Payy, a privacy-focused stablecoin payment network formerly known as Polybase, has raised $6 million in seed funding led by FirstMark Capital. The round will fund development of Payy’s zero-knowledge proof infrastructure, which hides transaction amounts and wallet addresses on its Ethereum Layer 2 network while maintaining regulatory compliance.
$6M
Seed Funding Round
Raised by Payy, a privacy-focused stablecoin payment network, in a round led by FirstMark Capital.
Payy Closes $6M Seed Round With FirstMark Capital Leading
The seed round was led by FirstMark Capital, with Robot Ventures and DBA Crypto also participating, according to a report from PANewsLab. FirstMark, a Tier 1 venture firm with a portfolio spanning enterprise software and fintech, brings institutional credibility to what remains an early-stage bet on private stablecoin infrastructure.
Payy originally launched as Polybase, a Web3 database project, before pivoting to stablecoin payments in 2023. The company now offers self-custodied wallets and Visa cards supporting USDC, targeting users who want to spend stablecoins without exposing their financial activity on a public blockchain.
The company claims over 100,000 users across 120 countries and roughly $130 million in annualized transaction volume, though these figures have not been independently verified. Payy plans to use the funding to expand its product suite and target financial institutions and fintech companies as enterprise clients.
How Payy’s Zero-Knowledge Payment Rails Actually Work
Payy’s core technology is the Payy Network, a Layer 2 built on Ethereum that uses zero-knowledge proofs to shield transaction data. Unlike transparent stablecoin transfers on Ethereum mainnet, where anyone can see sender addresses, recipient addresses, and amounts, Payy’s ZK circuits hide all three on-chain.
The privacy layer is built using Halo2, the same ZK proof framework that powers Zcash. This is a meaningful technical choice: Halo2 eliminates the need for a trusted setup ceremony, which has historically been a criticism of earlier ZK implementations. The network claims 1-second block times, making it fast enough for point-of-sale transactions.
CEO and co-founder Sid Gandhi has framed the product as a usability-first approach to crypto payments. “The whole reason we built Payy was because we saw…none of them felt as simple as, OK, I downloaded an app, and now I know exactly what to do,” Gandhi said in a conversation with Protocol Labs.
Gandhi has also been vocal about what he sees as a fundamental flaw in current stablecoin infrastructure. “It’s absolutely crazy that we’ve accepted even the minimum amount of…payments happening today onchain being all public,” he said. The argument is straightforward: businesses and individuals won’t adopt stablecoin payments at scale if every transaction is visible to competitors, employers, or anyone with a block explorer.
What distinguishes Payy from privacy coins like Monero or Zcash is that it operates on stablecoins, specifically USDC, rather than a volatile native asset. This positions it closer to traditional payment rails than to the privacy coin category, which has faced increasing scrutiny from exchanges and regulators over anti-money laundering concerns.
Stablecoin Privacy Gains Traction as VC Money Pours Into Payment Infrastructure
Payy’s raise comes during a period of heavy venture investment in stablecoin infrastructure, even as the broader crypto market sits in extreme fear territory with the Fear & Greed Index at 14. In Q1 2026 alone, 1Money raised $20 million, Better Payment Network closed $50 million, and Rain completed a $250 million Series C, all focused on stablecoin payment rails.
The regulatory environment creates both demand and risk for Payy’s approach. The FATF Travel Rule requires virtual asset service providers to share sender and recipient data on transactions above certain thresholds. Payy’s architecture claims to satisfy KYC requirements at the wallet level while preventing blockchain analytics firms from correlating identity with on-chain activity.
This is a narrow line to walk. Privacy-preserving payment tools face heightened scrutiny globally, and no specific regulatory ruling has validated Payy’s approach. Competing projects like Aztec Network and Railgun are pursuing similar goals with different technical architectures, while institutional players like major asset managers entering crypto have largely focused on transparency as a selling point.
Payy has also announced plans to launch a native token, though no timeline has been disclosed. The company’s next challenge will be convincing financial institutions that privacy and compliance can coexist on the same payment network, a proposition that regulators have yet to formally endorse.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
