Ethereum and Arbitrum Gain New Privacy Layer as Fhenix Goes Live

Offchain Computation and Dual-Mode Tokens

Fhenix launched its mainnet on Ethereum and Layer 2 network Arbitrum on Oct. 21, bringing its fully homomorphic encryption coprocessor, CoFHE, into production to allow smart contracts to compute on encrypted data without exposing sensitive information onchain.

The technology enables smart contracts across both blockchain networks to process encrypted figures directly, keeping account balances, positions, and trading strategies confidential while preserving automated rule enforcement.

The launch aims to address a long-standing privacy hurdle in decentralized finance (DeFi) by allowing institutional investors and developers to execute transactions without broadcasting sensitive strategies to the public ledger.

“Confidentiality is one of the biggest barriers between institutions and public blockchains,” said Steven Goldfeder, co-founder and CEO of Offchain Labs, the developer behind Arbitrum. “They need to keep positions and strategies private, and until now that meant giving up the composability that makes onchain markets worth using.”

Fhenix’s coprocessor offloads intensive encrypted computation off-chain before returning verified results to smart contracts on Ethereum and Arbitrum. The system features a dynamic throughput design that scales processing capacity with demand, along with a dual-mode feature allowing users to toggle token balances between public and confidential modes within a single transaction—without wrapping or bridging assets.

Initial Ecosystem and Security Audits

The platform launches with two initial design partners: Fluton, an encrypted intent engine for cross-chain transactions, and Alpha Engine, a financial network where strategists submit encrypted trading strategies to compete for liquidity.

Ahead of the deployment, blockchain security firm Consensys Diligence completed a technical audit of the system.

“An entire market can clear on numbers nobody has ever seen, the contract running it included, and the outcome is still correct and still checkable by anyone,” Consensys Diligence said in a statement. “The category of application waiting on the other side simply was not available before.”

Looking ahead, Fhenix plans to deploy three additional decentralized applications (dapps) on CoFHE in the fourth quarter and announce two institutional strategic partnerships in the coming weeks. The company is also developing a confidential stablecoin in collaboration with Tandem and participating in the Colosseum hackathon to explore demand for confidential applications on the Solana blockchain.

“CoFHE is now live on Ethereum and Arbitrum mainnet, with competitive performance and a UX that’s simple for any builder who wants privacy in their dapp,” remarked Guy Zyskind, founder of Fhenix.

Self-custodial trading platform Sedona has partnered with Fhenix to integrate confidential fully homomorphic encryption infrastructure into its system. [key_takeaways] Key…