The solution, which uses zero-knowledge proofs to verify every transfer, will allow companies moving large volumes to maintain the secrecy of these movements, improving transaction confidentiality. The system implementation encompasses KYT screening from regulators.
Key Takeaways:
- Polygon partnered with Hinkal to launch a ZKP-powered private payment solution for USDC and USDT.
- Polygon claims this release gives institutions bank-like privacy while retaining KYT compliance.
- Available now in the Polygon wallet, the network will next develop more privacy offerings for users.
Polygon Implements Private Payments to Entice Institutional Adoption
Privacy has become a relevant hurdle preventing institutions and individuals from adopting blockchain technology, and some are engineering tech to tackle this problem.
Polygon, a payments-focused blockchain, has announced the implementation of private payments, seeking to expand its adoption to institutions and traditional finance entities.
Polygon stressed that exposure of financial information is a real operational problem for institutions unwilling to make the tradeoffs of revealing their operations to enjoy speed and cost improvements. “We heard it from partners across payments, payroll, and treasury: confidentiality is not a feature request, it is a prerequisite,” it declared.
The solution, built in partnership with Hinkal using Zero-Knowledge Proofs (ZKPs), allows users to send stablecoins (USDC and USDT) through the Polygon network without revealing the sender, receiver, or even the funds involved in a transaction, and does not involve taking custody of the funds being transacted.
For this solution to work, Hinkal leverages a special shielded pool, with ZKPs managing confirmations without accessing specific details. Nonetheless, the shielded pool involves know-your-transaction (KYT) screening for regulators to verify the legality of the operations.
With this move, Polygon claims to deliver an equivalent to how banking transactions work today, where operations are private for the market but can be accessed by regulators, in a faster, cheaper, and always available network.
The feature is already available to users of the Polygon wallet, who have a new option available to use this private send functionality. Polygon hinted at developing more confidentiality-oriented functions in the near future, stressing that it was “working on more privacy offerings to complement the wallet and will share specifics as each piece is ready.”