Sedona, a self-custodial trading platform, has teamed up with Fhenix to implement Confidential Fully Homomorphic Encryption (FHE) on its Arbitrum-based system. This upgrade eliminates the need for trusted hardware by encrypting data throughout processing, ensuring users’ balances and portfolio details remain hidden even from AI agents operating within the platform.
Previously reliant on trusted execution environments (TEEs), which depend on hardware trust, Sedona is shifting toward cryptographic guarantees that protect sensitive financial data by default. FHE allows computations on encrypted data without revealing the underlying information, a significant leap for privacy in decentralized finance.
Guy Itzhaki, CEO of Fhenix, highlighted that trading platforms require privacy not only for transactions but also for balances, positions, and the rules governing autonomous agents. Sedona’s move sets a new benchmark for confidential finance on Arbitrum, making privacy an inherent feature rather than an added option.
Founded by Tyler Maxwell, Sedona offers spot trading, perpetuals, and structured products. It is currently migrating from the Seismic ecosystem to Arbitrum and plans to deploy Fhenix’s encryption framework after completing this transition. This change will reduce reliance on hardware or operator trust and improve security for both users and developers.
The upgrade is key because most private DeFi solutions still depend on trusted hardware or committees of operators, both of which carry trust risks. By contrast, fully homomorphic encryption ensures that data remains encrypted even during processing, preventing exposure to AI agents or other system participants.
