Analysis of the Arcium Network Project

Project Background

Arcium Network is the first project in the Solana ecosystem focused on privacy computing. In May this year, it secured a $50 million funding round led by GreenField.

As mentioned in Arcium’s Purplepaper, Arcium is a decentralized privacy computing protocol, primarily composed of two key components: MPC and its economic model.

The overall structure of Arcium is not hard to understand, especially the part that integrates with blockchain—it directly uses Solana smart contracts:

However, Arcium is built on a strong foundation of hardcore technology. For instance, in this blog post, Arcium explains the technical principles of MPC with simplified examples.

MPC (Secure Multi-Party Computation) is not a new concept—it has existed for many years. The most familiar use case is MPC wallets. Wallets like Binance and OKX use this model by default. From a learning perspective, it’s worth distinguishing between concepts like MPC, multisig, MPC wallets, TSS aggregate signatures, and BLS aggregate signatures—these are somewhat related but easily confused.

Back to Arcium’s article, the simplified version of MPC goes like this: suppose there are 3 participants a, b, and c, each performing computations of +1, +2, and +3 respectively. They each add a salt value of +10, +20, and +30 to their result. The final result after combining all is 66. Subtracting the total salt value of 60 yields the final result of 6.

The desalinization process is also sequential—starting from 66, each participant removes their salt value one by one (e.g., a to c), rather than subtracting 60 all at once. Each participant only knows the initial value and their own computed result—they don’t know the execution order. The protocol specifies that this information remains private.

In reality, MPC is a complex interactive protocol that requires sophisticated engineering. In short, Arcium is leveraging MPC technology to explore more practical use cases, which is a promising direction.

Arcium is exploring many technical directions and experiments. For example, in this article, it proposes a Confidential SPL Token that combines Solana’s SPL standard, the Token-2022 standard, and Arcium’s MPC aggregation framework—a privacy-enabled token standard. They’ve also developed a Dark Pools Dapp on-chain, showing strong cryptographic technical vibes.

Project Architecture

Arcium’s project architecture looks complicated at first glance, with terms like MXEs, arxOS, Arcis, etc. This is a classic example of creating proprietary terminology—assigning fancy names to internal components that are not really technical terms. Most projects have their own terminology set to make things sound more impressive.

You can get a clearer understanding from the Developer version of the documentation. As a developer using Arcium, you’re essentially developing Solana smart contracts. You create your own contract (MXE program) to describe a computation task—say a+b expecting result c—write this logic into the contract, and then call the official deployed contract (Arcium Program) to submit the computation task into Arcium’s task pool:

This way, the Arcium Program becomes aware of the task. The actual execution of the privacy computation is done by the MPC Cluster (arxOS), which reads the task event from the on-chain transaction log, performs the computation, and submits the result back to the Arcium Program (contract). Meanwhile, the MXE program has a callback function to receive the result of the privacy computation and triggers an event to notify the client:

At the contract code level, the types of computations you can perform—addition, subtraction, division, etc.—depend on what Arcium’s framework supports.

Putting aside the convoluted terminology, the essence of Arcium is to allow submitting computation tasks on-chain, getting them computed off-chain by MPC nodes, and submitting the result back to the chain. This is its interaction model with the blockchain. On the off-chain side, Arcium has developed a well-structured client (contract) framework around MPC.

Economic Model

The nodes that actually perform multi-party computation are called StakHodlers in Arcium. It’s a bit complex—in essence, participants can either provide hardware and go through configuration to join the computation network and earn rewards, or delegate their ARX tokens to computation nodes and earn a bit of interest.

In terms of the economic model, the Purplepaper mentions that the total supply of ARX tokens adjusts automatically with network computational demand to maintain equilibrium:

This dynamic balancing aims for a 50% ARX staking ratio. If it drops below 50%, new tokens are minted; if it goes above 50%, tokens are burned. This model favors computation nodes and encourages ARX holders to actively participate in staking and computation. However, it’s not ideal for non-stakers—minting doesn’t benefit them, while burning affects them negatively. It amplifies the shortcomings of Ethereum’s PoS model.

That said, Arcium’s burning mechanism differs from Ethereum’s. Arcium collects protocol fees in SOL, converts them to ARX via Dutch auctions, then burns the ARX. This adds complexity to the token supply dynamics and warrants further observation.

In summary, whether from a technical architecture or economic model perspective, Arcium has substantial depth and has formed a closed-loop system, making it a project worth continued observation. Arcium Network is currently in the testnet phase, with mainnet launch still in the planning stages on the roadmap.