March 2025 Summaries

Invisible image watermarking, a technique for embedding hidden information within digital images without altering their appearance, was the focus of the Zama Bounty Program Season 7, where developers were tasked with creating systems to perform this operation on encrypted images using Zama's confidential AI library, Concrete ML, with Fully Homomorphic Encryption (FHE). This approach is increasingly important due to developments in Generative AI and regulatory efforts like the EU AI Act, which demand reliable digital watermarking of AI-generated content for attribution and traceability. The winning solution utilized a privacy-preserving neural network model built with FHE to embed and extract watermarks, ensuring privacy by not exposing the original content during watermarking. The encoder model used Quantization-Aware Training (QAT) with Brevitas for better accuracy-latency tradeoffs, while a second neural network was responsible for watermark extraction. This method proved resilient to various image transformations, addressing concerns like copyright protection, authentication, and tamper detection, although a runner-up solution offered faster performance with less resistance to image changes. The Zama Bounty Program now invites exploration of FHE to enhance privacy in biological age estimation for its next season.

Zama's fhEVM bounty program in Season 7 focused on creating a smart contract system for a Single-Price Auction (SPA) using Solidity, where bids are sealed to maintain confidentiality. The challenge required developers to design a system that balances privacy and scalability, with the settlement price determined by the lowest price among winning bids. The winning submission by Palra introduced innovative design choices, including a custom Solidity library called HalfEncryptedFenwickTree, which efficiently processes bids while maintaining partial confidentiality by encrypting quantities but not prices. This approach leverages a Fenwick tree data structure for efficient auction operations and introduces a customized decryption scheme for settlement. Despite the challenge's complexity, the submission effectively addresses scalability issues and offers a promising proof-of-concept for privacy-centric auctions on the Ethereum Virtual Machine (EVM), though it remains unaudited and carries inherent risks associated with smart contracts.

Over the past 15 years, the cryptocurrency landscape has seen significant developments, with Bitcoin emerging as a store of value and stablecoins revolutionizing monetary systems. Stablecoins, like USDT, provide financial stability in inflation-prone countries and serve as essential components in both centralized and decentralized financial platforms. Despite their growing market cap of $225 billion, stablecoins represent a mere fraction of the global money supply, facing regulatory hurdles that limit their expansion. The primary challenges include regulation, scaling, and confidentiality concerns, with the latter being a critical issue affecting businesses and personal financial activities due to the lack of transaction privacy. Efforts to address these issues include the development of confidential stablecoins using Fully Homomorphic Encryption (FHE), which promises to enhance privacy by encrypting identities and transaction amounts while maintaining composability in smart contracts. This innovation aims to upgrade the global financial system by combining privacy with the programmability and ownership benefits offered by blockchain technology, paving the way for a more secure and private financial ecosystem.

During Season 7 of the Zama Bounty Program, €29,000 was awarded to developers who created innovative solutions using Fully Homomorphic Encryption (FHE), with top submissions tackling challenges like implementing a fully homomorphic version of the AES-128 cryptosystem, creating a privacy-preserving invisible image watermarking system, and building a confidential single-price auction for tokens. As Season 8 launches, participants are invited to tackle new bounties, including developing a fixed-point arithmetic API, implementing an FHE-based biological age estimation model, and building a confidential benchmarking and polling system onchain, each with a reward of €10,000. The new season kicks off on March 4th, 2024, with a submission deadline of May 18th, 2025, and participants can register by following the provided steps, including filling out a registration form, working on the challenge using provided resources, and submitting their solutions by the deadline.