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What is Zama?

Zama (ZAMA) is the native utility and staking token of the Zama Confidential Blockchain Protocol, a programmable privacy layer that brings fully homomorphic encryption (FHE) to any L1 or L2 chain for confidential smart contracts and encrypted on-chain applications.

ZAMA is designed to pay protocol fees for services such as zero-knowledge proof verification, ciphertext decryption, and encrypted data bridging. It also underpins staking and incentives for protocol operators who run the FHE and coprocessor infrastructure.

How does Zama work?

Zama operates as a confidentiality protocol that runs as a coprocessor layer on top of existing L1 and L2 blockchains, rather than as a standalone monolithic chain. Canonical state and consensus remain on the host chain, while Zama offloads heavy encrypted computation to specialised operators.

At its core, Zama uses Fully Homomorphic Encryption (FHE), including an efficient TFHE-style scheme that supports arbitrary computations directly on encrypted data. The protocol is designed with post-quantum security targets, including parameters aimed at 128-bit security and a failure probability around 2^-128. It also incorporates Multi-Party Computation (MPC) and zero-knowledge proofs (ZK) to prove correctness of encrypted computations and address limitations of other privacy approaches.

Developers build confidential smart contracts through Zama’s fhEVM and Solidity libraries, which extend the EVM programming model with encrypted data types (such as euint and ebool) and FHE operations. When a contract invokes an FHE operation, an “Executor” component emits events that instruct off-chain coprocessors to perform the computation and then post results back on-chain.

Access and decryption are controlled via threshold decryption and an on-chain Access Control List (ACL) smart contract on each host chain. Threshold decryption requires multiple operators to jointly decrypt values only when permitted by the ACL, preventing any single party from unilaterally decrypting confidential data. Within the protocol, multiple FHE operators run and cross-check computations, using a model described as optimistic-rollup-like for FHE results. ZAMA supports staking and incentives for these operators, while the base consensus mechanism is inherited from the underlying host chain.

Economically, Zama is described as using a burn-and-mint model where 100% of protocol fees are burned and new tokens are minted as rewards to operators, aligning operator incentives with protocol usage.

What are the potential use cases for Zama?

Zama is positioned for applications that require confidentiality on public blockchains while keeping smart contract rules verifiable. Potential use cases include:

• DeFi: confidential token swaps, lending, and yield farming where balances, position sizes, and trade amounts remain encrypted while contracts remain verifiable.
• Payments: confidential stablecoin transfers with encrypted amounts and potentially hidden balances, enabling private on-chain payments.
• Banking and fintech: self-custodial on-chain banking services where account balances and internal operations are encrypted, with programmable access controls and auditability.
• Token launches and governance: private token launches, vesting schedules, airdrops, and governance voting where allocations and votes can be encrypted while results remain auditable.
• RWA tokenisation: confidential and compliant tokenisation of real-world assets, shielding sensitive financial or regulatory data while enabling on-chain settlement and reporting.
• Sealed-bid auctions: on-chain auctions where bids are encrypted to reduce front-running and information leakage, while winners and clearing prices remain verifiably correct.

These use cases span sectors including decentralised finance, payments and remittances, regulated banking/fintech, enterprise RWA issuance, and on-chain marketplaces and auctions.

What is the history of Zama?

Zama is described as an open-source cryptography company focused on fully homomorphic encryption, developing FHE solutions for blockchain and other applications. Over several years, the project reports improving FHE performance and usability, including achieving more than a 100× speed-up compared with earlier implementations, while targeting general-purpose programmability through common developer environments such as Solidity and Python.

Key milestones include releasing an efficient FHE stack with post-quantum security guarantees, launching the Zama Confidential Blockchain Protocol and fhEVM to enable confidential smart contracts on EVM-compatible chains, and introducing the ZAMA token as the native fee and staking asset with a burn-and-mint fee model linked to protocol usage.

The project’s evolution is framed around cryptographic improvements, hardware acceleration (including GPUs and future ASICs), and expanding support across multiple host L1/L2 chains. Zama also presents a longer-term concept of moving from encryption in transit (HTTPS) towards default end-to-end encryption enabled by FHE, described as “HTTPZ”.