State of Aleo Q2 2025

Key Insights

• The total amount of staked ALEO increased 14.3% QoQ, rising from 1.2 billion to 1.3 billion. This growth in native terms signals sustained validator commitment and network security participation, even amid market turbulence.
• ALEO’s price declined 8.1% QoQ to $0.19, while its circulating market cap rose 5.8% QoQ, driven by expected inflationary emissions. The divergence underscores protocol-level stability amid volatile sentiment.
• Aleo deepened its partnership with Google Cloud to enable one-click node deployment, a key step toward institutional readiness.
• Private transactions increased 5.6% QoQ, reaching 638,000 and comprising 9.6% of total transactions, indicating rising adoption of Aleo’s zero-knowledge-native architecture.

Primer

The rise of smart contract-enabled blockchains has enabled the development of unique decentralized applications and increased transparency in financial transactions. While transparency is beneficial for some use cases, the need for onchain privacy has also grown. This has given rise to an influx of applications and blockchains prioritizing privacy through the implementation of cryptographic primitives such as zero-knowledge proofs, ring signatures, and multi-party computation (MPC).

Aleo is a privacy-focused Layer-1 (L1) blockchain designed for private and compliant payments, with enhanced scalability and security through zero-knowledge proofs (ZKPs). Aleo combines its unique Coinbase Puzzle and AleoBFT mechanisms to verify ZKPs and validate transactions. This enables validators to verify the validity of transactions without knowing potentially sensitive information such as the addresses involved in a transaction or the amount transacted. These privacy components create an advantage for developers looking to build privacy-focused decentralized applications. For a complete overview of Aleo, refer to Understanding Aleo: A Comprehensive Overview.

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Key Metrics

Financial Overview

Aleo’s native token, ALEO, continued its downward price trajectory in Q2 2025. ALEO ended the quarter at $0.19, down 8.1% QoQ from its Q1 2025 close of $0.21.

Despite the decrease in price, Aleo’s circulating market cap increased 5.8% QoQ, from $73.9 million at the end of Q1. This increase can be attributed to ALEO’s inflationary nature in Q2.

Network fees, which are denominated in ALEO, fell 88.7% from 370,735 to 114,228 QoQ. Although transaction volume and activity remained relatively resilient (covered in this report’s Network Overview section), the decline in USD-denominated fees from $196,588 to $22,405 QoQ reduced total revenue for stakers, validators, and provers, weakening short-term incentive structures.

Despite these headwinds, inflationary pressures remained contained, with circulating supply growth in line with expected emissions. In Q2, 66.4 million ALEO were issued as rewards. This suggests that while market sentiment has sharply corrected, protocol-level issuance has not accelerated disproportionately, preserving the integrity of Aleo’s economic model.

ALEO’s average price over Q2 was $0.2, the token peaked at $0.28, and bottomed at $0.13. Market cap followed a similar trajectory, averaging $77.7 million for the quarter. It reached a high of $100.8 million in late April after declining to a low of $45.7 million in early April, ending at a market cap of $78.2 million in June.

Total transaction fees paid on Aleo reached $2.3 million in Q2 2025, averaging $8,388 per day. In Q2, daily fees peaked at $819 and hit a quarterly low of $106, illustrating volatility in daily blockspace demand. The overall fee revenue declined 88.6% QoQ, driven primarily by ALEO’s declining market price and transaction count.

Network Overview

Network activity on Aleo declined overall QoQ, normalizing after a larger decrease in Q1. Average daily transactions dropped 30.4% QoQ, falling to 73,280 by the end of June.

The data on user engagement was mixed in Q2, with average daily active addresses increasing 8.9% QoQ, ending at 17,875. Meanwhile, average daily new addresses decreased by 60.7% QoQ, dropping to 2,719. These figures suggest that Aleo’s core user base remains active, but the growth of new users is slowing.

Despite these declines, Aleo’s focus on ZK-native architecture continues to provide a foundation for future growth. As developer tools and privacy-preserving applications expand, long-term metrics such as prover adoption and application-layer integrations may provide a more meaningful signal than raw address or transaction count alone.

One core feature of Aleo is the ability to submit private transactions using the network’s provers, which generate Zero-Knowledge Proofs (ZKPs) to verify their validity. Of the 6.7 million transactions processed on Aleo in Q2 2025, approximately 9.6% (638,000) were private. This marks a 5.6% QoQ increase from Q1. While public transactions continue to dominate, the rising share of private activity signals growing adoption of Aleo’s ZK infrastructure. As the prover ecosystem matures and privacy-native applications expand, private transaction volume may become a core driver of Aleo’s differentiation in the L1 space.

Staked ALEO

Staking activity on Aleo continued to diverge sharply between native and USD terms in Q2 2025. The total amount of staked ALEO increased 14.3% QoQ, rising from 1.2 billion to 1.3 billion. This growth in native terms signals sustained validator commitment and network security participation, even amid market turbulence. When measured in USD, total staked value increased 5.0% QoQ, from $240.8 million to $253.0 million.

The widening gap between native and USD-denominated staking underscores how deeply Aleo’s economic security is tied to token performance. It also highlights the resilience of validator incentives, as operators continued to bond more ALEO even in the face of deteriorating dollar-denominated returns.

Aleo distributed 66.4 million ALEO in validator and prover rewards over Q2 2025, with 34.6 million ALEO issued as block rewards and 31.8 million through puzzle rewards. Despite the network’s declining token price, reward issuance remained consistent and effectively flat, reflecting stable block production and proof generation throughout the quarter.

On average, validators earned 380,234 ALEO per day in block rewards, while provers captured 349,538 ALEO in daily puzzle rewards. The relatively balanced distribution between the two mechanisms highlights the dual-engine nature of Aleo’s network security model, which relies on consensus validators and ZK proof generators to maintain system integrity.

As Aleo’s ecosystem matures and application demand increases, reward distribution dynamics may evolve further, particularly as future upgrades adjust emission schedules and introduce new staking or participation incentives.

Ecosystem Overview and Technical Progress

Technical Roadmap

Aleo’s technical roadmap outlines an ambitious evolution of its L1 ZK platform with a strong focus on performance, developer tooling, and decentralized programmability. Core infrastructure efforts include completing AleoBFT with formal verification, syncing improvements, and dynamic committee support.

2025 Development Goals
In 2025, Aleo is focused on strengthening its core infrastructure and developer experience. Key goals include completing the production version of AleoBFT, with features like dynamic validator committees, formal verification, and improved synchronization for better network resilience. Performance enhancements target 1,000+ TPS, driven by upgrades in peer-to-peer networking, cryptographic optimizations, and transaction propagation. For developers, Aleo is expanding the Leo programming language with support for dynamic data structures, async/await, program upgradability, and a Leo debugger. Improvements to the developer stack will make building private, zero-knowledge applications faster, safer, and more composable.

2025 Development Progress

So far in 2025, Aleo has completed some of its goals, with progress being made on many more.

Completed milestones so far this year:

• AleoBFT: Optimized Caching.
• AleoVM: Batch Proposal Spend Limits.
• Leo: Array and struct assignment, constant-folding, Leo tx verification, Leo debugger, and Leo Test Framework.
• Provers: ARC-0046.

Milestones that are in progress:

• AleoBFT: Formal verification, AleoBFT syncing, automated ephemeral test environments, and streamlined transaction propagation.
• AleoVM: Priority fees, synthesis acceleration, program upgradability, and dynamic dispatch.
• Leo: Program upgradability (cont.) and compiling time function evaluation.
• Provers: Delegated synthesis and formal verification puzzle semantics.

Future Direction
Looking beyond 2025, Aleo aims to unlock full programmability and scalability for ZK applications. This includes advanced proving techniques like batch proving, delegated synthesis, and a proving marketplace to reduce latency and cost. The protocol is also moving toward fee abstraction with paymaster support and building shared private state functionality for richer smart contract interactions. These initiatives could position Aleo as the leading platform for building scalable, interoperable, and privacy-first applications in the next generation of Web3.

ZK Technology Developments

Aleo advanced its position as a leader in zero-knowledge (ZK) innovation throughout Q2 2025, making measurable progress in both protocol design and real-world use cases. Q1 marked the approval and implementation of ARC-102, also known as the zPass Model, which allows hierarchical data to be transformed into Merkle-tree-based, verifiable structures. This architectural shift unlocks new privacy-preserving applications across industries. Q2 lended itself to educational articles and deep dives:

Ecosystem Expansion

Aleo’s broader ecosystem grew materially in Q2 through strategic partnerships, infrastructure upgrades, and the launch of new applications.

Building on their partnership with Google Cloud in Q1, that brought BigQuery analytics and institutional-grade infrastructure to the network, any user can now one-click deploy an Aleo node in the Google Cloud Marketplace.

Verulink, the bridge between Ethereum and Aleo, integrated Predicate in Q2 to help reduce the attestation delay from 24 hours to 15 minutes, improving the overall user experience of cross-chain transfers. There are currently 30+ live applications on mainnet.

On the infrastructure side, AleoBFT, a DAG-based consensus upgrade, pushed throughput to over 20,000 transactions per second. Additional updates to snarkOS (V3.6.x) improved validator performance and expanded the validator set to 33. The new validators in Q2 were NTT Digital and HashKey Cloud.

Community and Developer Engagement

Aleo continued to prioritize developer support and community growth through initiatives such as Codesprint V3, which encouraged new decentralized application submissions. Developer relations were bolstered by regular calls with ecosystem contributors.

From this Codesprint, the three winners were zPassport, zkEscrow, and Minimask.

In addition to the Codesprint, Aleo hosted zkHack in Berlin in June, crowning Kinky Swap and Pessimistic Liquidation as the best DeFi applications and Leomafia as the best game.

The Aleo Foundation announced that BJ Mahal (Head of Partnerships) and Josh Hawkins (EVP Strategy, Policy & Communications) would join their team. These programs signal Aleo’s commitment to building an open, participatory network that leverages grassroots innovation to scale its ecosystem.

Privacy Applications and Real-World Impact

While technological advancements formed the core of Aleo’s Q2 roadmap, the project also expanded its focus to real-world privacy applications and payments.

zPass, originally conceived for credentialing, found new use cases in healthcare and social impact. In collaboration with Humine, zPass was used to secure patient data in clinical trials, offering patients visibility and control over their medical records for the first time. In another instance, AleoHQ partnered with Three of Cups to explore zPass as a tool for enhancing women’s safety during real-world meetups, launching the initiative on International Women’s Day.

In gaming, Aleo continued to explore child-safe environments through ZK-powered data protections. Meanwhile, Arcane Finance continued its work on dark pool infrastructure, showing how financial privacy and compliance can coexist through cryptographic guarantees. These efforts are underpinned by Aleo’s dual-key architecture, which separates transaction control from view permissions, allowing for selective disclosure.

Taken together, these projects demonstrate Aleo’s expanding role as a protocol and a platform for societal change, delivering applied privacy tools to sectors that need them most.

Governance and Tokenomics

In Q2, no governance proposals were voted on. The Aleo Network Foundation plays a central role, both in allocating development resources and in guiding community governance. The unanimous approval of ARC-102 (zPass Model) in the past highlights the active engagement of stakeholders.

Notably, the following has occurred in past quarters:

• Enacted in December 2024, ARC-0042 shaped network incentives by reducing staking emissions and aligning rewards with sustainable growth. The emission curve remains front-loaded, but decreases over time to manage inflation.
• Aleo formalized its validator standards with the introduction of ARC-101, outlining performance, security, and participation requirements. These measures aim to ensure long-term network reliability while opening up validator participation to a broader base.
• The deployment of the Pondo Protocol expanded Aleo’s staking ecosystem to include liquid staking. The issuance of pALEO opens new avenues for yield generation and composability, mirroring trends seen across mature L1 networks.

Closing Summary

Aleo’s Q2 2025 was defined by coming back from a challenging past quarter while maintaining steady progress across technical and ecosystem fronts. While ALEO’s price declined, staking activity grew in native terms, underscoring validator confidence and network security resilience. Network usage normalized after earlier declines, with an uptick in private transactions reflecting deepening adoption of ZK infrastructure. Aleo’s core developer stack advanced significantly, with upgrades to Leo, AleoBFT, and AleoVM positioning the network for scalability and composability.

Strategic partnerships with Google Cloud and Verulink reinforced infrastructure robustness and cross-chain interoperability. The continued rollout of ARC proposals and liquid staking (via pALEO) enhanced governance and capital efficiency. Overall, Aleo remains committed to its vision of privacy-first programmability and payments.

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