Fhenix has announced that its CoFHE coprocessor, which leverages fully homomorphic encryption (FHE), is now operational on both the Arbitrum and Ethereum networks. This milestone marks the shift of CoFHE from public test environments into full production, signaling a significant development in on-chain encrypted computation.
Key features of CoFHE and dual-mode tokens
FHE, a cryptographic method, allows computing on encrypted data without needing to decrypt it first. By integrating this technology, Fhenix has enabled developers to perform complex calculations off-chain while preserving user privacy. The results of these encrypted computations are then relayed back to smart contracts across the two networks.
Fhenix claims that developers can integrate CoFHE with a single Solidity import, using encrypted data types that function like standard variables within Solidity-based applications. This integration is designed to streamline adoption while maintaining compatibility with existing Ethereum development practices.
Mini dictionary: Fully Homomorphic Encryption (FHE), a form of encryption that allows computations to be performed on encrypted data without needing to decrypt it. This enables privacy-preserving operations, safeguarding confidential information even during processing.
With the launch, the company has also rolled out its dual-mode token design. This new standard equips tokens with both public and confidential modes, allowing holders to switch balances between the two with a single transaction. According to Fhenix, these tokens always remain on their native chain and are neither wrapped nor bridged, ensuring compatibility with existing wallets, exchanges, and decentralized finance protocols.
Security audit and early partners
Prior to launch, Fhenix engaged Consensys Diligence to conduct a security audit of the CoFHE system. The company stated that the system successfully passed the audit, although a publicly accessible report has not been located.
On its first day in production, Fhenix onboarded two design partners: Fluton and AlphaEngine. Fluton is described as a confidentiality engine focusing on encrypted intents, while AlphaEngine offers a platform where strategists compete for user liquidity using private, encrypted strategies. Fhenix noted that AlphaEngine utilizes a trusted execution environment to decrypt and match user swap intents, supporting confidential transaction execution.
Mini dictionary: Trusted Execution Environment (TEE) is a secure area of a processor that ensures sensitive data is processed safely, protecting it from external software attacks.
Upcoming launches and ecosystem development
Fhenix reported that three additional applications are scheduled to launch on the CoFHE platform in the fourth quarter. The company also indicated that it will soon announce two new strategic partnerships with institutional players.
Founder Guy Zyskind mentioned that the team is collaborating with Tandem on a confidential stablecoin project. Tandem is the venture division of Offchain Labs, which develops the Arbitrum network and invested in Fhenix in 2025.
Founder Guy Zyskind stated that Fhenix is “working on a confidential stablecoin together with Tandem,” as part of the growing institutional interest in privacy-enabled blockchain assets.
Competitive developments in FHE stablecoins
Fhenix is not the only company using FHE for stablecoin applications. In May, Circle, the issuer of USDC, froze approximately $12.6 million related to a confidential USDC contract managed by Zama, another FHE-focused technology developer. The action affected funds belonging to users who had no connection to the underlying legal case that prompted the freeze.
Tokens issued under Fhenix’s dual-mode standard carry a confidential mode alongside their public one, enabling users to move balances between modes securely without transferring assets across chains or requiring wrapped tokens.
