Fhenix Deploys CoFHE Coprocessor on Ethereum and Arbitrum for Encrypted Balances

Privacy startup Fhenix deployed its CoFHE encryption coprocessor to the $ETH Ethereum and $ARB Arbitrum mainnets on Oct. 21, 2026, enabling smart contracts to execute computations on obscured balances and trading strategies without exposing the underlying data publicly ¹. Prior to the mainnet rollout, the system had operated strictly in public test environments ¹.

CoFHE relies on fully homomorphic encryption (FHE), a cryptographic method allowing mathematical operations on encrypted data without preliminary decryption ¹. Fhenix noted that the coprocessor processes intensive encrypted computations off-chain before relaying verified results back to smart contracts across both base layers ¹. Developers can integrate the capability through a Solidity import using native-style encrypted data types ¹. The production release also implements a dual-mode token structure, allowing asset holders to shift balances between public and confidential modes in a single transaction without bridging or wrapping assets ¹. Fhenix stated that smart contract security firm Consensys Diligence completed an audit of the architecture prior to deployment ¹.

Launch Apps and Confidential Stablecoin Plans

The coprocessor launched with two initial applications: Fluton, a confidentiality system built on encrypted intents, and AlphaEngine, a platform where strategists deploy encrypted execution strategies ¹. For AlphaEngine, operators match and decrypt swap intents inside trusted execution environments ¹. Fhenix expects three additional decentralized applications to deploy on CoFHE during the fourth quarter of 2026 ¹.

Looking ahead, Fhenix founder Guy Zyskind stated that the company is partnering with Tandem, the venture arm of Arbitrum creator Offchain Labs, to build a confidential stablecoin ¹. Tandem previously invested in Fhenix in 2025 ¹. Fhenix also plans to disclose two institutional partnerships in the coming weeks ¹. The push for encrypted balances follows wider industry efforts to bring confidentiality to tokens, an area that has faced operational challenges: in late May, a court order required Circle to freeze approximately $12.6 million in a confidential USDC contract administered by cryptography firm Zama ¹.