Zama Launches Privacy-Focused $ZAMA Token with Fully Homomorphic Encryption

• Zama (ZAMA) launched a privacy-centric metric called Total Value Shielded (TVS), measuring the amount of economic value processed in encrypted form.
• The $ZAMA token was introduced in a sealed-bid auction on Ethereum, oversubscribed by 218% with $121 million locked from 11,000 participants.
• Zama's Delegated Proof of Stake (DPoS) system features a 5% annual inflation rate and a Square Root reward formula to promote decentralization.

Zama's implementation of Fully Homomorphic Encryption (FHE) is the first production-scale use on public blockchains, enabling encrypted smart contracts while maintaining public verifiability. The introduction of TVS aims to redefine how the DeFi market measures economic value, shifting from public visibility to encrypted privacy. Zama's technology allows computation on encrypted data without revealing the raw data, addressing the privacy-transparency dilemma in blockchain systems.

The $ZAMA token is now listed on major exchanges, including Bitget and Coinbase, offering investors opportunities for staking and governance. Zama's TVS metric is designed to assess the effectiveness of its privacy infrastructure by tracking value being shielded within the network. However, the project faces risks such as uncertain token demand, centralization risks in DPoS, and competition from other privacy protocols.

How Does Zama's FHE Enable Encrypted Computation on Public Blockchains?

Zama utilizes Fully Homomorphic Encryption (FHE) to allow encrypted computation on public blockchains without decrypting the data first. This enables private transactions and smart contracts while maintaining public verifiability of rules. The implementation of FHE in Zama's protocol marks a milestone in encrypted computation, offering a solution to the privacy-transparency dilemma. Zama's FHE technology is designed to become a standard for confidential on-chain applications, similar to how HTTPS is used for secure web communication.

What Is the Role of the $ZAMA Token and TVS Metric in DeFi?

The $ZAMA token serves as a utility, governance, and security mechanism within the Zama protocol. It is used in a Delegated Proof of Stake (DPoS) system where 18 genesis operators manage the network. The token's DPoS model incentivizes network security through token delegation and reward distribution. Zama's Total Value Shielded (TVS) metric is a privacy-focused counterpart to DeFi's Total Value Locked (TVL). TVS quantifies the economic impact of maintaining privacy on-chain through cryptography. This redefines how investors assess the scale and value of encrypted transactions.

What Are the Risks and Limitations of Zama's Privacy-Centric Model?

Zama's model faces several challenges, including uncertain token demand and the potential for centralization in its DPoS system. The Square Root reward formula is designed to promote decentralization, but smaller operators may still be at a disadvantage. Zama also faces competition from other privacy-focused protocols in the DeFi space. The success of Zama's TVS metric depends on adoption and whether it becomes a standard for measuring encrypted on-chain value. Despite these risks, Zama's first production-grade application—the Zama Public Auction—demonstrates the real-world scalability of its encrypted financial operations.