Fhenix: Led by Multicoin, How Can Fully Homomorphic Encryption Transform the Web3 Ecosystem?
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Fhenix: Led by Multicoin, How Can Fully Homomorphic Encryption Transform the Web3 Ecosystem?
FHE will redefine confidentiality and fairness in Web3.
Navigating Web3 tides with focused insightsAuthor: Idan Levin
Compiled by: TechFlow
Fhenix is the first blockchain built on fully homomorphic encryption (FHE), enabling end-to-end encrypted transactions. It recently raised a $7 million seed round led by Multicoin Capital, with participation from Node Capital, Bankless Ventures, Robot Ventures, Tane Labs, HackVC, and Metaplanet.
What is FHE?
Fully Homomorphic Encryption (FHE) has been a theoretical academic concept since 2009, but recent practical advancements by companies like Zama have made it feasible for real-world production use for the first time.
The magic of FHE lies in its ability to perform computations on encrypted data. Calculations performed on ciphertext (i.e., encrypted data) produce a new ciphertext that corresponds exactly to the result of performing the same operation on plaintext (i.e., unencrypted data).
The precise mathematical mechanisms behind FHE are complex, relying on lattice-based cryptography derived from the hardness of certain problems in lattice theory. The first viable FHE scheme was proposed by Craig Gentry in 2009, using mathematical structures called "ideal lattices" to encrypt data and allow computation on encrypted data.
From a blockchain perspective, FHE means every transaction is encrypted before being sent to the mempool, so even miners or block proposers cannot see the contents of a block. But FHE goes beyond just encrypting the mempool—execution of transactions within blocks remains fully encrypted, enabling true end-to-end confidentiality.
Fhenix is building the first FHE-powered blockchain (fhEVM), which will bring end-to-end encryption to public blockchains. This system promises to revolutionize our understanding of blockchain technology by providing two critical guarantees:
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Complete Confidentiality: FHE enables computation on encrypted data, often referred to as the "holy grail" of cryptography. With this capability, Fhenix’s system ensures absolute privacy, as even the nodes executing smart contracts cannot access any user data.
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Elimination of Miner Extractable Value (MEV): By fully encrypting the entire mempool, Fhenix prevents any entity from front-running users. MEV is one of the largest and most painful issues plaguing public blockchains today, undermining fairness in the system. FHE has the potential to eliminate MEV entirely—a significant breakthrough for the industry.
The fhEVM is designed to:
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Require no cryptography expertise: The fhEVM is designed to be accessible without specialized cryptographic knowledge. It will support Solidity smart contracts with only minor modifications, primarily involving the addition of private data types within contracts.
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Maintain compatibility with existing Ethereum tools: fhEVM will remain compatible with current Ethereum development tools and infrastructure.
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Be user-friendly.
FHE Will Redefine Privacy and Fairness in Web3
In the Web2 era, end-to-end encryption and protocols like TLS/SSL played a crucial role in securing digital communications and ensuring privacy—as seen in applications such as WhatsApp (one of the world’s most widely used messaging apps, employing end-to-end encryption) and the vast majority of today’s internet traffic using TLS. It would seem absurd now to use an e-commerce website that does not support TLS-secured communication.
The emergence of FHE promises to bring this same high standard of encryption to the blockchain space. FHE allows computation on encrypted data, offering the strongest possible protection for user data privacy—superior to any prior technology (such as TEEs or ZK proofs).
Moreover, FHE addresses the critical issue of Miner Extractable Value (MEV)—one of the biggest challenges facing public blockchains today—which other technologies have failed to resolve. Solutions like Flashbots merely redistribute MEV in a somewhat fairer manner, but all proposed approaches so far are variations on managing the problem rather than eliminating it at its root. MEV undermines the legitimacy of public blockchains by eroding the principle of fairness. This is why MEV has become one of the hottest topics in the industry, with hundreds of millions of dollars invested in mitigating it. FHE will eliminate MEV entirely and restore fairness to the system.
We believe there is no better team on Earth to build this system than Fhenix. Very few people globally possess the expertise required to design such a system. The combination of Guy Zyskind’s proven track record in blockchain and Guy Itzhaki’s deep experience in confidential systems is exceptionally rare. They have assembled a world-class team of partners—Zama as their technical partner, including Pascal Paillier, one of the leading figures in the global FHE community, along with Shai Halevi and Professor Srini Devadas.
Israel is a global leader in cryptography, home to a deep talent pool in this field. The convergence of Israeli expertise and advanced cryptography is unique and unmatched worldwide. We believe they will play a pivotal role in bringing end-to-end encryption to the Web3 industry.
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