Why fully homomorphic encryption is the next encryption narrative

Press: On September 27, 2023, Collider Ventures announced that it had jointly led Fhenix’s US$7 million seed round of financing with Multicoin Capital (see Golden Finance’s previous report “: Fhenix and the dawn of fully homomorphic encryption on the chain”). Fhenix aims to Build the first blockchain based on Fully Homomorphic Encryption (FHE) to achieve end-to-end encryption.

Collider Ventures encryption and Web3 partner Idan Levin wrote that “fully homomorphic encryption will become the next encryption narrative.” Golden Finance 0xxz translation.

What is FHE

FHE has been a theoretical academic concept since 2009, but practical advances in recent years by companies such as Zama have made it possible to use the technology in production for the first time.

The magic of FHE is the ability to perform calculations on encrypted data. Computation on ciphertext (i.e., encrypted data) produces a new ciphertext that corresponds to the result of an operation on plaintext (i.e., unencrypted data).

The exact mathematical process behind FHE is very complex and relies on lattice-based cryptography, a branch of cryptography based on the difficulty of certain problems in lattice theory. The first feasible FHE scheme was proposed by Craig Gentry in 2009, using an object called an “ideal lattice” to encrypt data and allow calculations to be performed on the encrypted data.

Application of FHE

In the blockchain world, FHE means that each transaction is encrypted before being sent to the mempool, so even miners/proposers cannot see the contents of the block.

But FHE is more than just an encrypted memory pool—the execution of block transactions remains fully encrypted, so complete confidentiality exists end-to-end.

Fhenix is developing the first FHE blockchain (fhEVM) to support end-to-end encryption. The system promises to revolutionize the way we think about blockchain by providing two important guarantees:

• Full Confidentiality: FHE allows computations to be performed on encrypted data and is often referred to as the “holy grail” of cryptography. Through this feature, Fhenix’s system ensures absolute confidentiality, and even nodes executing smart contracts cannot access any user data.
• Eliminate MEV: With Fhenix’s system, the entire memory pool is fully encrypted, preventing any entity from pre-empting the user. MEV is one of the biggest and most painful problems facing public blockchains today, compromising the fairness of the system. FHE has the potential to eliminate MEV, which is very important to the industry.

Design principles of fhEVM

1. No cryptographic expertise required: fhEVM is designed to not require any professional cryptographic knowledge. It will support Solidity smart contracts, mainly adding privacy data types in smart contracts.

2. Consistent with Ethereum tools: fhEVM will maintain compatibility with existing Ethereum tools.

3. User friendly

FHE redefines confidentiality and fairness in Web3

In the Web2 era, end-to-end encryption and protocols like TLS/SSL play a key role in ensuring the security and confidentiality of digital communications such as WhatsApp, one of the most used end-to-end encrypted messaging apps in the world. a) and the TLS used by most of the internet today. It is almost unthinkable to shop on an e-commerce website that does not support TLS communication.

The emergence of FHE promises to bring this high level of encryption to the blockchain space. **FHE allows calculations to be performed on encrypted data, keeping user data confidential in the best possible way, far superior to any current technology (TEE/ZK). **

Additionally, FHE solves the huge problem of MEV, which is one of the biggest problems facing public blockchains today and cannot be solved by other technologies (all other technologies like Flashbots just make it fairer by redistributing MEV in some way, but All proposed solutions are just permutations of the problem, not fundamental solutions). MEV undermines the legitimacy of public blockchains because it erodes the notion that the system is fair. This is why MEV is one of the hottest topics in the industry, with hundreds of millions of dollars already invested in it (both from people who want to solve it, and from people who want to financially benefit from it). FHE will eliminate MEV and can restore fairness to the system.