Fhe-Pred
Encrypted Prediction Market
The problem Fhe-Pred solves
Private Prediction Markets Using Fhenix FHE
Problem
Traditional prediction markets expose all user activity publicly:
- who placed a bet
- which side they chose (YES/NO)
- how much money they staked
This leads to:
- zero privacy,
- easy manipulation,
- unsuitable markets for sensitive questions.
A private prediction market must hide individual bets without breaking fair settlement or payouts.
Solution
We designed a privacy-preserving prediction market using Fhenix's Fully Homomorphic Encryption (FHE) through
cofhejs
.Our system keeps the market itself public, but all user bets remain encrypted.
What stays public
- Market question & close time
- Fees and creator info
- User deposit balances
- Total escrow available
What stays private
- Individual stake amounts
- Whether a user bet YES or NO
- Each user’s payout amount
How it works
- Users deposit funds publicly into the contract.
- When placing a bet, users submit:
- encrypted stake
- encrypted outcome (YES/NO)
- a binding signature to link encrypted data to escrowed funds
- The contract updates encrypted totals using on-chain FHE operations.
- After the market closes, an authorized FHE worker:
- processes all encrypted bets,
- computes payouts homomorphically,
- submits encrypted payout results to the contract.
- Users decrypt their own payout privately and withdraw from escrow.
This ensures fair settlement without revealing who bet what.
How We Use Fhenix
We leverage Fhenix FHE in three key stages:
1. Encrypting User Inputs
- the amount they are betting
- their YES/NO choice
The contract receives only ciphertexts.
2. Homomorphic On-Chain Computation
The contract uses:
euint64
encrypted types- FHE operations to update encrypted totals like:
- total pool
- total YES stake
All without ever seeing the underlying numbers.
3. Encrypted Outputs + Private User Decryption
The FHE worker submits encrypted payouts.
Users retrieve their own encrypted payout and call:
Challenges I ran into
🔧 Challenges We Faced
1. Keeping real-money bets private
Blockchain transactions are public, so hiding how much a user actually bet is difficult.
Solution: Users deposit funds publicly, but the actual bet amounts they place are encrypted using Fhenix FHE.
This keeps economic value real while preserving stake privacy.
2. Ensuring encrypted stakes correspond to actual escrow
A malicious user could encrypt a fake value while only escrowing a small amount.
Solution: Each bettor signs a binding signature that links:
- the encrypted stake ciphertext
- the public escrowed amount
This prevents mismatches without revealing the encrypted value.
3. Computing payouts under encryption
Payout formulas involve division and selecting winners, which are expensive or impractical to run purely under FHE.
Solution: A hybrid settlement model:
- encrypted totals are computed homomorphically,
- only the aggregate totals are selectively decrypted by the FHE worker,
- per-user payouts are then computed homomorphically using these values.
This approach keeps individual bets private while making settlement practical.
4. Identifying winning bets without revealing bet choices
We must decide who won, but decrypting outcome bits would reveal each user’s side.
Solution: Use an encrypted winning bit, and compute
encryptedOutcome * encryptedWinningBit
homomorphicallyso the FHE can determine winners without ever seeing choices.
5. Enforcing secure and private withdrawals
Users must claim rewards without revealing their identity or bet details.
Solution: Each bet has a hidden payoutCommit and the user generates an ephemeral payout key.
Withdrawals are authorized by signatures from this private key, ensuring unlinkability.
Tracks Applied (1)
Creative Privacy Applications
Fhenix
Technologies used
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