Crypto project Payy has introduced a new Ethereum layer-2 network designed to support private ERC-20 transfers by default. The release positions privacy as a built-in feature rather than an optional tool that requires specialized wallets or contract modifications.
The announcement came through the project’s official X post and supporting documentation. Payy stated that the network works with existing Ethereum Virtual Machine wallets and requires no smart contract changes.
“ERC-20 transfers are private by default.
No smart contract changes required.
Supports all EVM wallets out of the box.”
Users can add the network to MetaMask and send tokens through a privacy system integrated into the infrastructure, according to Payy.
How the network works
The layer-2 routes transfers through a chain-native privacy pool that holds ERC-20 tokens. Direct transfers occur within the pool, while smart contract interactions trigger withdrawals to newly generated addresses.
Private transaction data moves to offchain storage described by Payy as Privacy Vaults. The project said developers configure these vaults through RPC parameters, allowing different privacy and compliance setups depending on application needs.
“Private transaction data goes to offchain Privacy Vaults.”
“Users can choose applications and contracts to interact with based on the privacy-compliance tradeoff.”
Payy said the design supports a spectrum of use cases, from fully private to fully public activity.
The network architecture also addresses a persistent usability barrier in privacy tools. Payy stated that earlier solutions involved fragmented liquidity, complex workflows and compatibility issues.
“In the past, privacy always had tradeoffs: bad UX, fragmented liquidity, limited compatibility. With Payy, privacy is invisible.”
Target users include institutions and crypto natives
Payy identified two core user groups. The first includes crypto-native traders and funds that want to move assets privately without managing multiple wallets or looping through centralized exchanges. The second includes fintech firms and traditional financial institutions exploring onchain payments.
“Crypto natives will use their existing wallets and apps, while Fintechs and TradFi will onboard through our distribution partners.”
Payy CEO Sid Gandhi described the demand from institutions in a separate statement shared on X.
“Nearly every bank, fintech, and enterprise is telling us the same thing: They cannot move real capital flows onchain if their financial data is exposed to the world,” he said.
The project previously launched a privacy wallet and a crypto banking card in mid-2025. Payy stated that these products reached about 100,000 users. The company said that user base will help bootstrap the network alongside early stablecoin partners expected to be announced soon.
“Some of the largest stablecoin players are day 1 launch partners on Payy Network.”
Privacy design focuses on stablecoins and ERC-20 tokens
Payy’s documentation highlights private stablecoin transfers as a central use case, though the network supports all ERC-20 tokens. Transactions pass through privacy pools by default when users operate through standard wallets such as MetaMask.
When users interact with decentralized finance applications, funds exit the private pools to a new address. The structure aims to conceal counterparties and transaction trails that remain visible on public chains.
The project presented this approach as a way to reduce operational friction compared with earlier privacy solutions that required dedicated wallets or protocol switches.
Competition and broader privacy push
Payy enters a sector that already includes privacy-focused protocols such as Aztec Network and Railgun. Interest in privacy tools increased in 2025, with tokens such as Monero and Zcash gaining attention during a broader sector expansion.
At the same time, Ethereum developers continue work on privacy improvements at the wallet level. The Kohaku roadmap focuses on reducing reliance on centralized tracking services and supporting private sending and receiving functions.
Payy’s launch adds another model to the ecosystem by embedding privacy at the layer-2 infrastructure level instead of relying solely on token-level or wallet-level tools.
Positioning privacy as a barrier to adoption
Sid Gandhi framed privacy as a major factor in mainstream adoption during a separate X statement.
“I firmly believe privacy is the final barrier to critical mass adoption. By removing it, we’re unblocking the path for the $2 quadrillion global payments economy to move onchain, without turning every transaction into a data leak,” he said.
The network’s structure reflects that position. Payy emphasizes compatibility with existing wallets, default privacy for token transfers and configurable compliance through offchain vaults.
The approach aims to attract both institutional capital and retail usage without forcing changes to how users interact with Ethereum applications.
The project has not disclosed specific stablecoin partners yet but indicated that announcements will follow in the coming weeks.
Early stage rollout and next steps
Payy plans to expand adoption through distribution partners in fintech and traditional finance. The network will rely on its wallet user base and liquidity from early partners during the initial rollout.
The design introduces a hybrid model that combines private pools, offchain data storage and compatibility with existing Ethereum tools. The strategy addresses privacy concerns that limit institutional participation while preserving open access for crypto-native users.
The success of the network will depend on adoption, liquidity depth and integration with existing decentralized applications. Early traction from stablecoin issuers and financial institutions will play a central role in shaping its trajectory.
Matvii Diadkov
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