Get the best insights in crypto delivered directly to your inbox. Subscribe to our newsletter below.

mail icon

The Holy Grail of Cryptography

Kyle Samani
March 7, 2024 | 4 minute read

In some sense, every server-side security vulnerability or exploit over the last 30 years shares the same root cause: some sensitive piece of data was left unencrypted (or an attacker gained access to a decryption key).

When presented in this frame, the solution is fairly obvious: don’t ever decrypt data, and ensure no decryption key is ever stored on any server.

The only problem with this proposed solution is that it was impossible. Until now.

Today, I’m excited to announce that Multicoin Capital has co-led a $73M investment in Zama, alongside Protocol Labs. The round also included Metaplanet, Blockchange, VSquared, Stake Capital and Portal Ventures, as well as several other strategic founders, including Juan Benet (Filecoin), Gavin Wood (Ethereum), Anatoly Yakovenko (Solana), Julien Bouteloup (StakeDAO), and Tarun Chitra (Gauntlet).

Zama is the world leader in fully homomorphic encryption (FHE). FHE, as the name implies, enables arbitrary computation over encrypted data. FHE has been a concept in academia for decades, but was too computationally intensive to be useful. The Zama team—comprised of over 30 PhDs and many of the world’s leading cryptography experts—has pioneered dozens of breakthroughs over the last four years, and their TFHE-rs and Concrete libraries are production ready today for some workloads, starting with blockchains. In the coming years, we expect another 1,000x in performance gains between improvements in math, software, and accelerated hardware (e.g., ASICs) - which will make FHE-enabled rival plaintext computation.

Soon every web2 application, spanning database applications and even LLMs, will be FHE-enabled.

FHE will alter the fabric of computing.

Confidential Blockchains

Blockchains produce a lot of financial value even with fairly limited transactional throughput. As such, they are the initial focal point for Zama given FHE’s limitations today. Given this focus, it was natural for Multicoin and Protocol Labs to help Zama bring their technologies to market. We have been working closely with the Zama team as they pioneer on-chain FHE.

There are many approaches to on-chain privacy. For simple payments, zero-knowledge proofs (ZKPs) have proven sufficient. However, for any transaction involving shared state—which includes by definition all DeFi—ZKPs are somewhere between insufficient and extremely difficult to implement. The beauty of FHE is that FHE allows developers to re-use the same logic in an FHE-environment as they would in a transparent environment.

Today, there are three teams that have announced building FHE-enabled chains using Zama’s technology, including Fhenix (in which we are investors), Inco, and Shiba. All are launching this year.

Zama offers an off-the-shelf fhEVM for developers who want to leverage FHE on top of the EVM. I expect Zama will support more blockchain VMs beyond the EVM soon.

Onchain FHE has the ability to enable many things, including but not limited to:

  • Privacy-preserving DeFi
  • Confidential voting
  • Privacy-preserving DataDAOs
  • Onchain blind auctions
  • Onchain gaming
  • A new way to think about bridging (store an FHE’d private key for chain B on chain A, and vice versa)

It is still early days. We can’t wait to see what developers build using FHE.

HTTPZ: Privacy By Default

In 5-10 years, we will look back on the regular data breaches of the early cloud era (2005 - 2025) in horror. It will seem crazy that user data was ever decrypted.

The Zama team put out their vision for a successor to HTTPS that they call HTTPZ (video, written) a couple of years ago. HTTPZ is the logical conclusion of encryption on the internet: users encrypt their data using their own keys locally before sending encrypted data to servers, which can then compute over that data. Under an HTTPZ configuration, you can assume that servers are breached at all times. It simply does not matter that an attacker has access to a server if all user data is encrypted using keys that users store on their own devices.

HTTPZ represents the strongest vision of the future of encryption on the internet. Given the steady progression of the adoption of cryptography over the last 30 years, we believe this future is inevitable. It is only a matter of time.

We are incredibly excited to back Rand, Pascal, and the entire Zama team as they pioneer the future of advanced cryptography across the internet.

Disclosure: Unless otherwise indicated, the views expressed in this post are solely those of the author(s) in their individual capacity and are not the views of Multicoin Capital Management, LLC or its affiliates (together with its affiliates, “Multicoin”). Certain information contained herein may have been obtained from third-party sources, including from portfolio companies of funds managed by Multicoin. Multicoin believes that the information provided is reliable but has not independently verified the non-material information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This post may contain links to third-party websites (“External Websites”). The existence of any such link does not constitute an endorsement of such websites, the content of the websites, or the operators of the websites. These links are provided solely as a convenience to you and not as an endorsement by us of the content on such External Websites. The content of such External Websites is developed and provided by others and Multicoin takes no responsibility for any content therein. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in this blog are subject to change without notice and may differ or be contrary to opinions expressed by others.

The content is provided for informational purposes only, and should not be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete. The contents herein are not to be construed as legal, business, or tax advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by Multicoin, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Multicoin is available here: Excluded from this list are investments that have not yet been announced (1) for strategic reasons (e.g., undisclosed positions in publicly traded digital assets) or (2) due to coordination with the development team or issuer on the timing and nature of public disclosure. * This blog does not constitute investment advice or an offer to sell or a solicitation of an offer to purchase any limited partner interests in any investment vehicle managed by Multicoin. An offer or solicitation of an investment in any Multicoin investment vehicle will only be made pursuant to an offering memorandum, limited partnership agreement and subscription documents, and only the information in such documents should be relied upon when making a decision to invest.*

Past performance does not guarantee future results. There can be no guarantee that any Multicoin investment vehicle’s investment objectives will be achieved, and the investment results may vary substantially from year to year or even from month to month. As a result, an investor could lose all or a substantial amount of its investment. Investments or products referenced in this blog may not be suitable for you or any other party.

Multicoin has established, maintains and enforces written policies and procedures reasonably designed to identify and effectively manage conflicts of interest related to its investment activities. For more important disclosures, please see the Disclosures and Terms of Use available at and