Zama’s confidential USDC vault climbs to No. 8 on Morpho

Zama says a lending vault that accepts only confidential $USDC has grown into one of the largest $USDC vaults on Morpho’s Ethereum deployment, weeks after opening to depositors.

According to a July 16 post from Zama, the Steakhouse Confidential Prime $USDC vault held $23.23 million at Ethereum block 25,544,806. The company said that placed it eighth by total deposits among Morpho V1 and V2 $USDC vaults on Ethereum. The ranking and deposit figure reflect Zama’s stated snapshot and can change as users deposit or withdraw funds.

Confidential $USDC moves into established DeFi infrastructure

The Steakhouse Confidential Prime $USDC vault opened on June 23. Steakhouse Financial curates the strategy, Morpho provides the lending infrastructure, and Zama supplies the confidentiality technology.

Users deposit confidential $USDC, or cUSDC, rather than standard $USDC. Zama uses Fully Homomorphic Encryption to keep individual balances and transaction amounts encrypted while allowing the assets to interact with applications on Ethereum. Deposits ultimately enter a strategy using Morpho lending markets backed by collateral including cbBTC, WBTC and wstETH.

Zama points to $23.23M TVL as a demand signal

Zama described the vault’s growth as evidence that users are willing to place capital into confidential financial infrastructure. The company said “capital is ready to flow through confidential rails,” while acknowledging that an ongoing incentive program has also helped attract deposits.

The vault launched with a 12-week reward program on top of the yield generated by its underlying Morpho strategy. Zama said the native strategy was producing about 4% when the product launched, while additional incentives rewarded early depositors. The company had reported more than $14 million deposited by July 2, before the total reached the $23.23 million figure reported on July 16.

Morpho attracts more institutional-style vault products

The confidential vault arrives as Morpho attracts asset managers, wallets and professional curators. Bitwise launched its first onchain vault on Morpho in January, targeting stablecoin lending through a non-custodial structure.

Morpho has also expanded through consumer wallet integrations. As reported by crypto.news, Trezor added access to Steakhouse-curated $USDC and USDT vaults in May. Those developments place Zama’s product within an existing lending market rather than requiring users to move liquidity to a separate blockchain.

Confidential finance still faces compliance questions

Zama’s confidential $USDC system has already faced a test involving the underlying stablecoin. In May, a US court order led Circle to temporarily freeze a Zama contract holding about $12.5 million in $USDC. The order was later lifted, and Zama said the funds returned to normal operation.

As previously reported, the episode prompted Zama to accelerate work on compliance and controlled disclosure tools. The company says its system encrypts transaction details rather than making users anonymous and plans tools that can respond to legal and regulatory requirements.

Zama argues that its cross-chain confidentiality model can add privacy where liquidity already exists instead of requiring a new Layer 1 or Layer 2. The $23.23 million vault provides an early test of that approach, although continued deposits after the incentive program ends will offer a clearer measure of lasting demand.