Concept

FHE & ERC-7984

Fully Homomorphic Encryption, the fhEVM, and the confidential-token standard ShadowLine is built on.

The whole system rests on two ideas: a way to compute on encrypted data (FHE), and a token standard that stores balances as ciphertext (ERC-7984).

Fully Homomorphic Encryption

Fully Homomorphic Encryption (FHE)is a cryptographic scheme that allows arbitrary computation on encrypted data without decrypting it first. Zama's fhEVM is a modified Ethereum Virtual Machine that supports FHE operations natively in Solidity — a contract can add two encrypted balances and get an encrypted sum, never seeing either plaintext.

The ERC-7984 standard

ERC-7984 is the confidential token standard built on the fhEVM. Instead of storing balances as a public uint256, a wrapper contract stores them as euint64 — an encrypted 64-bit integer. The plaintext is never on-chain; only the token owner can decrypt it.

Public ERC-20balanceOf = 1000uint256 · readable by anyoneConfidential ERC-79840x9f3a…e1c7euint64 handle · only you can decrypt
Public ERC-20 vs. confidential ERC-7984 storage
Key properties of ERC-7984 tokens:
  • Balances are on-chain ciphertexts — unreadable by validators, indexers, or block explorers.
  • Transfer amounts are encrypted — confidential even from recipients until decrypted.
  • Decryption requires the owner's EIP-712 permit.
  • The underlying ERC-20 is always 1:1 collateralized inside the wrapper contract.

What FHE does and does not hide

FHE hides values — balances and transfer amounts. It does not hide the graph: the fact that address A interacted with a given wrapper contract, and when, is still public, because transactions and their senders are public on Ethereum. See the Security Model for the precise trust boundaries.