Fhenix Launches CoFHE on Ethereum and Arbitrum With a $1.5T Opportunity

Fhenix brought encrypted smart-contract computation to Ethereum and Arbitrum with CoFHE, dual-mode tokens, two design partners and plans for three additional applications.

CryptoMEV Bot NewsroomOct 26, 20263 min read

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Fhenix launched its CoFHE encryption coprocessor on the Ethereum and Arbitrum mainnets on October 21, 2026, according to Unchained. The fully homomorphic encryption system lets smart contracts calculate on encrypted balances, positions and trading strategies while enforcing their rules onchain, according to Crypto.news.

Fact box

Fhenix is a privacy startup building tools for Ethereum.
CoFHE is the company’s fully homomorphic encryption coprocessor for confidential smart-contract computation.
The production launch covers Ethereum and Arbitrum mainnets, announced on October 21, 2026.
Fhenix identified a potential $1.5 trillion tokenization opportunity constrained by privacy limitations.
Three additional decentralized applications are planned for the fourth quarter of 2026, alongside two institutional partnerships expected to be announced in the coming weeks.

Encrypted computation

CoFHE performs computationally intensive operations on encrypted information offchain before returning verified results to smart contracts on Ethereum and Arbitrum. The system can adjust throughput to demand rather than operate at a predetermined processing rate. Before the production launch, CoFHE operated only on public test networks.

Developers can add the infrastructure through a Solidity import and encrypted data types designed to function like ordinary variables. Fhenix said this would allow builders to incorporate confidentiality into existing smart-contract development workflows.

Fhenix also moved its dual-mode token architecture into production. Token holders can switch balances between public and confidential modes in a single transaction, without wrapping the asset or moving it through a bridge. The tokens remain on their original chain and are designed to remain compatible with existing wallets, exchanges and decentralized finance applications.

Privacy for traders

Fhenix says public networks make transaction and contract activity broadly observable, creating a problem for financial services that depend on private information. That constraint is relevant to traders operating an Ethereum arbitrage bot or a DeFi arbitrage bot.

Offchain Labs co-founder and CEO Steven Goldfeder framed confidentiality as a barrier between institutions and public blockchains, according to Bitcoin.com. He said institutions have historically faced a trade-off between protecting sensitive financial information and accessing the composability of public blockchain markets.

"They need to keep positions and strategies private, and until now that meant giving up the composability that makes onchain markets worth using." — Steven Goldfeder, co-founder and CEO of Offchain Labs

Fhenix positions CoFHE as infrastructure for confidential decentralized finance and tokenization, with encrypted balances, positions and strategies forming its initial use cases.

Launch applications

Fluton launched as an encrypted-intent engine for interactions spanning blockchains, applications and assets. Alpha Engine launched as a confidential onchain finance network where strategists can submit encrypted strategies and compete for liquidity without disclosing their approaches.

Fhenix said Fluton and Alpha Engine completed technical and security reviews before going live. Consensys Diligence also audited the system ahead of the launch, although Unchained said it could not find a public copy of the audit report.

Consensys Diligence said the technology could allow a market to operate on numbers that participants and the underlying contract could not directly read while keeping the outcome correct and independently checkable. The supplied material did not identify the Consensys Diligence representative by name or title.

A December 2025 post on Fhenix’s blog said AlphaEngine’s operators decrypt and match users’ swap intents in a step designed to run inside a trusted execution environment, described as a secure hardware enclave.

Expansion plan

Fhenix said three more decentralized applications would launch on CoFHE during the fourth quarter of 2026 and that it expected to announce two institutional partnerships in the coming weeks.

Founder Guy Zyskind said Fhenix was working with Tandem on a confidential stablecoin. No further development details or release timeline were provided for the stablecoin. Tandem is Offchain Labs’ venture arm, which invested in Fhenix in 2025; Offchain Labs develops Arbitrum.

The team was also participating in the Colosseum hackathon to assess demand for confidential applications on Solana. Separately, the self-custodial trading platform Sedona partnered with Fhenix to integrate confidential fully homomorphic encryption infrastructure into its system.