A new blockchain that diversifies itself by focusing on data confidentiality, Fhenix, has completed a seven-figure seed round following its private development network (devnet) launched in July 2023. The funding round, where Fhenix raised $7 million, was led by Multicoin Capital and Collider Ventures. Node Capital, Bankless, HackVC, TaneLabs, Metaplanet, and Robot Ventures were among the participants.
According to the announcement, funds will be used to prepare the Fhenix Network public testnet for early 2024 while supporting application development for the ecosystem.
The evolution of the blockchain industry gives birth to more complex necessities and subsequent use cases. The need for data privacy comes into play as blockchain usage increases among businesses, and the industry is preparing an answer. While zero-knowledge proof (proof without revealing data) is the talk of the town, new partnerships enable fresh takes on keeping users’ information hidden online.
Claiming to be the “first confidential blockchain,” Fhenix aims to achieve data privacy on blockchain by applying a novel cryptographic technique called fully-homomorphic encryption, or simply FHE, to smart contracts. It enables “direct computation over encrypted data without ever revealing the underlying data,” according to calcalistech.com.
In simpler terms, FHE makes it possible to process encrypted data without decrypting it first. It helps service providers — or, in this case, blockchains — perform computation on user data without compromising privacy.
How Does Fully-Homomorphic Encryption (FHE) Work?
FHE can benefit blockchain transactions in multiple ways, especially for businesses. While Bitcoin (BTC-USD) enables direct pseudonymous transactions between peers, the whole transaction info is publicly available. So, once an entity is linked to a wallet address, the Bitcoin blockchain becomes their account book — not an ideal scenario for companies using crypto.
A blockchain with FHE can keep the transaction amounts encrypted, so how much money is sent can only be seen by the parties involved instead of anyone who has internet access.
The protocol that brings FHE integration to EVM-based blockchains is called fhEVM, and it’s developed by Zama, a cryptography company building open-source homomorphic encryption solutions for blockchain and AI. Fhenix partnered with Zama to integrate the fhEVM protocol into its blockchain, enabling developers to seamlessly integrate FHE into their workflows and create encrypted smart contracts without any cryptographic expertise.
From confidential transactions to privacy-friendly data analytics, Fhenix’s FHE-supported blockchain can potentially find broad use in the business world. The project aims to advance application development in the Ethereum (ETH-USD) ecosystem by bringing data encryption and encrypted data computation to smart contracts, transactions, and on-chain assets.
The Secret Network founder, Guy Zyskind, is also the founder of the Fhenix blockchain. Talking about how Fhenix answers to the need for encryption for commercially sensitive data on Ethereum, Zyskind explained, “Fhenix gives users the confidence to put sensitive data on public blockchains while also giving developers the tools to compute and transform that data for the first time.”
Fhenix CEO Guy Itzhaki, who previously worked at tech giant Intel (NASDAQ:INTC) as a director at the Homomorphic Encryption and Blockchain Division, added, “Encrypted smart contracts can empower developers to use encrypted blockchain as an enabler for new business opportunities.” The potential use cases for FHE-based blockchain include on-chain trustless gaming, private voting for DAOs, and on-chain privacy-preserving AI.
Fhenix’s Future Plans
Following the seed round, Fhenix aims to launch its public testnet, named Renaissance, in the first half of 2024. Fhenix is preparing its testnet as a sandbox environment for decentralized application developers who seek to benefit from the confidentiality aspect introduced by FHE cryptography.
Zero-knowledge proof is the first concept that comes to mind when talking about privacy on blockchain. It allows for validating blockchain transactions without ever revealing their content, gaining popularity quickly among the industry participants who need more privacy for blockchain. FHE is not a direct replacement for ZK proofs, as both focus on different aspects of the blockchain. So, both innovative technologies can be used in tandem to cater to the privacy needs of the blockchain ecosystem.
