Zama, Morpho and Steakhouse launch confidential USDC yield vault on Ethereum

Zama, Morpho and Steakhouse Financial are launching the Steakhouse Confidential USDC Prime vault, described as the first DeFi yield product for confidential USDC stablecoins on Ethereum. The product allows holders of Zama’s encrypted cUSDC to deposit directly into Morpho’s existing Steakhouse USDC Prime vault and earn yield while keeping balances, transaction amounts and strategy private onchain. Deposits open on June 23 through the Zama app. Zama said its cUSDC uses fully homomorphic encryption to shield balances and transfer amounts while maintaining auditability and compliance checks, and converts standard USDC directly on Ethereum without requiring a bridge to another chain. Once encrypted, the tokens can be deployed into Morpho vaults and use the protocol’s existing security and capital efficiency. The design is aimed at a longstanding trade-off in public blockchains: institutions may want transparent settlement and public infrastructure without exposing deposit sizes, portfolio movements or strategy signals to the market. Zama’s approach focuses on private deposit logic rather than hiding the protocol itself, and points to a model in which privacy features support institutional DeFi use while still allowing selective compliance verification. Zama co-founder and CEO Dr. Rand Hindi said public blockchains have historically exposed users’ financial activity and called the launch the start of a “confidential DeFi” category on Ethereum. Morpho co-founder Merlin Egalite said institutions have consistently signaled demand for onchain confidentiality, while Steakhouse co-founder Sébastien Derivaux said the USDC Prime vault was designed to be liquid and risk-conscious and that the added privacy layer could help institutions avoid broadcasting positions to competitors or front-runners. The rollout extends infrastructure Zama has already put into production. Last month, a federal judge ordered Circle to blacklist Zama’s cUSDC contract after roughly $12.6 million linked to a class-action suit against Overnight Finance’s Maxim Ermilov flowed into it. Hindi said at the time the contract had been caught in a crossfire rather than exposing a flaw in the system. Zama also acquired TokenOps last month and partnered in March with Apex Group-backed T-REX Network to bring its encryption layer to tokenized real-world assets on the ERC-3643 standard. Steakhouse has separately built an institutional yield business on Morpho, including a February vault that lets Safe users earn yield on Société Générale’s MiCA-compliant EURCV stablecoin. Morpho this month closed a $175 million funding round co-led by Paradigm, a16z crypto and Ribbit Capital, with Apollo Funds, Circle Ventures and VanEck also participating, valuing the protocol at roughly $2 billion. As of Wednesday, ZAMA traded near $0.035 and MORPHO near $1.92, according to The Block’s price page.