Blockchains today operate on a model of “radical transparency”. While this ensures trust and verifiability, it also creates a fundamental limitation known as the Transparency Paradox. The same public visibility that secures blockchains prevents them from supporting many real-world applications.

In practice, this limitation shows up quickly. Enterprises cannot place proprietary algorithms, employee payrolls, or supply-chain data on-chain when every transaction and balance is visible to competitors. In decentralized finance, transparent mempools expose user intent before execution, enabling front-running and other forms of MEV extraction. More broadly, developers are constrained from building applications that depend on information asymmetry.

For the Web3 ecosystem to mature and become global financial infrastructure, blockchains must support programmable privacy, the ability to keep data and computation confidential while still allowing applications and smart contracts to seamlessly interact on a shared public ledger.

What is Zama?

Zama is an open-source cryptography company and protocol tackling that paradox. In a nutshell, Zama enables confidential smart contracts on public blockchains.

In practical terms, Zama allows transactions, balances, and application logic to remain private, while still executing on open, composable blockchains like Ethereum and its L2s (and Solana in the future). Data is encrypted end-to-end, yet smart contracts can still operate on it, allowing applications to enforce rules, compliance, and business logic without exposing sensitive information on-chain.

This shifts blockchains from being systems where everything is visible to everyone to systems where privacy is programmable, unlocking entire categories of applications that were previously impossible on public ledgers. Some key use cases unlocked by Zama include:

• Confidential payments & stablecoins: Private balances and transfer amounts on public blockchains, with compliance features such as KYC/AML checks, sanctions screening, and spending limits enforced directly within smart contracts.
• Tokenization of real-world assets (RWAs): Institutions can issue and trade stocks, bonds, funds, and other financial assets on public blockchains while keeping investor identity and trading activity confidential.
• Confidential DeFi execution: Private swaps, lending, and positions that prevent front-running and MEV allow users and institutions to interact on-chain without revealing balances or trading strategies.

Zama is not a new Layer 1. Instead, it functions as a modular confidentiality layer that plugs into existing chains. Zama uses Fully Homomorphic Encryption (FHE) to enable smart contracts to compute directly on encrypted data, ensuring sensitive information is never revealed on-chain, even during execution.

What is Fully Homomorphic Encryption (FHE)?

Fully Homomorphic Encryption (FHE) is often described as the “holy grail” of cryptography because it removes a fundamental limitation of traditional encryption. While standard techniques protect data at rest and in transit, data typically must be decrypted before it can be processed, creating a point of exposure. FHE eliminates this requirement by allowing computations to be performed directly on encrypted data, meaning untrusted third parties (including Zama nodes) can execute logic without ever accessing the underlying plaintext.

Zama brings FHE on-chain through the fhEVM (Fully Homomorphic Ethereum Virtual Machine). The fhEVM extends the EVM with native encrypted data types and FHE-enabled operations, allowing smart contracts to execute logic directly over ciphertext. Transactions, balances, and contract states remain encrypted end-to-end, while nodes simply process encrypted values. Only authorized parties can decrypt the results, and the final output is exactly the same as if the computation had been performed on unencrypted data.

To explore FHE in more detail, you can read Zama’s full introduction here.

The Zama Token

The ZAMA token is the native utility and staking token of the Zama Protocol. It is used to pay protocol fees and to secure the network through staking.

Token utility

ZAMA is used to pay protocol-level fees associated with confidential execution, including:

• Verification of encrypted inputs.
• Decryption of ciphertexts.
• Bridging encrypted values across chains.

Protocol fees are paid in ZAMA but priced in USD, with prices updated via an oracle. This provides predictable costs for users and developers, independent of token price volatility. Fees may be paid by users, applications, or relayers, meaning end users are not required to hold ZAMA directly.

All protocol fees are 100% burned.

Staking & emissions

Users and node operators stake ZAMA to participate in securing the protocol and running infrastructure components. Rewards are paid via inflationary emissions, with an initial inflation rate of 5%, adjustable via governance.

Rewards are distributed by role, with separate reward rates for:

• FHE coprocessors, which perform confidential computation
• MPC nodes, which operate the Key Management Service and control decryption

Within each role, rewards are distributed using a square-root-weighted stake model to limit concentration and promote decentralization.

Distribution

Up to 10% of the ZAMA token supply will be sold in January 2026 via a sealed-bid Dutch auction on Ethereum, using the Zama Protocol itself to keep bids private. This serves as an early demonstration of Zama’s confidentiality capabilities, ensuring fair access, true price discovery, and eliminating bot-driven manipulation.

The Zama Team

Zama is a global cryptography company founded in 2020 by Dr. Rand Hindi (CEO) and Dr. Pascal Paillier (CTO), supported by leading researchers including Prof. Nigel Smart (Chief Academic Officer) and Dr. Marc Joye (Chief Scientist). With 90+ team members, nearly half holding PhDs, Zama operates the largest dedicated research team in Fully Homomorphic Encryption (FHE). 

Rand Hindi is a serial entrepreneur and deep-tech investor (formerly founder of Snips, acquired by Sonos) with a background spanning AI, privacy, and bioinformatics. 

Pascal Paillier is a pioneer of modern cryptography and the inventor of the Paillier encryption scheme, one of the most widely used homomorphic encryption systems, and a 2025 IACR Fellow. 

Together, the team combines deep academic leadership with proven experience in building and deploying production-grade cryptographic systems.

Figment’s Involvement

Figment has been supporting Zama as an MPC node operator and is a part of the genesis set, participating from the earliest days of the testnet. We have deep experience running MPC infrastructure and are committed to supporting the long-term success of the Zama Protocol and its ecosystem. If you’re interested in staking ZAMA with Figment, connect with our team here.