The Steakhouse Confidential USDC Prime vault opened for deposits on June 23, giving holders of confidential USDC (cUSDC) their first route to earn DeFi yield. Previously, cUSDC could only be held or transferred. The vault, built by Zama, Morpho, and Steakhouse Financial, routes cUSDC through Morpho's lending markets while keeping depositor balances and strategies encrypted on-chain.
Zama's cUSDC wraps standard USDC in fully homomorphic encryption (FHE), a technique that lets smart contracts compute on encrypted data without decrypting it. Balances and transfer amounts remain hidden from outside observers while protocol logic still operates on them. The token also includes compliance and auditability features that Zama has positioned as a selling point for institutional allocators and corporate treasuries that want yield without revealing positions to the broader market.
The build is a three-party stack. Zama supplies the FHE infrastructure and the cUSDC wrapper. Morpho hosts the vault and routes deposits through lending markets backed by cbBTC, WBTC, and wstETH; it carries more than $11 billion in total deposits across its protocol. Steakhouse Financial curates the credit allocation and manages the USDC Prime strategy; the firm carries $2.124 billion in TVL across its products.
In late May, a U.S. court temporarily froze approximately $12.5 million held in Zama's cUSDC contracts, more than 99 percent of outstanding supply at the time, following a civil lawsuit involving a third-party depositor. The court lifted the order on June 1.
The vault is the first live test of whether FHE-encrypted tokens can compose with standard DeFi lending infrastructure rather than sit inert in wallets. FHE operations carry higher computational overhead than standard contract calls; whether that cost stays manageable at real deposit volume is the open question the launch is now set to answer.
