Hassan Maishera
Fhenix and Monaco Research have announced a research collaboration aimed at exploring how fully homomorphic encryption (FHE) can enhance privacy in decentralized trading infrastructure.
Collaboration Focuses on Bringing Privacy to the DeFi Market
In a press release shared with Cryptowisser, the teams said the partnership will investigate new approaches to confidential trading systems, including: dark pools, encrypted request-for-quote (RFQ) platforms, private trade execution mechanisms, and confidential settlement infrastructure
The goal is to determine whether meaningful privacy can be introduced to decentralized finance (DeFi) without sacrificing transparency, liquidity, or trust.
One of the defining characteristics of public blockchains is transparency. While this openness strengthens verifiability, it also exposes sensitive trading information.
Every order, position, and trading strategy can be viewed by network participants, creating opportunities for information leakage, maximum Extractable Value (MEV) exploitation, front-running attacks, and reduced execution quality
As institutional participation in DeFi grows, these issues have become increasingly important for traders seeking confidentiality.
Exploring Encrypted Order Flow and Private Matching
The collaboration combines Monaco Research’s work on high-performance trading infrastructure with Fhenix’s expertise in FHE-powered confidential computation.
Together, the teams are examining whether order flow can remain encrypted, trading positions can stay private, matching engines can operate confidentially, and market fairness and liquidity can be preserved.
The research centers on developing mechanisms that allow encrypted trading activity while maintaining verifiable and trustless execution.
As part of the initiative, the teams are also evaluating applications of Fhenix’s FHERC-20 confidential token standard.
By keeping on-chain balances hidden while preserving smart contract functionality, FHERC-20 could support new forms of confidential settlement and position management within decentralized trading protocols.
The research remains in its early stages, but both organizations see significant potential in addressing one of DeFi’s most challenging infrastructure problems.
While commenting on the partnership, Guy Itzhaki, CEO of Fhenix, said,
“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."
If successful, the research conducted by Fhenix and Monaco Research could lay the groundwork for a new generation of decentralized markets where traders benefit from both blockchain transparency and institutional-grade privacy.
Monaco Research is the software development team behind the Monaco protocol, responsible for designing and building the core infrastructure that powers Monaco's high-performance global trading network. The team focuses on advancing decentralized trading technology, including offchain order matching, onchain settlement, and the broader technical architecture that enables institutional-grade trading capabilities for decentralized applications.
Meanwhile, Fhenix is a protocol building a confidential computing infrastructure using fully homomorphic encryption (FHE) for EVM-compatible chains. Its core products, including the CoFHE coprocessor and the FHERC-20 token standard, enable smart contracts to compute directly on encrypted data: keeping balances, transfers, and contract state private without ever decrypting onchain. Fhenix makes encrypted computation accessible to Solidity developers with minimal changes to existing workflows.
