Encryption startup Fhenix raises $7M for private computation

Multicoin Capital and Collider Ventures led the seed round

article-image

SkillUp/Shutterstock modified by Blockworks

share

Fhenix, a forthcoming layer-2 dedicated to bringing fully homomorphic encryption to smart contracts, will publicly launch its testnet early next year. 

Guy Itzhaki, Fhenix’s CEO, told Blockworks in an interview the company had secured $7 million in a seed round led by Multicoin Capital and Collider Ventures. Other investors include Node Capital, Robot Ventures, Bankless, HackVC, TaneLabs and Metaplanet, among others. 

Fully homomorphic encryption, or FHE, is a specialized form of encryption that enables computations to be performed on encrypted data. This means multiple users can perform operations, interact with contracts, or collaborate on data while preserving privacy and preventing exposing sensitive information.

Itzhaki notes that unlike other encryption technologies, including trusted execution environments, users do not have to decrypt the data to perform computation.

Unlike zero-knowledge technology, where the data is moved off-chain and a prover can see the decrypted message, FHE computation can be achieved while the information is still encrypted. The output of computations will also be encrypted. 

“Zero-knowledge is a great technology that has been adopted for scaling […] but there are limited user cases,” Itzhaki said. “With FHE, it’s really the first time that we can have data on-chain, encrypted, and being used as if it’s non-encrypted for the sake of confidentiality.”

FHE has the ability to unlock a number of potential use cases. Itzhaki pointed to DAO voting tools, trustless games, and account abstraction as examples.

“We make account abstraction really easy because you can put private keys on a smart contract encrypted using FHE, then use it to sign transactions all over the place,” Itzhaki said. 

Fhenix will leverage fhEVM, an extension of the Ethereum virtual machine (EVM), according to Itzhaki.

“[Developers] don’t need to learn any new language, they can use Solidity and the same developer tools they are used to, there is an additional library that they have to decide what it is they actually want to encrypt,” Itzhaki explains. 

An earlier developer testnet launched in July was a proof-of-stake, layer-1 blockchain, but Itzhaki notes that the official testnet launch will be as an Ethereum layer-2.

“The long-term goal is to be perceived as some kind of extension to Ethereum,” Itzhaki said. “Whether you’re building your [layer-1] or your [layer-2], if you need to introduce encryption, you’ll be able to, using Fhenix.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

The Stripe-acquired firm has big plans for a streamlined, multi-wallet future

article-image

Both founders of the former crypto lender have now landed in new crypto industry roles

article-image

Bitcoin’s recent peak is a victory lap for curvers left and right

article-image

Securitize CEO Carlos Domingo says institutions are eager to get exposure to tokenization

article-image

Trade isn’t war and prosperity isn’t a contest