Payy Unveils New Ethereum Layer 2 Solution for Enhanced Privacy
In an exciting development for cryptocurrency users, Payy has unveiled a new Ethereum layer 2 solution focused on enhancing user privacy. This innovation allows on-chain financial activities to remain largely hidden from public scrutiny. Payy, which is known for its crypto wallet and a Visa-backed card, made this announcement via a post on X, detailing that the new layer 2 network is now compatible with MetaMask. This will ensure that ERC-20 token transfers are automatically private, eliminating the need for modifications to smart contracts.
Addressing Privacy Challenges
The project emphasizes that previous privacy solutions have presented challenges like poor user experience, fragmented liquidity, and a lack of compatibility. With this launch, Payy claims that it has resolved these issues, providing a seamless experience where privacy is the norm rather than an exception. As articulated on their website, the goal is to maintain the confidentiality of stablecoin transactions by design while remaining compatible with all ERC-20 tokens.
Target Demographics
Payy appears to be targeting two key demographics: large institutions and fintech companies looking to manage on-chain transactions without the risk of exposure to onlookers, as well as individual privacy advocates who wish to streamline their crypto tools without juggling multiple wallets.
“Crypto enthusiasts will employ their existing wallets and applications, while financial tech companies will engage through our distribution channels,”
Payy stated.
Layer 2 Network Architecture
The architecture of the layer 2 network facilitates privacy by directing transactions through discreet ERC-20 pools. When users operate with widely used wallets like MetaMask, their transactions will be redirected through these pools, thereby obscuring the actual destination of funds that would otherwise be transparent on the blockchain. Additionally, when users interact with decentralized finance (DeFi) applications using smart contracts, their funds will be sent to newly generated addresses, enhancing privacy further. According to Payy, the confidential transaction logs will be stored in off-chain Privacy Vaults, allowing users to select applications based on the trade-offs between privacy and compliance.
Onboarding and Future Plans
To establish a user base for this new network, Payy intends to initiate onboarding with its existing 100,000 wallet users, in addition to collaborating with prominent stablecoin providers that will be disclosed soon. The CEO of Payy, Sid Gandhi, expressed confidence in the necessity of privacy for widespread cryptocurrency adoption, declaring,
“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 on-chain, without turning every transaction into a data leak.”
Growing Demand for Privacy Solutions
This launch aligns with a rapidly growing demand for privacy-enhancing solutions in the crypto space. Throughout 2025, notable privacy coins such as Monero (XMR) and Zcash (ZEC) have gained traction. Concurrently, Ethereum developers are advancing wallet-level privacy enhancements with projects like Kohaku, and the Ethereum Foundation has laid out a privacy strategy aiming to prevent Ethereum from becoming a tool for global surveillance, a goal highlighted in their September roadmap announcement.
