Multicoin Capital has led a $7M seed round for Fhenix, a startup creating a blockchain protected by fully homomorphic encryption (FHE). The round also saw checks written by Collider Ventures, Node Capital, Bankless, HackVC, TaneLabs, and Metaplanet. Development is already underway for Fhenix Network, whose public testnet is expected in H1 2024.
Homomorphic encryption enables mathematical operations to be performed on encrypted data without compromising the encryption. It’s a new concept within the field of blockchain development, but its applications have real world utility. For example, an FHE solution might enable different companies to analyze patient data without falling foul of regulations governing medical privacy. The use cases for Fhenix’s concept are thus extensive.
Encrypted Data Computation
Fhenix is an ambitious project that has the potential to generate outsized returns for its backers if it can realize its potential. The ability to enable encrypted data to be computed without revealing the underlying data has echoes of zk-proofs, another technology that has attracted serious investment in recent years. As Fhenix founder Guy Zyskind explains, the main problem his startup tackles is a lack of encryption for commercially sensitive data.
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“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,” notes Zyskind. “The acute need for data confidentiality is rapidly growing which is driving demand for innovative technologies like FHE and fostering collaborations between complementary blockchains…to ensure a more secure and privacy-centric future.”
Expanding the EVM
The Ethereum Virtual Machine (EVM) is the computation engine for Ethereum that controls the blockchain’s state and enables smart contract functionality. In addition to Ethereum, it’s used on dozens of other blockchain networks that support the EVM. Fhenix will make use of the fhEVM, essentially an EVM on steroids that supports encrypted smart contracts that are written in Solidity. Developed by Zama, the fhEVM enables user data to be accessed onchain without exposing it for all the world to see.
Once the Fhenix mainnet debuts next year, expect to be hearing a lot more about homomorphic encryption. The applications for the technology are still being discovered but initial pilots are likely to center around such things as RWA tokenization, digital identity, and authentication. Essentially any situation where there’s a necessity to compute data onchain but an equally compelling need to keep the underlying data private.
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Kyle Samani of Multicoin Capital which led the $7M seed round is clearly impressed with Fhenix’s tech, enthusing: “Similar to zero-knowledge proofs, FHE has always been a technology with a ton of promise; however, the challenge has always been how to bridge the requisite knowledge in hardcore cryptography and blockchain development. Fhenix radically simplifies that problem, and is making FHE accessible to Ethereum devs practically overnight.”
The public will need to wait a little longer to experience Fhenix Network in production however. While the private devnet has been live since July, its public testnet, dubbed Renaissance, won’t debut until next year.
