- The partnership focuses on whether private state and encrypted order flow can coexist with public liquidity in the form of fair, verifiable confidential matching.
- These companies are investigating the design space around dark pools, encrypted request-for-quote (RFQ) systems, and the more general problem of allowing private execution in decentralized markets.
Fhenix and Monaco Research are thrilled to announce a research partnership to explore how onchain trading infrastructure might benefit from meaningful confidentiality with fully homomorphic encryption (FHE). Without compromising the trust assurances and liquidity that make DeFi appealing, these companies are investigating the design space around dark pools, encrypted request-for-quote (RFQ) systems, and the more general problem of allowing private execution in decentralized markets.
The rationale is simple. Every order, position, and strategy is visible to the whole network on public blockchains. Future market players incur expenses as a result of this transparency, including antagonistic front running, MEV extraction, and knowledge leaking, all of which lower execution quality. Fhenix’s extensive research on FHE-based confidential computing and Monaco Research’s investigation into high performance trading infrastructure naturally cross. The partnership focuses on whether private state and encrypted order flow can coexist with public liquidity in the form of fair, verifiable confidential matching. This is an issue that requires rigorous mechanism design thought on both sides.
Fhenix’s FHERC-20 secret token standard, which permits encrypted balances and transfers while maintaining EVM composability, is being used to assess possible crossings as part of this endeavor. Confidential settlement and position privacy inside trading protocols are made possible by the ability to trade in tokens whose on-chain balances are concealed. This is preliminary research conducted by two groups who are serious about the challenging issues.
Guy Itzhaki, CEO of Fhenix, stated, “Financial markets run on information. The challenge is deciding who should have access to it, when, and under what conditions. This collaboration with Monaco Research explores a fundamental question: Can we bring meaningful confidentiality to onchain trading without compromising fairness, verifiability, or liquidity? It’s a difficult problem, which is exactly why it’s worth working on.”
The Monaco protocol’s software development team, Monaco Research, is in charge of creating the fundamental infrastructure that drives Monaco’s high-performance international trading network. The group focuses on developing decentralized trading technologies, including as onchain settlement, offchain order matching, and the more comprehensive technological architecture that enables institutional-grade trading capabilities for decentralized applications.
Fhenix is a protocol that uses fully homomorphic encryption (FHE) for EVM compatible chains to build confidential computing infrastructure. Smart contracts can compute directly on encrypted data thanks to its primary technologies, which include the CoFHE coprocessor and the FHERC-20 token standard. This keeps balances, transactions, and contract state confidential without ever needing to decode onchain. Fhenix allows Solidity developers to access encrypted computing with little modification to their current processes.
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