Key Highlights
- ZAMA token surged 32% after Zama launched its Confidential RFQ swap protocol on Ethereum Mainnet.
- The protocol hides important trade details to help reduce MEV and frontrunning during on-chain swaps.
- ZAMA trading volume rose 129% to about $129 million, while its market cap increased to around $121 million.
The ZAMA token jumped 32% on Thursday, rising from an intraday low of around $0.04 to $0.057 before giving back part of its gains.
At the time of writing, the token was trading at $0.05522. The rally was accompanied by a 129% increase in trading volume to approximately $129 million, while its market capitalization climbed to about $121 million.
Why is ZAMA token up?
The price increase followed the launch of Zama’s new confidential swap protocol. In a post on X, the company said the protocol is meant to give users a way to trade digital assets on-chain without publicly showing key details about their transactions.
The protocol is designed to reduce maximal extractable value (MEV) and front-running by keeping sensitive trade information private throughout the swap process.
Zama launches a private way to trade on Ethereum
The launch introduced the Zama Confidential RFQ, an on-chain request-for-quote platform designed for confidential trading. RFQ means “request for quote.” In simple terms, a trader asks market makers to provide a price for a trade, and the market makers compete to offer the best deal.
However, unlike a normal public trade on a blockchain, the Zama system is designed to hide important information about the transaction.
On a public blockchain, people can often see what asset is being traded, how much is being moved, and whether someone is buying or selling. This can expose large traders to frontrunning and MEV, where bots watch pending transactions and try to profit from them.
Zama said its new system is built to solve this problem. “Today, we are putting an end to the tyranny of MEV by launching the first fully onchain, composable, and confidential RFQ-based swap protocol, where trade size and direction are kept confidential at all times,” the company said.
How the confidential RFQ system works
According to Zama, the process begins when a trader submits an encrypted trade request to the RFQ smart contract. The request hides details such as the trade amount, the trader’s slippage limit, and the direction of the trade.
Market makers then receive the encrypted request and submit their own encrypted quotes. They can see the size of the trade but do not know whether the trader is buying or selling. This means they must compete without seeing the full details of the transaction.
After the bidding period ends, the smart contract selects the best offer through a sealed-bid auction. The winning market maker can then learn the direction of the trade and complete the transaction on-chain.
Protocol launches with three trading pairs
Zama said the protocol is currently live in a private beta on Ethereum, with a public launch planned for September. The beta currently supports three trading pairs: cUSDT/cUSDC, cZAMA/cUSDC, and cSteakcUSDC/cUSDC.
The protocol is built on ERC-7984, a confidential token standard. Zama said this could allow different types of assets, including tokens, stablecoins, tokenized real-world assets, securities, and vault positions, to be traded without exposing large transactions to the wider market.
The company also said 100% of swap fees will be used to buy back and burn ZAMA tokens, while the platform will not charge frontend fees. Zama said the private beta will help it collect feedback from traders and market makers before the wider public launch.
Zama expands its confidential DeFi ecosystem
The Confidential RFQ protocol is the latest addition to Zama’s broader efforts to expand privacy-focused infrastructure for decentralized finance.
Last month, the protocol launched a Steakhouse Confidential Prime USDC vault on Morpho, which is designed to allow users to earn yield from Steakhouse Financial’s Prime USDC strategy while keeping individual balances and allocations private on-chain.
The vault uses Zama’s technology to keep user positions private while allowing the strategy to operate through Morpho.
The team said that unlike standard DeFi products, where wallet balances and deposit amounts can be viewed publicly, the confidential vault allows users to earn yield without exposing their individual balances and allocations on-chain.
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