Encrypted Oracles: Bringing Off-chain Data into Ciphertext Space I've been analyzing the institutional barriers holding back DeFi and one of the deepest is the public-by-default nature of blockchains. It fundamentally limits the design space for financial applications that require confidentiality. Zama’s protocol introduces a different approach using Fully Homomorphic Encryption (FHE). Unlike ZKPs, which focus on proving computations, FHE enables contracts to operate directly on encrypted data. Their encrypted oracle design extends this model by letting off-chain data enter the chain already in ciphertext form, aligning with the execution capabilities of the fhEVM, which adds native encrypted data types to the EVM. The flow is straightforward: an oracle encrypts off-chain data using the network’s evaluation key, submits the ciphertext on-chain, and the fhEVM processes it through deterministic encrypted execution. Validators never see plaintext; they only verify the correctness of the encrypted state transition. The implications are substantial. This architecture could unlock confidential DeFi primitives such as front-run-resistant order books, private creditworthiness scoring, and governance mechanisms where individual signals remain encrypted while the system remains verifiable. The performance overhead of FHE is still a significant factor, but as a foundational answer to the on-chain privacy trilemma, this direction is one of the most meaningful attempts to expand what the EVM can support. @zama_fhe @zama #ZamaCreatorProgram
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