Private DeFi

Private DeFi Applications

AFHE enables a new category of DeFi protocols where financial privacy is built into the protocol layer rather than bolted on as an afterthought.

Encrypted AMM Pools

Traditional AMMs expose all liquidity positions and swap details publicly. With AFHE, pool reserves can be encrypted while still allowing the AMM invariant (x * y = k) to be verified homomorphically. Liquidity providers can add and remove liquidity without revealing position sizes. Swap execution happens on encrypted state, preventing sandwich attacks at the protocol level.

Private Lending Markets

Current lending protocols like Solend and MarginFi expose every user's collateral ratio, borrow amount, and liquidation threshold. This creates toxic information asymmetry where liquidation bots can preposition for cascading liquidations. AFHE-powered lending markets evaluate collateral sufficiency homomorphically — the protocol can verify a position is healthy without knowing the exact ratio. Liquidations trigger only when the encrypted computation confirms insolvency, preventing anticipatory front-running.

Confidential Orderbooks

On-chain orderbooks suffer from order visibility — every limit order is publicly visible, enabling front-running and order manipulation. The FHE Coprocessor enables encrypted limit orders where price and quantity are hidden until matching. The matching engine operates on encrypted data, finding intersections between encrypted bids and asks without revealing individual orders. Only matched counterparties learn execution details.

Institutional DeFi Infrastructure

For institutions to meaningfully participate in DeFi, they require the same privacy guarantees available in traditional finance: portfolio privacy (positions not visible to competitors), execution privacy (orders not front-run), and compliance compatibility (ability to provide encrypted audit trails to regulators without public disclosure).

AFHE provides all three through its confidential token standard, encrypted swap execution, and optional auditability features where institutions can grant specific parties (auditors, regulators) decryption keys for their transactions while maintaining privacy from the general market.