Payy Launches Ethereum Privacy Network Amid Crypto Boom

On February 5, 2026, the world of blockchain and cryptocurrency privacy took a leap forward with the launch of Payy’s new Ethereum layer-2 network, a move that’s stirring up conversations across both the crypto industry and the broader financial sector. The development, as reported by CoinMarketCap and Innovation & Tech Today, comes at a time when privacy is not just a buzzword but a necessity for institutions, fintechs, and privacy-conscious users alike.

For those who haven’t followed the privacy debate in crypto, here’s the crux: public blockchains like Ethereum are radically transparent, allowing anyone to inspect on-chain activity in real time. That’s great for trust and accountability, but it’s a nightmare for banks, enterprises, and even individuals who need to keep their financial dealings confidential. As CEO Sid Gandhi of Payy put it, “nearly every bank, fintech, and enterprise cannot move real capital flows on-chain if their financial data is exposed to the world.”

Payy’s new network addresses this head-on. Users can add the Payy network as a custom chain in MetaMask, and, by default, all ERC-20 token transfers are routed through privacy pools. There’s no need for users or developers to fiddle with smart contract changes—transactions are automatically shielded, keeping counterparties and transaction details out of the public eye. This is especially significant for institutions and fintech firms that want to leverage blockchain’s benefits without the crippling downside of exposing sensitive financial flows. But it’s not just for the big players; crypto natives who crave privacy without the hassle of juggling multiple wallets or switching between protocols are also in Payy’s sights.

Payy’s approach is part of a broader trend in blockchain privacy, where the focus is shifting from “privacy coins” to a toolkit of cryptographic methods and network designs. As Innovation & Tech Today explains, privacy in blockchain isn’t a one-size-fits-all concept. There are multiple flavors: sender privacy (hiding who initiated a transaction), receiver privacy (hiding who received funds), amount privacy, activity privacy, and data privacy. Different systems offer different mixes of these protections. For example, Monero (XMR) uses ring signatures and stealth addresses to make sender and amount privacy the default, while Zcash (ZEC) relies on zero-knowledge proofs (ZKPs) to offer optional privacy via shielded transactions. Dash (DASH) provides optional privacy through CoinJoin-style mixing, but the privacy guarantees and user experience differ wildly between these protocols.

What sets Payy apart from other privacy-focused Ethereum layer-2s and protocols—such as Aztec Network and Railgun—is its emphasis on reducing operational complexity. The new Payy network hosts private ERC-20 pools that automatically route transactions, making it seamless for users to move funds from their normal wallets without publicly exposing transaction counterparties. When users interact with decentralized finance (DeFi) apps and smart contracts, funds are withdrawn from these private pools to a new address, further enhancing privacy. According to CoinMarketCap, the network is compatible with any Ethereum Virtual Machine (EVM) wallet and is primarily geared toward enabling private stablecoin transfers, though it supports all ERC-20 tokens.

Payy isn’t starting from scratch. The company previously rolled out a privacy-focused wallet and a crypto banking card in mid-2025, claiming to have attracted roughly 100,000 users since then. The new layer-2 is positioned as an expansion of this existing privacy infrastructure. Payy has also signed launch partners among stablecoin issuers—though their identities remain under wraps for now, with announcements expected in the coming weeks.

The privacy sector in crypto has been booming, especially in 2025, when tokens like $ZEC and $XMR saw explosive popularity. But the conversation is evolving. As Innovation & Tech Today notes, privacy is no longer just about hiding balances or masking transaction paths. The rise of AI in Web3—think trading agents, gaming bots, and automated governance—means that privacy must now extend to data, models, and even the outputs of machine learning systems. This is where advanced cryptographic techniques like zero-knowledge proofs come into play, enabling users and applications to prove what’s true without exposing everything.

ARPA Network is one example of a project pushing the boundaries of what privacy can mean in the blockchain era. ARPA focuses on decentralized cryptographic infrastructure for fairness, security, and privacy. Its Randcast product provides verifiable randomness for gaming, NFTs, and lotteries, while its Verifiable AI initiative combines zero-knowledge proofs with machine learning. This allows AI outputs to be independently verified without exposing confidential data—a critical capability as AI becomes more deeply embedded in financial and governance systems.

Ethereum developers aren’t sitting on their hands, either. As part of the Kohaku roadmap, they’re working on wallet privacy upgrades to reduce reliance on centralized parties that track transactions and to incorporate features like private sending and receiving directly into the protocol. The goal is to make privacy practical and accessible, not just for the technically savvy but for everyone who wants to participate in the decentralized economy.

Yet, privacy in crypto remains a moving target. As Innovation & Tech Today points out, most blockchains are pseudonymous, not private. A wallet address might not reveal your name right away, but once it’s linked to your identity—through exchange deposits, KYC checks, or even social media posts—the chain becomes a permanent record of your activity. That’s why the next phase of privacy tech is about striking a balance between strong confidentiality and robust verification. Systems like Payy’s new network, ARPA’s verifiable AI, and Ethereum’s upcoming upgrades all aim to reconcile these seemingly opposing demands.

Ultimately, privacy without verifiability can undermine trust and accountability, while verifiability without privacy can expose users and institutions to unacceptable risks. The most durable infrastructure, as ARPA envisions, will be the kind that makes privacy practical, proofs accessible, and trust cryptographic. As crypto and AI become increasingly intertwined, the need for such infrastructure isn’t just academic—it’s urgent.

Payy’s latest move signals a new era where privacy isn’t an afterthought or a niche feature, but a core requirement for mainstream adoption. With institutions, fintechs, and privacy-savvy users all seeking solutions that protect their data without sacrificing usability, the blockchain industry’s race to make privacy both practical and provable is just getting started.