Privacy is moving center stage in crypto as the new Payy privacy layer seeks to bring private ERC-20 transfers to mainstream users and institutions.
Payy, known for its privacy-focused wallet and a Visa-powered crypto card, has launched a new Ethereum layer 2 designed to make ERC-20 transfers private by default. On Wednesday, the project announced on X that the network can now be integrated directly into MetaMask without requiring any smart contract changes from users or developers.
According to the team, the solution is built to hide transaction flows while preserving compatibility with existing wallets and decentralized applications. However, the project is also emphasizing that user experience must remain as seamless as possible for both retail and institutional users.
“In the past, privacy always had tradeoffs: bad UX, fragmented liquidity, limited compatibility. With Payy, privacy is invisible,” the project said, highlighting its ambition to remove friction that has historically limited adoption of onchain privacy tools.
The new network functions by routing transactions through private ERC-20 pools, which act as privacy layers between senders and recipients. Moreover, when users send tokens from traditional wallets like MetaMask, their transfers are automatically routed through these pools, effectively concealing the final destination of funds that would otherwise be publicly traceable on Ethereum.
When interacting with decentralized finance protocols via smart contracts, the system withdraws funds to a new, freshly generated address. That said, this design aims to separate user identity from onchain activity while maintaining composability with existing DeFi infrastructure.
The project explains that private transaction data is sent to offchain Privacy Vaults. Users can then choose which applications and contracts to interact with based on their preferred balance between privacy and regulatory or compliance demands, reflecting a configurable privacy vault architecture.
According to the project website, Payy aims to make stablecoin usage private by design while still supporting all ERC-20 tokens. The team argues that stablecoins are the main bridge between traditional finance and crypto payments, so protecting those flows is a core design goal.
The network is targeting two primary user groups: institutions and fintech firms that want to bring payment flows onchain “without fear of analysis and exploitation,” and privacy-focused individuals who do not want to juggle multiple wallets or tools. Moreover, the team positions the product as a way to unlock fintech onchain privacy without forcing companies to rebuild their infrastructure.
“Crypto natives will use their existing wallets and apps, while Fintechs and TradFi will onboard through our distribution partners,” Payy said, indicating that they expect both consumer and enterprise channels to drive adoption over time.
The payy privacy layer is designed so that users can enable it directly within MetaMask, turning standard ERC-20 transfers into erc20 private transfers by default. However, the project emphasizes that developers do not need to modify smart contracts or liquidity pools to support this functionality.
To jump-start activity on the network, Payy plans to bootstrap liquidity and usage with 100,000 existing wallet users. In addition, it said it is partnering with “some of the largest stablecoin players,” which will be revealed in the coming weeks. This approach is meant to bring immediate volume and signal institutional crypto privacy demand from day one.
In a separate post on X, the team wrote: “I firmly believe privacy is the final barrier to critical mass adoption. By removing it, we are unblocking the path for the $2 quadrillion global payments economy to move onchain, without turning every transaction into a data leak.” That statement underscores how Strategy sees privacy as central to scaling crypto payments.
Payy’s launch comes as demand for privacy-preserving tools continues to grow across the digital asset market in 2025. Throughout this year, popular privacy coins such as Monero and Zcash have seen renewed interest, reflecting a broader push to shield user data from chain analysis.
Meanwhile, Ethereum developers are working on wallet-level privacy improvements through initiatives like Kohaku. Moreover, the Ethereum Foundation announced a new privacy roadmap in September, stating that its goal is to ensure Ethereum does not become “the backbone of global surveillance.”
Against that backdrop, solutions offering stablecoin privacy by design and seamless metamask privacy integration are likely to attract both retail users and regulated entities. The key challenge will be balancing advanced privacy features with evolving compliance expectations, especially as more payment volumes migrate onchain.
Overall, Payy’s privacy-enabled layer 2 adds another option to the growing field of onchain privacy solutions, aiming to combine familiar Ethereum tooling with stronger protections for everyday transfers.
