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HomeDigital AssetsFhenix lands $15M Series A funding for confidentiality-focused Layer 2 network
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Fhenix lands $15M Series A funding for confidentiality-focused Layer 2 network

Also participating in the round are veteran institutional investors Dao5, Amber Group, Primitive Ventures, GSR, Collider Ventures, and Stake Capital.

The recent financing round started in March and concluded last month. It has brought Fhenix’s total funding to $22 million, following a $7 million seed round in September, led by Multicoin Capital and other investors.

Fhenix is developing a confidential smart contract platform using fully homomorphic encryption (FHE). FHE is an innovative cryptographic scheme that allows direct computation on encrypted data without revealing the underlying information

The fresh capital injection also coincides with the launch of Fhenix’s “confidential” smart contract platform into a public testnet, Helium, which was initially planned to be named Renaissance. This comes barely a year after the rollout of its private devnet in July to support further ecosystem development.

Fhenix brands itself as the “first confidential blockchain” that aims to achieve data privacy by using a novel cryptographic technique in smart contracts. In simpler terms, FHE allows for the processing of encrypted data without needing to decrypt it first. This technology helps service providers, or in this case, blockchains, perform computations on user data while maintaining privacy.

As blockchain usage grows among businesses, the demand for data privacy becomes increasingly important. The industry is addressing this need, with zero-knowledge proof (proof without revealing data) being a prominent topic.

Fhenix’s Co-founder and CEO Guy Itzhaki, who previously served as a director at Intel’s Homomorphic Encryption and Blockchain Division, is leveraging his expertise to lead the company. He noted that the Series A round was driven by strong inbound interest from investors but declined to comment on the structure of the round, valuation, or board seat offerings.

Discussing how Fhenix addresses the need for encryption of commercially sensitive data on Ethereum, Zyskind explained that they allow developers to deploy “confidential” smart contracts on the Fhenix Layer 2 network for the first time. The network uses encryption technology from cryptography firm Zama to ensure end-to-end data confidentiality, even during processing.

Itzhaki highlighted that scaling and confidentiality are crucial challenges for Ethereum to achieve mainstream adoption, and FHE presents an elegant solution. Unlike zero-knowledge technology-based confidentiality solutions, FHE enables comprehensive computation of encrypted data.

Fhenix plans to launch its mainnet in the first quarter of 2024. To attract developers to its testnet, Fhenix has established a grants program. While the program’s size is yet to be finalized, Itzhaki indicated it would be substantial given the recent funding round.

The Fhenix Layer 2 network represents the initial stage of the company’s broader vision to drive data confidentiality across various platforms. Fhenix recently partnered with EigenLayer to develop an FHE co-processor, which aims to provide FHE services to Layer 1 and Layer 2 networks with minimal modifications.

“The co-processor is a stateless rollup that enables Layer 1s and Layer 2s to get FHE services with minimal modifications on their behalf,” Itzhaki told The Block. “The key challenge is — how do you trust the response from the co-processor? The solution is using EigenLayer crypto economics, securing the response of the co-processor.”

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