Payy launches privacy-enabled EVM layer-2 to anonymize ERC-20 transfers

Payy has introduced an Ethereum layer-2 designed to obfuscate token movements by routing ERC-20 transfers through privacy pools, allowing users to keep transaction destinations hidden while maintaining compatibility with standard EVM wallets. The rollout permits users to add the new network to MetaMask and similar wallets and claims that transfers processed on the chain are privatized automatically, requiring no alterations to existing smart contracts. Payy positions the network as a bridge for two groups: regulated institutions and fintechs reluctant to expose transactional data, and crypto users who want privacy without juggling multiple wallets or protocols. The startup says prominent stablecoin players are participating as launch partners and will be revealed in the near term, suggesting a focus on private stablecoin rails. Technically, the layer-2 holds private ERC-20 pools that act as intermediaries; funds move from a user’s wallet into these pools and are later withdrawn to fresh addresses when interacting with DeFi contracts, limiting onchain traceability. This flow preserves composability for smart contracts while inserting a privacy-preserving step at the transfer layer. Payy’s product roadmap builds on its earlier wallet and crypto-card offerings and claims a substantial user base for those services, which the team uses as evidence of product-market fit. The move places Payy in a crowded field alongside projects like Aztec and Railgun and intersects with Ethereum’s Kohaku privacy roadmap, elevating privacy tooling from niche experiments toward infrastructure that targets real-world capital flows. If institutions adopt private rails for stablecoins, liquidity patterns and risk monitoring tools will need to adapt, shifting how compliance teams view onchain transparency. That opportunity carries trade-offs: better privacy can reduce front-running and data extraction risks but will inevitably attract regulatory scrutiny and force new AML/transaction-monitoring solutions. The commercial proposition—making privacy frictionless for existing wallets—addresses a practical adoption barrier, but success depends on credible countermeasures for compliance and the willingness of major stablecoin issuers to participate. In short, Payy’s layer-2 could accelerate onchain movement of institutional capital by lowering privacy hurdles, yet its broader acceptance will hinge on regulatory navigation, partner onboarding, and competition from other privacy-focused stacks.