Architecture

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Overview

This page describes the architecture behind pre-execution privacy: a system that lets users encrypt a transaction, order, or bid so it can only be decrypted once a defined condition is met, then decrypts and executes it automatically. This is what protects users from frontrunning and information leakage, and enables fair price discovery for auctions, governance, and trading. Pre-execution privacy is powered by MPC identity-based encryption (MPC-IBE), where no single party ever holds the decryption key. Encryption and any required proofs are generated locally on the client, and the encrypted transaction waits on its originating chain until its condition triggers decentralized decryption on FairyRing.

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System at a Glance

The system is built with four layers: Pre-execution privacy moves an encrypted transaction through a condition gate:

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Breaking Down the Layers

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x/pep: Encrypted Transaction Handling

x/pep runs on both FairyRing and the integrated chain. It accepts encrypted transactions, stores them locally against their condition ID, and triggers decryption and execution once the derived key arrives. Encrypted transactions stay on their originating chain they are not relayed to FairyRing and are executed there, not on FairyRing.

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x/keyshare: MPC-IBE Key Generation

x/keyshare runs only on FairyRing and is the cryptographic heart of the system:

• Each epoch, a Master Secret Key (MSK) is generated and split into per-validator key shares; the corresponding MPK is published for encryption. FairyRing keeps at most two MPKs live; an ActivePubKey and a QueuedPubKey that rotate at epoch boundaries.
• When a condition is met, validators each produce a private key share for that condition ID. No single validator can reconstruct the key.
• Once 2/3N + 1 shares are submitted, FairyRing aggregates them into the derived private key that decrypts every transaction tied to that condition.

See Network Flow for the full key lifecycle and the Module Reference for message and query details.

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FairyPort: Conditional Decryption Relay

FairyPort is the relayer layer for external chains. It reads the state of both the destination chain and FairyRing, notifies FairyRing when a destination-chain condition is met, and delivers the derived private key back once it is constructed. It is operated by Fairblock; partners integrating over IBC or building native FairyRing apps do not need to run it.

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Decryption Conditions

The condition that gates decryption is what makes pre-execution privacy composable. Conditions decrypt in one of two modes, covered in Decryption Modes:

• Private Shared State (PSS) publicly decryptable once a global condition is met (block height, price feed, ZK proof, contract call). Used for sealed-bid auctions, encrypted mempools, and fair ordering.
• Private Access Control (PAC) decryptable only by an individual or group sharing an attribute. Used for private decryption and selective disclosure.

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Next Steps