Can Zama create an HTTPS moment for blockchain?

Written by: Sanqing, Foresight News

On December 1, Zama announced that it will hold a Dutch auction using a sealed bidding mechanism on Ethereum from January 12 to 15, 2026, selling 10% of the total token supply, with distribution opening on January 20. This auction will use Zama's self-developed fully homomorphic encryption technology to hide all bids, keeping the bidding process confidential on-chain, thus avoiding front-running and gas wars, and achieving a fairer price discovery.

Zama stated that this event is not driven by financing needs, but rather aims to distribute fully unlocked and circulating tokens more fairly to developers, node operators, and community participants before the protocol launches. As this is the first large-scale blockchain issuance scenario utilizing FHE technology, Zama also hopes to showcase its core capabilities in privacy computing and asset security on-chain through this auction.

ZAMA Token

Zama has not yet released a complete tokenomics. According to known information, the ZAMA token is the native token of the Zama protocol, primarily serving three functions: fee payment, staking, and governance. The protocol has designed a burn and mint mechanism to maintain the long-term value foundation of the token and ensure a stable economic incentive structure for all users and operators of the network.

All fees collected by the Zama protocol will be automatically burned, thereby reducing the token circulation. The protocol itself does not charge for FHE computation but concentrates fees on three quantifiable aspects, including verifying zero-knowledge proofs, decrypting ciphertext, and cross-chain bridging of ciphertext. To allow developers to accurately predict costs, the protocol is priced in USD and dynamically updates the price of ZAMA against the dollar through oracles, keeping fees stable across different market phases.

The Zama protocol has set an initial inflation rate of 5% as a reward mechanism to incentivize operator nodes in the network. These nodes are responsible for executing FHE computations and providing key management services, among other critical tasks, and thus need to continuously receive token rewards to maintain operations. The inflation rate can be adjusted through governance in the future to balance rewards and token value.

Operators participating in the network operation need to stake ZAMA to qualify for work, while ordinary holders can also join the security maintenance process through delegation. Zama adopts a Delegated Proof of Stake (DPoS) mechanism, allowing token holders to delegate their ZAMA to trusted operators, collectively enhancing network stability and sharing reward benefits, thus forming a long-term collaborative and incentive closed loop in the ecosystem.

Team and Investors Overview

Zama is a deep tech company focused on cryptography and privacy computing, co-founded by two highly influential scientists in the fields of cryptography and encryption applications. CEO Dr. Rand Hindi is a serial entrepreneur and deep tech investor who has focused on blockchain and privacy computing development since 2014. CTO Dr. Pascal Paillier is an important cryptographer in the field of homomorphic encryption, and his Paillier encryption scheme remains a core algorithm widely used globally. According to Rand, Zama's team consists of over 90 people, nearly half of whom hold PhDs.

Zama has completed over $150 million in financing, including $73 million in Series A and $57 million in Series B, with the latest valuation reaching $1 billion. Its investor lineup includes leading institutions in the crypto industry, significant forces in the tech sector, and several well-known founders. Series A was led by Multicoin Capital and Protocol Labs, attracting participation from Stake Capital, Metaplanet, Blockchange, Vsquared Ventures, and several industry-renowned founders, including Juan Benet, Gavin Wood, and Anatoly Yakovenko. Series B was led by Pantera Capital and Blockchange.

Pantera Capital is one of the earliest large traditional asset management institutions to enter the crypto space, with an investment style focused on infrastructure, underlying technology, and long-term value; Vsquared Ventures comes from the European deep tech fund system, investing long-term in high-barrier technologies such as artificial intelligence, quantum security, and next-generation chips; Metaplanet, as a strategic company for Bitcoin treasury, is supported by Japanese tech companies and sovereign wealth capital, excelling in supporting strategic tech infrastructure. Although Protocol Labs belongs to the crypto industry, its layout in distributed systems, data storage, and research ecology is highly aligned with traditional tech giants.

Zama Protocol and Its Technology Overview

The Zama protocol is positioned as a cross-chain privacy layer built on existing public chains, rather than a new L1 or L2. It aims to directly cover mainstream chains such as Ethereum, Solana, BNB Chain, and Tron, by overlaying privacy protection capabilities on these chains, fundamentally alleviating the privacy shortcomings caused by the default transparency of public chains. The Zama team believes that the complete public nature of all amounts, balances, and behaviors on-chain has long hindered the large-scale application of financial institutions and large enterprises on-chain, and Zama's vision is to make privacy the default configuration for all online and on-chain applications.

FHE (Fully Homomorphic Encryption) is its core technology, hailed as the "Holy Grail of Cryptography." It allows computations to be performed directly on encrypted data without decryption, meaning all operations are conducted in a "blind computation" state, keeping data encrypted throughout its lifecycle. In blockchain applications, FHE enables smart contracts to handle encrypted balances and amounts without seeing plaintext, achieving both public verifiability and confidentiality.

To understand Zama's role in the blockchain space, it can be likened to HTTPS in the blockchain world. Just as HTTPS transitioned the internet from plaintext transmission to end-to-end encryption, FHE will help blockchain move from public transparency to full encryption, providing true privacy protection without sacrificing verifiability. Zama's FHE technology has several key advantages. First, in terms of security, it possesses post-quantum security capabilities, meaning that even with the emergence of powerful quantum computers in the future, encrypted content cannot be cracked. Second, in terms of composability, FHE tokens have the same composability as regular ERC20 tokens and can be directly used to build DeFi stacks, avoiding the "island effect" found in traditional privacy solutions. Additionally, FHE natively supports programmable compliance, allowing smart contracts to define who can decrypt which data, enabling application developers to embed permission and compliance logic directly on-chain, for example, banks can view customer balances while ordinary users cannot access sensitive information.

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