Blackrocq - Private DeFi in Arbitrum

The Problem

Today's DeFi is a glass house. Every swap, every transfer, every LP position is visible to anyone with a block explorer. This creates real consequences:

• MEV bots extract $1.4B+ annually by front-running trades they can see in the mempool and on-chain

• Institutional capital stays away — hedge funds won't use on-chain DeFi when competitors can reverse-engineer their strategies from public balances

• Compliance creates a paradox — proving you hold enough assets for a loan requires revealing your entire portfolio, defeating the purpose of financial privacy

• Whale tracking has become an industry — wallet labels, portfolio trackers, and copy-trading bots turn every large holder into a public figure

Traditional finance has account privacy by default. DeFi has none. This isn't a feature gap — it's a fundamental barrier to institutional adoption and user safety.

What Blackrocq Does

Blackrocq is a full-stack private DeFi platform on Arbitrum powered by Fhenix CoFHE (Fully Homomorphic Encryption). Every financial operation — swaps, transfers, yield farming, liquidity provision — runs entirely on encrypted values. Not hidden. Not obfuscated. Mathematically encrypted on-chain, where even the smart contracts themselves cannot see your balances.

The Privacy Lifecycle

1. Shield — Lock public tokens (USDC, WETH, WBTC) in ShadowVault, receive FHE-encrypted equivalents (sUSDC, sETH, sBTC)

2. Use privately — Swap, transfer, earn yield, add liquidity. All operations use encrypted arithmetic via the CoFHE coprocessor. Nobody — not even the contracts — can see your balances or amounts.

3. Unshield — Burn encrypted tokens, receive public tokens back. This is the only point where amounts become visible.

Everything between shield and unshield is a black box — to block explorers, MEV bots, competitors, and even the contracts themselves. Only you can decrypt your own balances in your browser using the cofhejs SDK.

Core Features

🔁 Private AMM (ShadowSwap)

A constant-product AMM where reserves, input amounts, output amounts, and LP positions are all FHE-encrypted. MEV is structurally impossible — there's nothing to front-run when you can't see the trade. A $50M whale swap looks identical to a $50 swap on-chain. 0.3% fee, fully encrypted pool reserves.

📤 Private Transfers (ShadowTransfer)

Peer-to-peer encrypted escrow. Send any amount to any address — the amount is encrypted on-chain. The recipient claims it, or the sender reverts it. Nobody else ever knows how much was sent. Think Venmo, but with real financial privacy.

🏦 Encrypted Yield Vaults (ShadowYieldVault)

Deposit encrypted tokens, earn yield computed entirely on ciphertext. The contract calculates principal × APY × time using FHE multiplication and division — never touching plaintext. Your deposit size, your returns, your position — all invisible. Configured APYs: sUSDC 5%, sETH 3%, sBTC 2%.

🌐 Cross-Chain Compliance Proofs (ShadowXChain)

This is where privacy meets the real world. Users can prove "my encrypted balance exceeds $10,000" without revealing whether it's $10,001 or $10 million. The FHE comparison runs on Arbitrum, only the boolean result (true/false) is decrypted, and that result is relayed to Base Sepolia via LayerZero V2.

On the destination chain, any contract can call isProofVerified() — enabling:

• ShadowLend — privacy-preserving lending with borrow limits gated by cross-chain credit tier

• AirdropVault — tier-based airdrop distribution (Bronze / Silver / Gold)

• DeFiPassport — cross-chain credit scoring without ever seeing the underlying balance

Encrypted handles never leave Arbitrum. Only the boolean proof result (or a credit tier integer) crosses chains.

Why This Matters (Real-World Impact)

For institutions: A hedge fund can participate in on-chain DeFi without exposing their strategy. They shield $50M, swap encrypted tokens, earn yield — and their competitors see nothing. When they need a loan on another chain, they prove solvency with a boolean proof, not a balance screenshot.

For compliance: Today, proving you hold enough assets for a loan means revealing your entire wallet. With Blackrocq, a user proves "balance ≥ threshold" and the lender only sees true/false. This is the same principle behind credit scores in traditional finance — the bank sees your score, not your bank statements.

For everyday users: No more whale tracking. No more MEV. No more portfolio exposure. Send money to a friend without the amount being permanently public on Etherscan.

Architecture

User Browser (cofhejs SDK) ←→ Wallet (MetaMask)
         │
┌────────▼──────────────────────────────────────────────┐
│                  Arbitrum Sepolia                     │
│                                                       │
│  Public ERC20s → ShadowVault → Encrypted ERC20s       │
│                  (Privacy        (euint128 balances)  │
│                   Gateway)              │             │
│                              ┌──────────┼──────────┐  │
│                              ▼          ▼          ▼  │
│                        ShadowSwap  ShadowTransfer  ShadowYieldVault
│                        (Encrypted  (Encrypted P2P  (Encrypted Yield)
│                          AMM)        Escrow)                │
│                                                       │
│  ShadowXChain ──── LayerZero V2 ────→ Base Sepolia    │
│  ShadowCreditScore                   (DeFiPassport,   │
│  (FHE Proofs + Tier Relay)            ShadowLend,     │
│                                       AirdropVault)   │
│                                                       │
│  ┌──────────────────────────────────────────────────┐ │
│  │           Fhenix CoFHE Coprocessor               │ │
│  │ Encrypted arithmetic · Access control · Decrypt  │ │
│  └──────────────────────────────────────────────────┘ │
└───────────────────────────────────────────────────────┘

12 smart contracts deployed across Arbitrum Sepolia and Base Sepolia. 8 Foundry test suites with CoFHE mocks. 8 frontend pages with live FHE encryption/decryption in the browser via cofhejs.

Key FHE Innovations

Silent Fail Pattern

In normal DeFi, a transfer that exceeds your balance reverts with "insufficient balance" — leaking the fact that your balance is below the attempted amount. In Blackrocq, we use FHE.select(canTransfer, amount, 0): if the balance is too low, the transfer silently sends 0. No revert, no error, no information leak. Privacy is maintained even in failure cases.

Cross-Contract ACL Grants

When contract A holds an encrypted handle and passes it to contract B, B won't have access by default. We use FHE.allow(handle, targetContract) before every cross-contract call — ensuring encrypted values flow securely between ShadowSwap, ShadowTransfer, and the EncryptedERC20 token without breaking the FHE access model.

Overflow-Safe FHE Arithmetic

FHE operates on euint128 (max ~3.4×10³⁸). Operations like reserve × amount can overflow. We scale values down by 1e12 before multiplication, then scale the result — keeping all arithmetic within safe bounds while maintaining precision.

🚀 Live at https://arb.rocq.xyz — connect a wallet on Arbitrum Sepolia and try every feature end-to-end.

Built entirely from scratch during the hackathon:

- EncryptedERC20 — Custom FHE token contract with encrypted balances (euint128), operator model

for cross-contract transfers, and built-in compliance proofs (proveBalanceAbove)

- ShadowVault — Privacy gateway that bridges public ERC20 tokens into the encrypted layer via

shield/unshield

- ShadowSwap — Full constant-product AMM operating entirely on encrypted values. Pool creation,

liquidity add/remove, and token swaps — all on FHE ciphertext with overflow-safe arithmetic

- ShadowTransfer — Encrypted P2P escrow system with create/claim/revert lifecycle

- ShadowYieldVault — Yield farming where APY accrual (mul/div) runs on encrypted principal.

Per-second yield computed in FHE

- ShadowXChain + ShadowXChainReceiver — Cross-chain proof relay using LayerZero V2 OApp.

Compliance proofs generated on Arbitrum, relayed as booleans to Base Sepolia

- ShadowCreditScore — Multi-token credit tier system (Bronze/Silver/Gold) computed from 3

encrypted balance proofs

- DeFiPassport + ShadowLend + AirdropVault — Destination-chain contracts that consume cross-chain

proofs for lending and airdrops

- Full Next.js frontend — 8 pages with live cofhejs FHE encryption/decryption, RainbowKit wallet

connection, privacy toggles, and real-time cross-chain verification polling

- Event indexer — Express + MongoDB service tracking all contract events

- 8 Foundry test suites — Comprehensive tests using CoFHE mock contracts

- Multi-chain deployment — 11 contracts on Arbitrum Sepolia, 5 contracts on Base Sepolia,

LayerZero V2 peer wiring

None, Will be continue working on Private DeFi