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Zama, Morpho, and Steakhouse Financial are launching the first confidential DeFi yield product on Ethereum, targeting institutions to let them earn yield on encrypted USDC without exposing their balances or strategy onchain. The vault opens for deposits June 23rd.
What's the Scoop?
- How It Works: Zama's cUSDC uses fully homomorphic encryption to shield balances and transfer amounts while preserving auditability and compliance checks. Once shielded, the tokens deposit into Morpho vaults, specifically Steakhouse's USDC Prime vault, the curator's oldest on Morpho.
- Who Can Use It: While the product is aimed at institutions, it does not appear to be institution-only. Retail users can also shield USDC into cUSDC through
Zama* and deposit into the vault once it opens, subject to any front-end, wallet screening, or jurisdictional restrictions. Zama is also running a launch campaign from now until the 22nd tied to the vault, with deposits of $10 or more entering users into a prize pool to win $1000 cUSDC. Every $10 = 1 entry into the draw with a maximum allocation of $500 per wallet. - Privacy, Not Anonymity: Zama’s design encrypts balances and amounts, but it is not meant to function like a mixer. Its framework can support auditability, selective disclosure, compliance checks, and freezing logic tied to the underlying asset: a distinction underscored by the recent cUSDC freeze episode, where a court order against USDC temporarily affected Zama’s wrapped cUSDC contract before being lifted.
One of the next frontiers for onchain lending will be privacy: the ability for institutions to allocate, earn, and manage positions without showing their strategy to the entire market.
— Paul Frambot 🦋 (@PaulFrambot) June 17, 2026
Today we announce with @Zama the launch of the first confidential vault: confidential USDC can… https://t.co/kc95CikVOQ
* Bankless team holds crypto assets and advise crypto projects. Zama is included in our disclosures. See our complete investment disclosures here
