Payy launches Ethereum L2 with built‑in privacy for wallets

Payy has unveiled an Ethereum layer‑2 network that automatically masks transaction counterparties by routing ERC‑20 moves through private pools, a feature it says works with popular wallets such as MetaMask [1]. The rollout positions Payy as the first privacy‑enabled EVM L2, aiming to make on‑chain capital flows more acceptable to banks and enterprises.

Key takeaways

• Payy’s L2 routes ERC‑20 transfers through private pools, hiding counterparties from the public blockchain [1]
• The network is integrated with wallets like MetaMask, allowing users to move funds without exposing transaction details [1]
• Payy previously offered a privacy‑focused wallet and crypto banking card, reporting roughly 100,000 users since its mid‑2025 launch [1]
• The project markets the L2 as a simpler alternative to existing privacy tools, reducing the need to manage multiple wallets or protocols [1]
• Payy’s broader vision includes attracting traditional finance institutions that are hesitant to move capital on‑chain due to data exposure concerns [1]

Privacy‑enabled L2 architecture

Payy’s layer‑2 operates by maintaining private ERC‑20 pools. When a user initiates a transaction from a supported wallet, the funds are first transferred to a pool address; the pool then forwards the assets to the destination address, effectively obscuring the original sender and receiver on the public Ethereum ledger [1]. Interaction with decentralized finance (DeFi) apps follows the same pattern: funds exit the private pool to a new address before engaging with smart contracts, preserving privacy throughout the transaction flow [1]. Payy positions this design as a way to lower operational complexity compared with other privacy solutions that require users to juggle multiple wallets or switch between protocols [1].

Position within the crypto‑neobank landscape

Payy’s launch aligns with a broader trend toward crypto neobanks that combine stablecoin payments, DeFi access, and fiat on‑ramps in a single interface [2][3]. While many neobanks focus on offering Visa‑linked cards and yield‑generating accounts, Payy differentiates itself by embedding privacy directly into its network layer [2]. The company’s earlier products—a privacy wallet and a crypto banking card launched in mid‑2025—have already attracted an estimated 100,000 users, suggesting a base ready to adopt the new L2 [1]. Payy’s CEO Sid Gandhi has emphasized that “nearly every bank, fintech, and enterprise” is reluctant to move real capital on‑chain without privacy guarantees, indicating that the L2 could serve as a bridge for institutional adoption [1].

Why it matters

If successful, Payy’s privacy‑enabled L2 could address a key barrier to broader institutional participation in Ethereum’s DeFi ecosystem: the exposure of transaction data. By automating privacy for ERC‑20 transfers and integrating with existing wallets, Payy reduces the friction that has historically limited on‑chain capital flows for banks and large enterprises [1]. The launch also adds to a growing ecosystem of Ethereum privacy solutions, including Aztec Network and Railgun, and coincides with Ethereum developer efforts under the Kohaku roadmap to enhance wallet privacy [1]. Continued adoption will depend on how well the network performs at scale and whether traditional finance players view the built‑in privacy as sufficient to meet regulatory and risk‑management standards.