What is Zama (ZAMA)? Cryptocurrency soared 26%, the third most popular privacy coin this month

Note this pattern

Two weeks ago, Zcash rose to more than US$500, becoming the strongest large-cap currency on the market. A few days later, Zano topped the list of page views, and we released a guide about it. Today, Zama appeared on the trend list, up 25.9%, another privacy item that most traders cannot define. The appearance of three privacy tokens in three weeks is not a coincidence, but a rotation. Zama is the strangest of the three because it's not a real privacy coin at all-it's an encryption layer, and that's the difference.

As of July 23, 2026, the trading price of Zama (ZAMA) was US$0.05161, up 25.9% in 24 hours, ranking third in the trend list.

What is Zama: Summary in one sentence

Zama is an open source cryptography company that has been working on building fully homomorphic encryption (FHE) for many years and has now launched it as a blockchain protocol. It is positioned not as a privacy coin, but as a confidentiality layer built on top of existing chains, allowing ordinary blockchain to support cryptographic transactions and cryptographic smart contracts without changing its own consensus mechanism. The project's own analogy is HTTPS: the web did not replace HTTP, but wrapped it in encryption, and the encrypted version eventually became the default.

What exactly does fully homomorphic encryption do

This part is worth understanding carefully because FHE is fundamentally different from the privacy tools previously used in the encryption field.

Traditional encryption protects data at rest and data in transit. To do any useful operation on encrypted data, the computer must first decrypt it, which creates a moment of exposure. FHE eliminates this moment: It allows calculations to be made directly on encrypted data, producing an encrypted result, with the data never being decrypted in the process. The input is locked, the mathematical operation occurs, and the output is still locked. Only the key holder can read it.

For blockchain, the actual significance lies in confidential smart contracts. A transaction, balance, borrowing position, or governance vote can be settled on the public chain without exposing amounts, strategies, or positions to any bystanders. Public blockchains have been forced to make trade-offs between transparency and privacy, and the FHE claims this trade-off is superfluous.

Speed has been an obstacle for years. FHE is thousands of times slower than ordinary computing and is just a curiosity in the laboratory rather than infrastructure. Zama's architecture solves this problem: it outsources heavy encryption calculations to a dedicated off-chain coprocessor, which returns the results to the main chain; and a decentralized key management service splits decryption keys through multi-party computing to multiple nodes, so no single operator can unlock them individually. Developers use Solidity to write confidential contracts through a library called FHEVM, using encrypted data types in standard code.

Throughput remains a real constraint. Public documents show that throughput per chain is at the level of tens of transactions per second, which is enough for high-value confidential operations, but far from enough to support consumer-level activity. Anyone evaluating the project should verify current data rather than rely on progress assumptions.

Zama was founded in January 2020 by Dr. Rand Hindi and Pascal Paillier. The second name is a concern for serious cryptographers: Paillier invented the Paillier encryption scheme in 1999, and the architecture is still embedded in billions of smart cards and payment systems. Such a deep academic background is not common in token projects, which is a legitimate advantage for the project. But that alone does not constitute a reason for investment; good cryptography and well-performing tokens are two different things, and this has been proven many times in the crypto field.

ZAMA Tokens: Destruction and Forging Mechanisms and Their Implications

ZAMA has two main functions. It pays protocol fees (called privacy fuel fees) to cover the cryptographic costs of verifying encrypted inputs, running FHE calculations, and managing decryption. At the same time, it carries out pledges through the entrusting certificate of interest system to protect the network and reward node operators.

The economic model is a destruction-and-minting model, with a reported total supply of 11 billion tokens: fees paid by ZAMA are destroyed, while new tokens are minted to reward operators. The important issue raised by this structure is the balance between the two flows. If the cost of destruction exceeds the reward for casting, the supply shrinks and the usage truly creates value for the holder. If the amount cast exceeds the amount destroyed, the holder is diluted to subsidize the operator, which is common in similar networks and often under-noticed. What really needs to be tracked is this ratio, not the total supply, and verification should be based on current chain data rather than start-up documentation.

There is another design detail worth mentioning because it is extraordinarily elegant: the tokens are distributed through a closed-bid Dutch auction that uses Zama's own protocol, so bids remain confidential. Using a product to perform your own startup is both a distribution mechanism and an open stress test.

Why the privacy section is rotating

The explanation is very straightforward. This month's rise in Zcash has repriced the sector's flagship currency, and funds that have already paid for the leader will look downward for currencies that have not yet risen. Last week Zano captured that flow, and now it's Zama.

The difference is worth remembering: Zcash and Zano are privacy currencies, while Zama is the infrastructure other apps use to achieve privacy, so it's a different type of bet. It does not compete for the same use case, and its target market is institutional confidentiality rather than personal anonymity. Whether the market currently understands this distinction or is simply buying any privacy-related assets is an open question, and such movements rarely make careful distinctions.

Real risk

Regulatory pressure applies to everything in the sector, although the programmable compliance nature of the FHE (decryption rules can be defined rather than missing) gives it an advantage over purely anonymous tools. But this advantage has not yet been tested by any major regulator.

Adoption is the core of the entire argument. The encryption layer only generates value when the application is integrated and the user pays a privacy fuel bill. Infrastructure tokens can be traded on narrative basis for years, but actual usage remains small.

Performance limitations limit the near-term market to high-value operations rather than large-scale use.

The token economy may dilute rather than add value, depending on the above balance of destruction and minting.

The risk of rotation is immediate: the 25.9% increase driven by sector capital flows rather than project events comes and goes quickly, and readers of this article entered after the candlelight appeared.

Summary

Zama is one of the most technologically credible projects on this month's trend list: real cryptography, a founder who invented a solution that still runs on billions of devices, online mainnet infrastructure, and a token with reasonable cost and destruction design. But it is also an infrastructure bet, whose value depends entirely on adoption that has not yet occurred, and its 26% rise this week is entirely due to sector rotation, not to itself. Learn techniques, verify the destruction and casting balance and current throughput, and treat this candle line as it is: attention that poured in after price changes appears in a corner of the market that has been rotating for three weeks.

This article is for reference only and does not constitute investment advice. Cryptographic assets fluctuate very much and you may lose all your principal. Please be sure to study it yourself.