Payy Unveils Ethereum‑First Privacy‑Enabled EVM Layer‑2
Crypto‑focused wallet and banking‑card provider Payy has launched a privacy‑centric Ethereum layer‑2 solution that automatically shields ERC‑20 transfers without requiring smart‑contract modifications.
Overview
On Wednesday, Payy announced via its official X account that its newly built layer‑2 network is now live and can be accessed through any EVM‑compatible wallet, including MetaMask. The service routes ERC‑20 token movements through private pools, rendering the transaction trail opaque to outside observers. According to the company, the feature works out‑of‑the‑box: users do not need to alter existing contracts or switch to a dedicated wallet to benefit from privacy.
Target Audience
Payy positions the network for two primary user groups:
- Institutional and fintech players – firms that want to move capital on‑chain while preventing the public analysis of transaction patterns that could expose strategic or regulatory information.
- Retail crypto users – individuals who prefer a single wallet experience rather than juggling separate “privacy” wallets or bridging solutions.
The project’s roadmap cites “large stable‑coin custodians” among its first‑day partners, with formal announcements expected in the coming weeks.
How the Privacy Model Works
The layer‑2 maintains a series of private ERC‑20 liquidity pools. When a user initiates a transfer from a standard wallet, the tokens are first routed into the relevant pool. From there, the funds are re‑issued to a fresh address on the destination chain, breaking the on‑chain traceability link. When interacting with DeFi protocols or smart contracts, the same “withdraw‑and‑re‑deposit” flow is applied, ensuring that the originating address is never exposed.
Market Context
Payy joins a growing list of privacy‑oriented solutions on Ethereum:
| Project | Core Technology | Current Status |
|---|---|---|
| Aztec Network | Zero‑knowledge rollups | Live (multiple dApps) |
| Railgun | zk‑SNARKs on L2 | Live (private token pools) |
| Payy | Private ERC‑20 pools on dedicated L2 | Launch (integration via MetaMask) |
While Aztec and Railgun rely on zero‑knowledge proofs that require developers to embed specific privacy functions into contracts, Payy’s approach is designed to be transparent to end‑users and developers alike. The trade‑off is that privacy is achieved through pooled liquidity rather than cryptographic proof of transaction correctness.
Strategic Implications
- Lowering friction for enterprises – By eliminating the need for bespoke privacy contracts, Payy may accelerate the onboarding of banks, payment providers, and other regulated entities that have previously cited data exposure as a deal‑breaker.
- Stable‑coin focus – The network’s emphasis on hiding stable‑coin flows aligns with the recent surge in stable‑coin usage across DeFi, where transaction volumes often exceed $100 billion daily. Confidentiality could open new use cases such as confidential remittances and corporate treasury operations.
- Competitive pressure on Ethereum core development – The launch arrives while the Ethereum community is advancing the “Kohaku” roadmap, which aims to embed privacy primitives directly into wallets and the base protocol. Payy’s deployment may act as a real‑world testbed for concepts that later become native to Ethereum.
Risks and Challenges
- Liquidity Sufficiency – The effectiveness of the private pools depends on ample token depth. Insufficient liquidity could result in longer settlement times or higher fees, especially for large institutional moves.
- Regulatory Scrutiny – Privacy‑enhancing technologies are increasingly attracting attention from regulators worldwide. Payy’s focus on stable‑coins could place it under the microscope of anti‑money‑laundering (AML) watchdogs.
- User Adoption – Convincing mainstream crypto users to trust a new privacy layer hinges on seamless integration and clear security audits. Any lapses could erode confidence quickly in a market that is already skeptical of privacy solutions.
Key Takeaways
- First‑move advantage – Payy claims to be the first EVM‑compatible L2 that provides automatic privacy for all ERC‑20 transfers without contract changes.
- Enterprise‑friendly – The solution is marketed to institutions that need confidential on‑chain capital flows, a segment traditionally hesitant about public blockchain transparency.
- Stable‑coin centric – Early partnerships with major stable‑coin issuers suggest a strategic focus on hiding high‑volume, low‑volatility assets.
- Competitive landscape – Payy’s model coexists with existing privacy protocols (Aztec, Railgun) and upcoming Ethereum‑level privacy upgrades (Kohaku), setting up a multi‑front race for the “best‑in‑class” confidential transaction stack.
- Adoption hurdles – Success will depend on liquidity provisioning, regulatory navigation, and the ability to deliver a frictionless experience that rivals native wallet solutions.
Outlook
If Payy can secure robust liquidity and demonstrate rigorous security, its layer‑2 could become a go‑to bridge for banks and fintech firms looking to experiment with public‑chain finance without compromising confidentiality. At the same time, the broader Ethereum ecosystem’s push toward built‑in privacy may eventually render external layers less critical. For now, Payy’s launch adds a practical, user‑friendly privacy option to an increasingly crowded market and may accelerate the mainstream acceptance of private on‑chain transactions.
Source: https://cointelegraph.com/news/privacy-enabled-evm-l2-payy-launches-ethereum?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
