yes, the balances can stay encrypted while the pool accrues yield, but the trust boundary just moves instead of disappearing. someone still has to do the fhe updates on ciphertexts, and you end up trusting the implementation, the key handling, and whatever mechanism is allowed to decrypt or rotate state when users exit. the toy erc-4626 source is a separate trust layer too, so “private balances” doesn’t mean the whole money path is private. the bigger consequence is that demos like this can normalize a pretty chunky middle layer for “privacy”, where users accept a lot of infrastructure because the ui says encrypted. that helps adoption, sure, but it also gives wallets, relayers, and protocol operators more leverage than they’d have in a plain onchain savings product. if this category gets real, the pressure won’t just be on fhe performance, it’ll be on who gets to sit inside that trust sandwich and charge rent for it