We are excited to co-lead Fhenix's $7m seed round alongside Multicoin Capital, and with the participation of Node Capital, Bankless Ventures, Robot Ventures, Tane Labs, HackVC, and Metaplanet, to build the first FHE-based blockchain that enables end-to-end encryption.
What is FHE?
Fully Homomorphic Encryption (FHE) has been a theoretical academic concept since 2009, but practical advancements in recent years by companies like Zama have made it possible to use this technology in production for the first time.
The magic of FHE lies in the ability to perform computations on encrypted data. The computations on the ciphertext (i.e., the encrypted data) produce a new ciphertext that corresponds to the result of the operation on the plaintext (i.e., the unencrypted data).
The exact mathematical procedures behind FHE are complex and rely on lattice-based cryptography, a branch of cryptography based on the hardness of certain problems in lattice theory. The first viable FHE scheme was proposed by Craig Gentry in 2009 and used an object called an “ideal lattice” to both encrypt data and allow computations on the encrypted data.
In the blockchain sense, FHE means that each transaction is encrypted before being sent to the mempool, so even the miner/proposer can’t see the content of the block. But FHE is more than just encrypting the mempool — the execution of the block transactions remains fully encrypted, so there is complete confidentiality end-to-end.
Fhenix is developing the first FHE blockchain (fhEVM) that will enable end-to-end encryption for public blockchains. This system promises to revolutionize how we perceive blockchains by providing two significant guarantees:
Complete Confidentiality: FHE allows for computations on encrypted data, often referred to as the “holy grail” of cryptography. With this feature, Fhenix’s system ensures absolute confidentiality, as even the node executing the smart contract cannot access any user data
Elimination of Miner Extractable Value (MEV): With Fhenix’s system, the entire mempool is fully encrypted, preventing any entity from front-running the user. MEV is one of the biggest and most painful issues for public blockchains today, undermining the fairness of the system. FHE has the potential to eliminate MEV, which is a very big deal for the industry.
The fhEVM is designed to be:
Independent of Cryptographic Expertise: The fhEVM is designed not to require any specialized knowledge of cryptography. It will generally support Solidity smart contracts, with some minor changes, predominantly the addition of a privacy data type to the smart contracts.
Consistent with Ethereum Tools: The fhEVM will retain compatibility with existing Ethereum tools.
User-friendly
FHE will redefine confidentiality 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 preserving confidentiality, as evident in applications like WhatsApp (which is one of the most used messaging applications in the world and is end-to-end encrypted) and the majority of the internet that uses TLS today. It almost seems crazy to use an e-commerce website that doesn’t support TLS communications.
The advent of FHE promises to bring this high level of encryption to the blockchain realm. FHE allows computations on encrypted data, preserving the confidentiality of user data in the best possible way that exists, much better than any previous technology (TEE/ZK).
Moreover, FHE addresses the significant issue of Miner Extractable Value (MEV), which is one of the biggest problems public blockchains face today, and no other technology was able to solve (all other technologies like Flashbots just make MEV fairer by redistributing it in some way, but all proposed solutions are just some permutation of the problem and not a root solution). MEV undermines public blockchains legitimacy, as it erodes the concept that this system is fair. That is why MEV became one of the hottest topics in the industry, with hundreds of millions of dollars invested in it (either by people who want to solve it, or people who want to take economic advantage of it). FHE will eliminate MEV, and can restore the fairness of the system.
We believe there isn’t a better team on earth to build this system than Fhenix. There are very few people in the world who have the expertise to design this system, and the combination of the previous blockchain track record Guy Zyskind brings with him combined with Guy Itzahki's vast experience in confidential systems is rare. They gathered the best partners in the world — Zama as a technology partner, including Pascal Paillier who is one of the top figures in the world in FHE, Shai Halevy, and Prof. Srini Dev Adas.
Israel is a leading figure in cryptography with an immense talent pool in the field. The blend of Israel’s expertise and advanced cryptography is unique and unmatched globally. We believe they will be pivotal in bringing end-to-end encryption to the web3 industry.