Zama’s confidential USDC vault hits $23 million on Morpho

Launched on June 23, the vault allows participants to earn yield on their holdings while keeping deposit amounts and balances encrypted. Zama provides the underlying technology, while Steakhouse Financial manages the strategy, which deploys capital into Morpho lending markets backed by assets like cbBTC, WBTC, and wstETH. The rapid capital inflow, rising from $14 million earlier in July, was bolstered by a 12-week incentive program supplementing the native 4% yield.

This integration marks a shift in how privacy tools enter the market, focusing on existing liquidity rather than new, isolated chains. However, the project operates under regulatory scrutiny. In May, a US court order forced a temporary freeze on a Zama contract holding $12.5 million in USDC, an event that pushed the company to prioritize development of controlled disclosure tools. Zama maintains that its encryption model is designed for compliance, allowing for necessary legal responses without exposing transaction details to the public.