Aztec has finally issued coin after a long wait of 7 years! Instead of an airdrop, they opted for a public sale with a valuation of 350 million, facing backlash from the community.

The celebrity privacy project Aztec Network has issued its coin after seven years, with a total supply of 10.35 billion AZTEC Tokens and an initial FDV of 350 million USD. However, it is controversial that Aztec has stated it will not conduct an Airdrop and will only open the public sale to 300,000 Allowlist participants. The tokens must have a Lock-up Position of 12 months and KYC, which contrasts with the privacy narrative. The community believes that the valuation cannot match the output, and the long-term interaction costs in terms of user time and capital will be in vain.

TGE No Airdrop Causes Collective Collapse of the Rug Pull Gang

As a privacy project with considerable financing scale and high attention, Aztec has been a key target for the “撸毛党” in its early days. However, the official statement indicated that no airdrops would be conducted, which made the time and financial investments of long-term participants feel wasted. Instead, Aztec emphasizes community priority, opening the qualification for early bidding to online contributors, including testnet node operators, Aztec Connect users, zk.money users, and active community members. Currently, the number of addresses that have obtained allowlist status has exceeded 300,000.

This model of “no airdrop, change to public sale” has triggered strong backlash in the crypto community. Airdrops are the traditional way for crypto projects to reward early users, and those who spend time and gas fees interacting on testnets usually expect to receive token rewards when the project issues coins. Aztec's decision has shattered this expectation, leaving tens of thousands of early participants feeling betrayed.

The allowlist mechanism, while giving early users the priority to purchase, does not equate to receiving tokens for free. Users still need to pay the purchase cost and face lock-up and market risks. For many small participants, they may not have sufficient funds to participate in the public sale or may consider the risk-reward ratio to be unfavorable. In this situation, the value of the allowlist qualification is greatly diminished.

The community's anger also stems from the waste of time costs. Aztec has been online for 7 years since 2018, and many early users participated from the bull market peak, experiencing a complete bear market cycle. They invested not only gas fees but also the time cost of continuous attention and interaction. In the end, they were told there would be no airdrop, and they could only spend money to buy coins and would need to lock-up position for 12 months. The psychological gap is understandable.

Three Major Focuses of the Aztec Issuing Coin Controversy

No Airdrop: Long-term interactive users cannot obtain tokens for free, and the time and gas costs go to waste.

Overvaluation: Starting FDV is $350 million, the community believes it does not match the current output.

Long Lock-up Position: Tokens must be locked up for 12 months, amplifying capital risk during market downturns.

3.5 billion valuation and dual pressure of December Lock-up Position

What is more concerning are the valuation and lock-up conditions. The starting FDV of the Aztec Token is $350 million, with a public sale ratio of 14.5%. Although the official statement claims that this price represents a discount of about 75% compared to the implied valuation from the latest round of equity financing, many community members still believe that the valuation does not match the current output of the project. This valuation implies that Aztec needs to prove its worth in the future, but the current progress in ecological construction is insufficient to support this figure.

According to DeFi Llama data, Aztec's total Lock-up Position (TVL) has dropped from a peak of $21 million to a low of about $4 million. Although there has been a recent recovery in activity on the testnet, this TVL figure seems extremely mismatched compared to the $350 million valuation. Compared to other privacy projects, even at its peak, Aztec's actual application scale has been relatively limited.

At the same time, Aztec's new listing is said to have a longer lock-up period. The Genesis sale (minimum staking requirement of 200,000 AZTEC) and the proceeds from the open auction both require a 12-month lock-up, during which the tokens from the public auction must be decided by governance vote whether to unlock immediately after 90 days. Current market sentiment is low, and most projects perform poorly after TGE; such lock-up conditions amplify the financial risks for participants.

A 12-month lock-up period is extremely risky in the current market environment. The cryptocurrency market cycle typically lasts around 4 years, and we are currently at a turning point in the late bull market or early bear market. A 12-month lock-up means that investors may not be able to unlock until the middle of the bear market, by which time the token price may have already dropped significantly. This risk causes many cautious investors to choose to wait and see.

In addition, based on compliance requirements, Aztec requires participants to complete KYC and mint NFTs before entering the auction process. However, this requirement has become another focal point of community discussion due to its contrast with the project's privacy narrative. A project that positions itself around privacy as its core selling point yet requires users to provide identity information for KYC raises questions about the authenticity of Aztec's privacy philosophy.

Timing choices for business transformation and the rebound of the privacy track

The once-popular project Aztec has been dedicated to creating privacy solutions on Ethereum since its launch in 2018. Public records show that Aztec completed four rounds of financing between 2018 and 2022, with a total amount exceeding $119 million, and investors include heavyweight institutions in the industry such as Vitalik Buterin, ConsenSys, Paradigm, a16z, and Ethereal Ventures.

However, despite the large scale of financing and high market attention, the progress of Aztec's ecosystem construction is not ideal. Especially after Tornado Cash was sanctioned by the U.S. OFAC in 2022, the regulatory risks for the entire privacy-related projects have significantly increased. In March 2023, Aztec announced a business transformation, gradually closing its DeFi privacy bridge project Aztec Connect and halting the deposit function of zk.money. The officials stated that they had not been contacted by regulatory agencies, and this move was made for business considerations, shifting focus towards the zero-knowledge general language Noir and the development of the next generation of cryptocurrency blockchain. This decision led to a shock to the Aztec ecosystem, as Aztec Connect and zk.money had already accumulated tens of millions of dollars in trading volume and hundreds of thousands of users at that time.

After a period of fatigue in privacy narratives, although Aztec has continuously advanced product updates, the market enthusiasm has clearly declined. However, there have been signs of recovery in the privacy sector since the end of last year. In November 2024, a U.S. court ruled that “OFAC sanctions against Tornado Cash” were illegal, and in March of this year, it was removed from the sanctions list, bringing positive signals for crypto privacy projects.

Taking this opportunity, Aztec announced the establishment of a foundation in February this year, and the market immediately began speculating on its issue coin plan. Subsequently, Aztec launched a public testnet to attract user interaction and boost TVL recovery. In just four weeks, the platform added over 30 application developments, with the number of node connections exceeding 17,000. After that, Aztec also completed several tasks, including network upgrades, developer ecosystem expansion, as well as cross-chain and performance optimization.

Recently, with the significant price increase of privacy coins like Zcash, the market's attention on the privacy sector has risen again, which also provides a relatively favorable window for Aztec's issue coin. Aztec's choice to issue coin at this time is clearly aimed at leveraging the heat of the privacy sector to enhance the success rate of token sales. However, the current environment in the crypto market is sluggish, and narratives are changing rapidly. After gaining short-term attention and liquidity stimulation through issuing coin, whether Aztec can continue to promote ecological construction and attract developers and users for long-term participation still needs time to verify.