Payy Privacy Ethereum L2 Launches to Revolutionize Confidential Crypto Transactions for Institutions and Users

In a significant move for blockchain confidentiality, crypto wallet and banking provider Payy has launched a groundbreaking privacy-enabled Ethereum layer 2 network. Announced globally on Wednesday, this innovative platform automatically renders every ERC-20 transfer private by default, eliminating the need for users to manage multiple wallets or new tokens. This development arrives amid a 2025 surge in demand for practical financial privacy solutions within the regulated digital asset space.

Payy’s Privacy Ethereum L2: A Technical Breakdown

Payy’s new network represents a sophisticated technical advancement in layer 2 scaling. The system is compatible with any Ethereum Virtual Machine (EVM) wallet, including the widely used MetaMask. Consequently, users can integrate the network directly into their existing wallet interfaces without complex migrations. The core innovation lies in its automatic privacy mechanism. When a user initiates a transfer, the transaction is seamlessly routed through private ERC-20 pools hosted on the layer 2. This process requires no smart contract changes from the user or the token issuer, a feature Payy emphasizes as a key differentiator.

From a user experience perspective, the funds move from a standard wallet address into these shielded pools. As a result, external blockchain analysts cannot trace the destination or the amount. When users later wish to interact with a decentralized application (dApp) or smart contract, the funds withdraw from the private pool to a freshly generated address. This two-step process effectively breaks the public transaction trail on the base Ethereum layer.

• Default Privacy: All transfers are private by design; users do not need to opt-in.
• Wallet Compatibility: Works with MetaMask and other EVM wallets without new software.
• Token Agnostic: Supports all ERC-20 tokens, with a stated focus on privatizing stablecoin flows.
• No Protocol Juggling: Eliminates the need to bridge assets between multiple privacy protocols.

Targeting Institutional and Retail Adoption in 2025

Payy has clearly defined its target audience for this network. The project identifies two primary user groups poised to benefit from its technology. First, the platform caters to institutions and fintech firms. According to Payy CEO Sid Gandhi, traditional finance entities express a common concern: they cannot move substantial capital onchain if their financial data becomes publicly visible and exploitable. Payy’s layer 2 aims to solve this by providing a compliant pathway for private, large-scale settlements.

Second, the network serves crypto-native users. These individuals seek robust privacy tools but often face usability hurdles with existing solutions. Payy’s integration removes the friction of managing separate privacy wallets or understanding complex cryptographic protocols. The company claims its existing wallet service has already attracted 100,000 users, providing a potential initial user base for the new L2. Notably, Payy announced that “some of the largest stablecoin players” are launch partners, with names to be revealed in the coming weeks.

The 2025 Privacy Landscape and Competitive Analysis

The launch occurs within a rapidly evolving crypto privacy sector. In 2025, privacy-focused tokens like Monero (XMR) and Zcash (ZEC) saw a notable boom in interest. Simultaneously, regulatory scrutiny in jurisdictions like Dubai, which moved to ban certain privacy coins, has created a demand for alternative, protocol-level privacy solutions. Existing Ethereum privacy options include dedicated networks like Aztec and privacy protocols like Railgun, which use zero-knowledge proofs or similar mixing techniques.

Payy’s stated point of difference is user experience and integration depth. While other tools exist, they often require active user management. Payy bakes privacy directly into the transaction layer for its network. Furthermore, this development aligns with broader Ethereum ecosystem trends. The Kohaku roadmap, an initiative by Ethereum developers reported on in October, aims to enhance native wallet privacy. Kohaku’s goals include reducing reliance on centralized transaction trackers and introducing features like private sending. Payy’s product can be seen as a commercial implementation advancing similar ideals for specific use cases, particularly institutional finance.

Broader Implications for On-Chain Finance

The successful adoption of Payy’s layer 2 could have profound effects on how value moves on blockchains. For institutions, the ability to conduct private settlements could unlock new use cases for stablecoins in trade finance, inter-bank transfers, and treasury management. The transparency of Ethereum has historically been a double-edged sword, providing auditability but exposing strategic financial positions. A functional privacy layer removes this barrier.

For the decentralized finance (DeFi) ecosystem, increased private liquidity could influence lending protocols and decentralized exchanges. Large, private capital movements might enter DeFi pools without revealing the size or strategy of the participating entity, potentially increasing market depth while complicating analysis. However, this also raises important questions for compliance and audit frameworks that rely on transparency, suggesting a future where privacy and regulation must find a new equilibrium through technological means like selective disclosure proofs.

Conclusion

Payy’s launch of its privacy-focused Ethereum layer 2 network marks a pivotal attempt to bridge the gap between the transparency of public blockchains and the confidentiality demands of modern finance. By making privacy the default for ERC-20 transfers and integrating seamlessly with existing wallets, the project addresses critical friction points for both institutions and everyday users. As the 2025 crypto landscape continues to mature with a pronounced focus on privacy, solutions like Payy’s L2 will play a crucial role in determining how—and how privately—global capital flows onchain. The coming weeks, with promised announcements from major stablecoin partners, will be critical in gauging the network’s initial traction and long-term viability.

FAQs

Q1: How does Payy’s Ethereum L2 make transactions private?
Payy’s layer 2 network uses private ERC-20 pools. When you send a token, the transaction is automatically routed through these shielded pools, breaking the visible link between your sending address and the recipient on the public Ethereum blockchain.

Q2: Do I need a special wallet to use the Payy network?
No. The network is compatible with any Ethereum Virtual Machine (EVM) wallet, such as MetaMask. You simply add the Payy network to your wallet’s list of supported networks.

Q3: What is the main advantage of Payy’s system over other privacy tools like Railgun or Aztec?
Payy emphasizes ease of use. Privacy is automatic and requires no active management of multiple protocols or wallets. It is designed as a seamless layer where privacy is the default state, not an extra step.

Q4: Who is the target user for this privacy Ethereum L2?
Payy targets two main groups: 1) Institutions and fintech companies that need to move large capital flows without exposing their financial strategy, and 2) Crypto users who want privacy without the technical complexity of current tools.

Q5: Does this network work with all cryptocurrencies?
It works with any token following the ERC-20 standard on Ethereum. This includes thousands of tokens, though Payy specifically highlights its utility for making stablecoin transfers private.