1RC: Encrypted Intents via Fhenix for Private, Fair Execution

2.1 General Proposals
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1RC: Encrypted Intents via Fhenix for Private, Fair Execution

Forum Tag: phase-2
Status: Draft
Author: Fhenix Labs
Duration: Open-ended

Simple Summary

Enable encrypted coordination within 1inch Fusion using Fhenix’s CoFHE (Co-Processor for Fully Homomorphic Encryption) — allowing private yet verifiable intent execution. This upgrade aims to protect user data, enhance fairness, and maintain composability across the 1inch protocol.

Abstract

This proposal explores integrating Fhenix’s homomorphic encryption infrastructure into 1inch Fusion to support encrypted intents. The goal is to evolve Fusion from a transparent coordination system to one where key trade parameters (such as token pair, amount, and slippage) are encrypted yet verifiable. Two implementation paths are presented: Hybrid Encrypted Intents, which protect only sensitive fields, and Fully Encrypted Routing, which encrypts the full intent for privacy-preserving computation via Fhenix’s co-processor.

Motivation

Currently, 1inch Fusion intents are visible in plaintext, revealing valuable information (e.g., trade direction, size, thresholds) to resolvers and MEV agents. This transparency enables inference and extraction strategies that diminish user surplus. Fhenix’s homomorphic encryption technology offers a way to preserve open coordination while eliminating information leakage, thereby improving fairness, execution quality, and protocol trust.

Specification

Integration Concept

Fhenix’s CoFHE architecture allows computation on encrypted data — smart contracts and off-chain resolvers can validate and route encrypted parameters without decryption.

Two Proposed Models

  1. Hybrid Encrypted Intents

    • Only sensitive fields (e.g., minReturn, slippage) are encrypted.

    • Resolvers continue standard routing while being unable to exploit user thresholds.

  2. Fully Encrypted Routing

    • The full intent (token pair, amount, limits) is encrypted.

    • Fhenix’s co-processor performs private routing simulations, generating verifiable attestations for on-chain settlement.

Lifecycle

  • User submits encrypted intent.

  • Resolvers compete based on execution quality, not information advantage.

  • Settlement occurs on-chain with verifiable, privacy-preserving attestations.

Technical Infrastructure

  • Fhenix CoFHE for encrypted computation.

  • Compatibility with EigenLayer AVS for distributed verification.

  • Optional integration paths for both v1 (hybrid) and v2 (fully encrypted) implementations.

Rationale

This proposal aligns with 1inch’s intent-based design philosophy — preserving competitive execution while addressing one of DeFi’s core inefficiencies: information asymmetry.
Encrypted intents move Fusion toward information symmetry, ensuring that competition focuses on execution quality rather than data access.

This enhances both user protection and protocol empowerment, positioning 1inch as the first DEX aggregator to offer MEV-resistant encrypted auctions.

Considerations

Benefits

  • MEV Resistance: Eliminates leakage of trade direction, size, or urgency.

  • Fair Auctions: Resolvers compete purely on execution, not inference.

  • Composability: Encrypted computation remains verifiable and auditable.

  • Protocol Empowerment: Enhances trust and user retention without altering core flow.

Challenges & Tradeoffs

  • Potential performance gas cost overhead from FHE computation.

  • Integration complexity for resolvers and off-chain actors.

  • Calibration of encryption granularity (hybrid vs full) to balance privacy vs costs

Open Questions

  • Which model (Hybrid vs Full Encryption) best fits the current Fusion design?

  • What tradeoffs between privacy and performance are acceptable for resolvers?

  • What new use cases could emerge from encrypted coordination (e.g., private RFQs, sealed-bid auctions)?

Reference Implementations & Case Studies

Uni v4 Encrypted Hooks (Fhenix Demonstrations)

Alpha Engine Hook

  • Encrypts both trading and yield intents via Fhenix CoFHE + EigenLayer AVS.

  • Keeps parameters confidential throughout settlement, revealing only verified net results on-chain.

Whisper Hook

  • Encrypts order intents (amount, price) to prevent MEV and frontrunning.

  • Privately matches counterparties using a CoW (Coincidence of Wants) model.

StealthSwap (Dutch Auction)

  • Fully encrypted Dutch auction system where all parameters (price, duration, bids) remain private.

  • Prevents front-running and preserves institutional privacy.

  • Implementation: StealthAuction

Conclusion

Fhenix enables 1inch to evolve from transparent intent coordination to encrypted execution — maintaining open competition while eliminating MEV-driven leakage.
This marks a pivotal shift from transparent competition to encrypted cooperation, where privacy, fairness, and composability coexist.

For a detailed breakdown (including encryption flow diagrams and lifecycle mappings), refer to the extended research whitepaper linked below.

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Link to Fhenix docs: