ZAMA Surges 100% as Confidential RFQ Targets $60B OTC Market

Woofun AI reports that ZAMA has emerged as a pivotal infrastructure layer for on-chain privacy, driven by the deployment of its Confidential RFQ protocol and underlying homomorphic encryption (FHE) technology. This structural shift was articulated by Mah in a report for Foresight News, highlighting how the protocol is redefining value propositions in the privacy sector. Rather than launching a new blockchain, ZAMA integrates directly with existing public chains, offering a confidentiality computing protocol that preserves composability while shielding sensitive data. This approach has catalyzed a significant market revaluation, positioning the project as a critical solution for institutional-grade privacy needs.

The market reaction to these developments was immediate and substantial, with ZAMA’s price surging from $0.035 to above $0.065 in less than two days. This rapid appreciation represented a gain of nearly 100%, pushing the asset to an all-time high and expanding its market capitalization to $188 million.

Concurrently, the fully diluted valuation (FDV) climbed to $700 million, reflecting investor confidence in the long-term utility of the technology. This current rally stands in stark contrast to the token’s performance earlier this year; following its Token Generation Event (TGE) in February, the price had depreciated from $0.046 to approximately $0.017. The recent volatility underscores the market’s sensitivity to tangible utility milestones rather than speculative hype.

Technically, ZAMA operates by adding a confidentiality layer to established networks such as Ethereum, eliminating the need for users to migrate assets to a new chain. At its core, the protocol utilizes homomorphic encryption (FHE), enabling smart contracts to process encrypted data directly. This means that transaction amounts, balances, and statuses remain encrypted throughout their lifecycle, accessible only to entities explicitly authorized by the contract rules. This architecture directly addresses the inherent transparency of public blockchains, which often exposes large positions and trading directions to the broader market. For institutional funds and professional trading desks, this capability mitigates the risk of strategy theft and front-running, offering a secure environment for complex financial operations.

The development trajectory of ZAMA has been supported by significant capital inflows, beginning with a $73 million funding round in March 2024. This was followed by an additional $57 million raise in June 2025, backed by a prominent roster of venture capitalists. The protocol’s mainnet has been operational for some time, with the team conducting a sealed bid Dutch auction in January using their own infrastructure. Tokens officially entered circulation in early February, marking the transition from development to public utility. Subsequent updates included the launch of confidential stablecoin transfers and confidential USDC yield vaults, developed in collaboration with Morpho and Steakhouse. These features allow users to earn yields while keeping their positions encrypted, demonstrating practical applications of the underlying technology.

Compliance and security have also been prioritized through strategic partnerships, notably with Elliptic in mid-July. This collaboration introduced compliant wallet screening capabilities, enabling institutions to identify risks without decrypting all underlying data. A major catalyst for the recent price action was the announcement of the Confidential RFQ test version on July 23. This fully on-chain sealed bid RFQ trading protocol ensures that transaction sizes and directions remain encrypted throughout the process. Professional market makers compete to submit bids, with settlements occurring on-chain. Currently, the platform supports trading pairs such as cUSDT/cUSDC, cZAMA/cUSDC, and those linked to confidential yield positions, with a public release scheduled for September.

The demand for such privacy-preserving solutions is underscored by the scale of the over-the-counter (OTC) market. Rand Hindi, co-founder and CEO of Zama, noted that the crypto OTC market is substantial, with trading desks settling approximately $50–60 billion daily. Spot OTC trading volume has grown by 109% year-on-year, while exchange trading volume has seen negligible growth during the same period. This disparity highlights the preference for privacy among large players, who often avoid public order books to prevent slippage and information leakage. Zama’s Confidential RFQ directly addresses this pain point by providing the transparency and verifiability of on-chain settlements without exposing positions to the entire market.

The economic model of Confidential RFQ is designed to align incentives with token holders. Zama has stated that 100% of the transaction fees generated from Confidential RFQ will be used to buy back and destroy ZAMA tokens, with no front-end fees charged to users. The workflow involves traders submitting encrypted transaction intentions to the RFQ smart contract, along with the confidential assets they wish to trade. These intentions conceal the transaction amount, slippage tolerance, and direction.

Whitelisted market makers receive these encrypted intentions on-chain, decrypt them, and submit their own encrypted bids. After the bidding period concludes, the RFQ smart contract selects the highest encrypted bid via an on-chain sealed bid auction, notifying the winning market maker. Only then is the winner permitted to know the transaction direction, facilitating settlement. Following the auction, the winning market maker transfers the confidential assets to the RFQ contract via a two-way transfer, after which the contract returns the funds originally deposited by the trader.

Industry validation for Zama’s technology has been robust, with Kyle Samani, co-founder of Multicoin Capital and current chairman of Forward Industries, describing it as a major step forward for on-chain privacy. On July 27, the team released benchmark test results indicating secure transfers at around 1,000 TPS on commodity GPUs. This performance milestone is approximately a year ahead of the original roadmap, significantly reducing infrastructure costs per transfer. While this performance has not yet been fully deployed on the mainnet, plans are in place to roll it out by the end of the year. Once reliable, this throughput could enable multi-chain expansion and support higher-frequency financial applications, further broadening the protocol’s utility.

Woofun AI data shows that the protocol is transitioning from demonstration to active use, with hundreds of millions of dollars in cumulative shielded assets. The current shielded Total Value Locked (TVL) ranges between $40–50 million, and confidential vaults have accumulated significant deposits. Staking activity has also surged, with the amount of staked ZAMA rising from $50 million to $130 million. This high staking rate locks in circulating tokens and indicates real incentives tied to network security.

ZAMA tokens are primarily used to pay protocol fees, such as encryption verification and decryption, with all fees being burned. Operators earn secondary offering rewards through staking, with an initial annual inflation rate of around 5%, adjustable via governance. The total token supply is approximately 11 billion, with the majority of circulating tokens released at launch. Team, VC, and angel shares have long cliff periods, while treasury and growth fund shares are released linearly. Large portions of tokens remain locked until February 2, 2027, when VC and team shares will unlock.

The recent market rally reflects a revaluation of Zama as a functional FHE protocol with verified performance and real-world use cases. Kyle Samani has previously stated that confidentiality remains the biggest open problem in cryptocurrency, and Zama is a leading candidate to solve it. The project’s ability to maintain its competitive edge will largely depend on the successful launch of Confidential RFQ in September. If executed effectively, this release could solidify Zama’s position as the standard for institutional privacy on public blockchains, driving further adoption and value accrual.