What makes Fhenix’s first fully homomorphic encrypted blockchain so magical, with Multicoin leading the investment and a gathering of experts?

Fhenix's fully homomorphic encrypted blockchain, with Multicoin as the lead investor and a team of experts.

Author: Idan Levin

Translation: Deep Tide TechFlow

Fhenix is the first blockchain built on FHE (Fully Homomorphic Encryption) that supports end-to-end encryption, with a seed round funding of $7 million led by Multicoin Capital and 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 progress by companies like Zama has made it possible for this technology to be used in production for the first time.

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The magic of FHE is that it allows calculations to be performed on encrypted data. Computation on ciphertext (encrypted data) produces a new ciphertext that corresponds to the operation’s result on plaintext (unencrypted data).

The exact mathematical process behind FHE is complex and relies on lattice-based encryption, which is based on certain problems in lattice theory. The first feasible FHE scheme was proposed by Craig Gentry in 2009, using an object called an “ideal lattice” to encrypt data and allow computation on encrypted data.

From the perspective of blockchain, FHE means that each transaction is encrypted before being sent to the mempool, so even miners/proposers cannot see the content of the block. But FHE is not just about encrypting the mempool – the execution of block transactions is still fully encrypted, ensuring end-to-end confidentiality.

Fhenix is developing the first FHE blockchain (fhEVM) that enables end-to-end encryption for public blockchains. This system is expected to revolutionize our perception of blockchain and provide two important guarantees:

1. Complete confidentiality: FHE allows computation on encrypted data, which is often referred to as the “holy grail” of cryptography. With this feature, Fhenix’s system can ensure absolute confidentiality, as even nodes executing smart contracts cannot access any user data.

2. Elimination of Miner Extractable Value (MEV): Using Fhenix’s system, the entire mempool is fully encrypted, preventing any entity from front-running users. MEV is one of the biggest and most painful problems in today’s public blockchains, undermining the fairness of the system. FHE has the potential to eliminate MEV, which is a significant issue for the industry.

fhEVM aims to:

1. Be independent of cryptographic expertise: fhEVM’s design does not require any specialized cryptographic knowledge. It will typically support Solidity smart contracts with only minor modifications, primarily adding privacy data types to the smart contracts.

2. Be compatible with Ethereum tools: fhEVM will maintain compatibility with existing Ethereum tools.

3. Be user-friendly.

FHE will redefine confidentiality and fairness in Web3

In the web2 era, protocols such as end-to-end encryption and TLS/SSL have played a crucial role in protecting digital communication and confidentiality. This can be seen in applications such as WhatsApp (one of the most widely used messaging apps in the world, which employs end-to-end encryption) and the majority of the internet today that uses TLS. It seems crazy to have e-commerce websites that do not support TLS communication.

The emergence of FHE is expected to bring this high level of encryption to the blockchain field. FHE allows computation on encrypted data to protect the confidentiality of user data in the best possible way, better than any previous technologies such as TEE/ZK.

In addition, FHE addresses the significant issue of miner extractable value (MEV), which is one of the biggest challenges facing public blockchains today and cannot be solved by other technologies (all other technologies, such as Flashbots, only redistribute MEV in some way to make it fairer, but all proposed solutions are just permutations of this problem and not a fundamental solution). MEV undermines the legitimacy of public blockchains as it erodes the concept of the system being fair. This is why MEV has become one of the hottest topics in the industry with billions of dollars invested. FHE will eliminate MEV and restore fairness to the system.

We believe that there is no better team on Earth to build this system than Fhenix. Only a few people in the world possess the expertise to design such a system, and the combination of Guy Zyskind’s track record in blockchain and Guy Itzahki’s rich experience in secure systems is extremely rare. They have gathered the world’s best partners – Zama as a technical partner, including LianGuaiscal LianGuaiillier, one of the top figures in the FHE field, and professors Shai Halevy and Srini Devadas.

Israel is a leader in the field of cryptography with a wealth of talent. The fusion of Israel’s expertise and advanced cryptography is unique and unparalleled globally. We believe they will play a key role in bringing end-to-end encryption to the Web3 industry.

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