Zama and Morpho Open Deposits for Encrypted USDC Yield Product - Crypto Economy

TL;DR:

• Zama, Morpho and Steakhouse Financial will launch on June 23 the first confidential DeFi yield vault on Ethereum with encrypted USDC.
• The product uses fully homomorphic encryption to conceal onchain balances and amounts, without sacrificing auditability or regulatory compliance controls.
• Morpho surpasses $11 billion in deposits and Steakhouse manages over $4.5 billion in TVL, key factors for the strength of the underlying vault.

Zama, together with Morpho and Steakhouse Financial, announced the launch of the first DeFi yield vault with confidential assets on the Ethereum mainnet. The product, called Steakhouse Confidential USDC Prime, will open for deposits on June 23, 2026 and will allow institutional and retail users to generate yields on USDC without publicly exposing the size of their position, the timing of entry or the direction of their strategy.

The central mechanism of the vault is confidential USDC, or cUSDC, a token already available on the Ethereum mainnet that encrypts balances and transfer amounts through fully homomorphic encryption (FHE). Once the user converts their standard USDC into cUSDC through Zama’s application, they can deposit those funds directly into the vault on Steakhouse over Morpho.


Confidential USDC

The yield comes from Morpho’s lending markets, backed by first-tier collateral such as cbBTC, WBTC and wstETH. The credit strategy and the parameters of the underlying vault are not modified at any point; the only difference is that the deposited asset is confidential.

Merlin Egalite, co-founder of Morpho, noted that the demand for onchain confidentiality from institutions is a constant in industry conversations. Sébastien Derivaux, co-founder of Steakhouse Financial, highlighted that Zama’s layer integrates directly into the existing vault framework, preserving liquidity, risk management, compliance and auditability. Rand Hindi, co-founder and CEO of Zama, argued that the project demonstrates that confidentiality and decentralization are no longer mutually exclusive conditions.


Zama: Architecture for the Institutional DeFi Sector

The vault’s design does not imply anonymity in the strict sense. Zama’s framework offers selective disclosure, compliance controls and freezing logic, as became evident in a recent episode in which a court order over USDC temporarily affected the cUSDC contract before being lifted. The distinction between privacy and total opacity is deliberate and targets directly the regulatory demands of institutional capital.

Zama launched a USDC-to-cUSDC conversion campaign. Every ten dollars converted grants one entry into a draw for 25 prizes of $1,000 in cUSDC each, with a cap of $500 per wallet. The draw will take place on June 23 using the protocol’s own randomness system.