrated, which can affect decentralization.
• Reputation & Security: Choose providers with a proven track record, transparent operations, and strong security practices.
• Verified Status: Look for Verified Staking Providers on Staking Rewards, which have undergone additional verification.

You can compare Aztec staking providers side by side on the Aztec staking page on Staking Rewards.

Once you have delegated your AZTEC tokens to a staking provider, maintenance requirements are minimal but worth monitoring:

• Reward Compounding: Staking rewards are not automatically compounded. To maximize returns, periodically claim and re-stake your earned AZTEC tokens.
• Provider Monitoring: Keep an eye on your chosen provider's performance and uptime. If a provider's attestation rate drops significantly, consider redelegating to a more reliable provider.
• Commission Changes: Providers may adjust their takeRate over time. Monitor any commission changes that could affect your net rewards.
• Governance Participation: As an AZTEC staker, you may be eligible to participate in governance proposals that affect the protocol. Staying informed about governance votes helps shape the network's future.
• Unbonding Period: If you decide to unstake, be aware of the 4-day exit delay (345,600 seconds) during which your tokens remain locked and do not earn rewards.

AZTEC staking rewards are generated through checkpoint block reward emissions:

• Checkpoint Rewards: Every 72-second slot, a checkpoint block is produced and 500 AZTEC are minted as a block reward.
• Reward Distribution: The 500 AZTEC reward is split between two roles: 70% (350 AZTEC) goes to the sequencer who proposed and ordered transactions, and 30% (150 AZTEC) is distributed among attesters who validated the block.
• Attester Rewards: The 30% attester allocation is distributed proportionally among all active attesters based on their stake weight. With approximately 3,721 active attesters, this yields a current APR of around 20.61%.
• Provider Commission: When staking through a provider, a small commission (typically 3-5%) is deducted from your rewards before distribution.

The reward rate is influenced by the total amount of AZTEC staked across all attesters. As more tokens are staked, the individual reward rate decreases, and vice versa. The current inflation rate from these emissions is approximately 2.12%.

While staking AZTEC offers attractive rewards, it is important to understand the associated risks:

• Slashing Risk: Attesters who act maliciously or fail to meet their validation duties may face slashing penalties, resulting in a loss of part of their staked tokens. When staking through a provider, your delegation may also be subject to slashing if the provider misbehaves.
• Unbonding Period: When unstaking, there is a mandatory 4-day exit delay during which your tokens are locked and do not earn rewards. During this period, you cannot trade or use your tokens.
• Smart Contract Risk: Staking occurs through the GSE contract on Ethereum L1. Like all smart contracts, there is an inherent risk of bugs or vulnerabilities, although Ethereum mainnet provides a high-security environment.
• Market Risk: The value of AZTEC tokens may fluctuate significantly. Staking rewards may not offset potential price declines.
• Provider Risk: If your chosen staking provider experiences prolonged downtime or is penalized, your staking rewards may be reduced.
• Protocol Risk: As a relatively new privacy-focused L2, the Aztec protocol is still maturing. Protocol upgrades or changes could affect staking mechanics or reward rates.

Always do your own research and consider diversifying across multiple providers to mitigate risk. Use the Staking Calculator to estimate potential returns.