Confidential ERC-20 Tokens Using Homomorphic Encryption and the fhEVM

The blog post introduces the fhEVM protocol, which enables private smart contracts using Fully Homomorphic Encryption (FHE) to perform computations on encrypted data without decryption, thereby ensuring confidentiality. The protocol allows developers to use existing Ethereum Virtual Machine (EVM) tools to build applications where transaction inputs and states remain encrypted on the blockchain, under a global network key. This encryption supports multi-user interactions and composability, with smart contract developers controlling access to decrypted states through consensus among validators. The fhEVM provides encrypted integer data types for easier contract development, supports various traditional integer operations, and includes mechanisms like zero-knowledge proofs to prevent misuse. The post demonstrates the application of fhEVM through an example of a confidential ERC20 token, where balances and amounts transferred are encrypted, and highlights the potential for broader applications such as blind auctions and confidential decentralized finance (DeFi). Future enhancements, such as an FHE random number generator, are also mentioned to improve the protocol's capability.