Zama pioneers a new era in crypto ICO: The blockchain privacy revolution behind the $118 million auction

Zama’s public auction took place from January 21 to 24, 2026, setting a new record for privacy protocols based on Ethereum. The total value locked in the auction reached $113.2 million, with a final transaction volume of $118.5 million. This ICO, protected for the first time using fully homomorphic encryption technology, attracted over 11,000 independent participants who submitted nearly 24,700 bids. Market demand for the ZAMA token far exceeded supply, with an oversubscription rate of an astonishing 318%.

Core Event: Pioneering Encrypted ICO

Zama’s public auction created a new paradigm for blockchain financing. This Dutch auction, held from January 21 to 24, 2026, used a sealed bid mechanism and ultimately raised $118.5 million. This figure includes funds from multiple platforms: the Zama main auction platform contributed the majority, while KuCoin and CoinList auctions brought in $2.2 million and $4.2 million respectively.

The auction attracted over 11,000 independent bidders, who submitted a total of 24,697 bids. Market demand for the token far exceeded supply, reaching 880 million tokens, with a 2.805x oversubscription, resulting in a 318% oversubscription rate. The final clearing price was set at $0.05 per token, with successful bidders paying a total of $44 million. This means up to 62.89% of bids were not filled, reflecting strong market participation and technological appeal.

Technological Breakthrough: From Theory to Practice of Fully Homomorphic Encryption

Zama’s core innovation lies in applying FHE technology to blockchain transactions. Fully homomorphic encryption is widely regarded as the “Holy Grail of cryptography,” enabling computations directly on encrypted data without decryption.

In this auction, all bid information remained encrypted until the final clearing price was obtained through homomorphic computation. This process required no decryption of individual bids, demonstrating the practical application capabilities of FHE technology.

Compared to other Ethereum-based privacy protocols, Zama achieved this milestone more rapidly. Within just three days, its total shielded value surpassed $100 million, whereas similar protocols took years to reach this figure. The Zama protocol positions itself as a cross-chain privacy layer for existing public blockchains, rather than creating a new L1 or L2 network. This design allows it to cover major blockchains like Ethereum, Solana, BNB Chain, and Tron.

Market Performance and Industry Impact

On January 24, Zama’s auction became the most widely used application on Ethereum. This achievement is significant, surpassing daily trading volumes of billions of dollars in stablecoins like USDT and USDC, as well as leading decentralized exchange Uniswap.

Recognition of Zama’s technology extends beyond the public auction. Shibarium plans to integrate Zama’s FHE technology, aiming for full on-chain privacy and confidential smart contracts by 2026. This integration will make Shibarium a privacy-focused EVM Layer-2 network, addressing developers’ needs for privacy in DeFi, gaming, and enterprise tools.

Token Economics and Distribution Strategy

Zama’s public auction represented 12% of the initial token supply, divided into three parts: 2% for community sale, 8% for the public auction, and 2% for pre-sale before the TGE.

The upcoming pre-sale starting February 2 will give participants who missed out in the auction a chance to buy ZAMA tokens. Participants can purchase at the auction’s final price of $0.05 per token, with a cap of $10,000. Successful bidders will start claiming tokens on February 2. ZAMA tokens will be distributed as standard ERC-20 tokens, fully unlocked and immediately usable for paying encryption and decryption fees on the Zama protocol.

Token holders can stake ZAMA tokens with chosen operators to earn rewards and help maintain the security of the Zama protocol. This mechanism creates a decentralized economic security model.

Ethereum Ecosystem and Market Environment

The success of Zama’s auction also benefits from the maturity of the Ethereum ecosystem. According to Gate data, as of January 27, 2026, Ethereum (ETH) price was $2,943.46, with a market cap of $351.54 billion, and a market share of 11.26%.

During the auction, the Ethereum network maintained stable operation without downtime. The Zama protocol was able to keep pace with Ethereum’s throughput, indicating that FHE technology has reached production readiness. Ethereum’s price change over the past year was -9.80%, over the past 30 days -1.04%, and in the last 24 hours +2.41%. Despite short-term market fluctuations, the Ethereum ecosystem remains capable of supporting innovative projects.

Future Outlook: The HTTPS Moment for Blockchain

Zama CEO Rand Hindi described this auction as the “HTTPS moment for blockchain.” Just as HTTPS brought encryption to internet communications, FHE technology is bringing a similar transformation to blockchain transactions. With the launch of Zama’s portfolio features, anyone can now shield and send confidential tokens. This marks the end of the era of fully transparent transactions, ushering in true privacy capabilities for blockchain.

The Zama protocol uses a delegated proof-of-stake mechanism, allowing token holders to delegate ZAMA to trusted operators, jointly enhancing network stability and sharing rewards. This design promotes long-term collaboration and incentives within the ecosystem. As institutional demand for blockchain privacy grows and regulatory environments tighten data protection requirements, Zama’s FHE technology is expected to find applications across various industries, from financial transactions to medical data management and supply chain transparency.

When Zama’s auction application surpassed USDT on January 24 to become the most used application on Ethereum, it was not only a technological victory but also a clear signal of market urgency for blockchain privacy. The auction, with over 11,000 bidders and a refund rate of 62.89%, demonstrated the effectiveness of the Dutch auction mechanism in fair price discovery. Achieving $100 million TVS in just three days marked a breakthrough for FHE technology, moving it from laboratory experiments into scalable production environments. With the token claim starting on February 2 and plans for integration with mainstream networks like Shibarium, this blockchain privacy revolution has only just begun.