FHEVM Privacy Integration

Confidential Computing with Zama

Polaris Pay implements a production-ready Zama FHEVM integration. Unlike traditional zero-knowledge proofs (ZKP) which only verify private data, Zama's Fully Homomorphic Encryption (FHE) allows us to perform mathematical operations on encrypted data without ever decrypting it.

Why FHE for Polaris Pay?

Traditional DeFi is entirely transparent. For institucional-grade credit, this transparency is a bottleneck. Polaris uses FHE to hide:

• Individual Debt Levels: Keep your financial health private.
• Collateral Ratios: Prevent predatory liquidation targeting by hiding exact ratios.
• Credit Scoring: Generate and utilize credit scores without exposing the underlying history.

How Zama FHEVM Works

Zama's technology uses TFHE (Threshold Fully Homomorphic Encryption). In our protocol:

1. Encrypted Inputs: Users encrypt their deposit or borrow amounts using the protocol's public key.
2. Confidential State: The blockchain stores these as euint64 (encrypted 64-bit integers).
3. Encrypted Logic: The smart contracts perform operations (FHE.add, FHE.sub, FHE.select) on these handles.
4. Threshold Decryption: Only when specific conditions are met (e.g., user requesting their own balance via EIP-712) does the Key Management System (KMS) provide a decryption.

Our Approach: Shielded Operations

We provide four primary shielded contracts on Sepolia:

Security & Verifiability

Even though data is encrypted, the protocol remains secure:

• ZK-Proofs for Inputs: Every encrypted input is accompanied by a zero-knowledge proof that the user actually knows the plaintext value and it fits within protocol limits.
• On-Chain Enforcement: The FHEVM ensures that if a calculation would result in an invalid state (e.g., negative balance), the transaction reverts, even if the value is encrypted.

For more technical details on Zama's library, visit Zama Documentation.