The First Confidential Incentive Campaigns Onchain, Live with Zama

The first confidential incentive campaigns are now live on Merkl. Depositors in confidential vaults on Morpho, powered by Zama, earn incentives computed on encrypted balances. Positions, reward amounts, and the leaderboard never appear publicly: no one can look up what another depositor holds or earns.

From confidential tokens to confidential incentives

The Zama Protocol made confidential tokens possible on public blockchains, keeping balances and amounts encrypted at all times with Fully Homomorphic Encryption (FHE) while preserving full verifiability. In June, Zama put them to work with the Steakhouse Confidential Prime USDC vault on Morpho, the first DeFi yield venue for confidential USDC (cUSDC). It grew from zero to $40 million in shielded TVL within seven weeks.

On September 15, Zama expanded the model to 16 curated vaults across five curators and five asset classes, all on Morpho.

One piece was still missing: incentives. Merkl now supports ERC7984, Zama's confidential token standard, and the first incentive campaigns computed on encrypted balances are live. DeFi went confidential. Incentives just followed.

What's live

Confidential incentive campaigns are now running on a first set of confidential vaults on Morpho, curated by leading DeFi curators, with ZAMA rewards.

Each opportunity shows up with a visible APR, like any campaign on Merkl. Everything else stays private: no public leaderboard, no visible reward amounts, no way to look up what an address holds or earns.

How to earn

1. Deposit into one of the qualifying confidential vaults in the Zama App. The app shields your deposit into its confidential form.
2. On the same page, delegate balance viewing to Merkl. This grants Merkl the right to decrypt your balance for reward computation, and nothing else. Without it, your position cannot earn.
3. Keep your deposit active. Rewards are computed on your balance, time weighted, on Merkl's standard cycle, and every day in a qualifying vault counts from day one.
4. Follow the rewards you accrue on your dedicated page in the Merkl App, visible to you and only you after connecting your wallet. When claiming opens in the weeks following launch, you claim through confidential ERC7984 transfers, so what you earned stays as private as what you deposited.

Why this is a first

Every incentive engine starts from the same primitive: read a user's balance, weight it over time, split a budget across participants. Vaults built on Zama's ERC7984 standard break that primitive on purpose. Balances are encrypted, there is no readable per user state, and the whole point of the product is that it stays that way.

Standard campaign surfaces make it worse. Users need a visible APR to decide to deposit, then an invisible reward amount once they have. Public leaderboards and reward feeds leak exactly the information a confidential asset exists to protect.

Running incentives on confidential assets meant solving three problems at once: computing rewards on balances nobody is allowed to read, keeping an opportunity attractive without exposing who holds what, and moving value to users without revealing what they earned.

How it works

The flow rests on one principle: what each party can see is limited by the system itself, not by a promise not to look.

1. The user delegates to Merkl, per position. Right after a deposit in the Zama App, the user grants Merkl the right to decrypt their balance for reward computation. No delegation means no indexing for that position. The campaign base is the sum of delegated balances, not a public total supply.
2. Merkl indexes and computes. A dedicated ERC7984 adapter ingests confidential vault positions like any other position type. Rewards are computed on decrypted per user balances, time weighted over the campaign, on Merkl's standard compute cycle.
3. Merkl encrypts the results. Instead of publishing a reward list, Merkl exposes a dedicated endpoint that returns, for every eligible address, the reward amount already encrypted together with its input proof.
4. The user claims. When a user calls claim, the reward settles through a confidential ERC7984 transfer, so Merkl never holds or moves the reward tokens, and Zama never sees a cleartext amount.

Who sees what

The confidentiality guarantee holds because visibility is split by design:

• The user sees their own balance and their own rewards, on their dedicated page in the Merkl App, after connecting their wallet.
• Merkl sees balances only where delegated, and computes rewards on them. Decryption rights are granted per user, in the Zama App, after deposit.
• Zama receives ciphertext and proofs, nothing else. It never sees a cleartext amount.
• Everyone else sees an opportunity and an APR. The leaderboard is invisible to all, including the campaign creator, and reward data is stripped from the public API so addresses cannot be impersonated to reveal it.

A blueprint for confidential incentives

Merkl has distributed over $1.8B in incentives across 60+ chains by reading onchain activity and computing who earns what. This integration extends that engine to assets designed not to be read, and it establishes a pattern that goes beyond the first vaults.

Confidential assets are how institutions come onchain: RWA tokenization, payments, trading, and yield all require balances that competitors and observers cannot see. Until now, those products had no way to run the incentive programs that bootstrap every DeFi market, because incentives meant exposure. With ERC7984 support, any team building on the Zama Protocol can launch targeted campaigns without compromising the confidentiality their users came for.