On Ethereum, a wallet’s holdings are public by default: anyone with the address can see what it owns, what it trades and when. Fhenix, a startup building privacy tools for Ethereum, said Wednesday that smart contracts on Ethereum and Arbitrum mainnet can now work with balances, positions and trading strategies that remain encrypted onchain, while the contract still enforces its rules.
The company said its CoFHE coprocessor, built on fully homomorphic encryption (FHE), is now in production on both networks. Until the launch, CoFHE ran only on public test networks.
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How It Works
FHE is a form of cryptography that lets a computer do math on data without decrypting it first. According to Fhenix, CoFHE handles the heavy encrypted computation off-chain and passes the results back to contracts on the two chains. Developers add it with one Solidity import and encrypted data types that, the company said, behave like normal variables.
The launch also brings Fhenix’s dual-mode token design into production. Tokens issued under Fhenix’s dual-mode standard carry a confidential mode next to their public one, according to the company, and a holder can shift a balance into confidential mode in one transaction and switch it back when needed. Fhenix said those tokens never leave their home chain, are not wrapped or bridged, and keep working with existing wallets, exchanges and DeFi apps.
Fhenix said Consensys Diligence audited the system before launch. Unchained could not find a public copy of the audit report.
First Apps and What Comes Next
Two design partners went live on day one, according to Fhenix: Fluton, which the company describes as a confidentiality engine built on encrypted intents, and AlphaEngine, where strategists compete for users’ liquidity with strategies that stay encrypted, so their methods remain private. A December 2025 post on Fhenix’s blog said AlphaEngine’s operators decrypt and match users’ swap intents in a step designed to run inside a trusted execution environment, a secure hardware enclave.
Fhenix said three more apps will launch on CoFHE in the fourth quarter, and that it plans to name two strategic partnerships with institutions in the coming weeks. Founder Guy Zyskind said in the announcement that the team is “working on a confidential stablecoin together with Tandem,” Offchain Labs’ venture arm that invested in Fhenix in 2025. Offchain Labs develops Arbitrum.
Fhenix is not the only team bringing FHE to stablecoins. In late May, a court order led Circle to freeze about $12.6 million held in a confidential USDC contract run by Zama, another FHE developer, locking funds of users unconnected to the case.
Steven Goldfeder, co-founder and CEO of Offchain Labs, said in Fhenix’s announcement that the launch is “the beginning of something big: a programmable economy with programmable privacy, fully composable for the end user.”
Related Listen: ‘Like a Peanut Butter Allergy’: Why Institutions Need Onchain Privacy
