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Paxos Labs Launches Privacy-Preserving USAD Stablecoin on Aleo Network

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TLDR:

  • USAD offers privacy-preserving transactions while maintaining regulatory oversight capabilities
  • Paxos leverages its established infrastructure to issue compliant stablecoins on Aleo’s platform
  • Circle previously partnered with Aleo for USDCx, showing competitive interest in privacy solutions
  • Aleo raised $200 million at $1.45 billion valuation from SoftBank, a16z, and Coinbase Ventures

 

Privacy-preserving USAD stablecoin has launched on the Aleo Layer 1 mainnet through a partnership between Paxos Labs and Aleo Network.

The collaboration introduces digital dollars to a zero-knowledge powered environment. The stablecoin offers privacy and programmability features for enterprise users.

Aleo previously partnered with rival issuer Circle to pilot USDCx. The launch reflects growing institutional demand for privacy-focused blockchain solutions.

Partnership Details and Technical Framework

Paxos Labs will issue USAD using its established infrastructure to meet regulatory oversight requirements. The stablecoin operates on Aleo’s zero-knowledge cryptography platform.

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The technology provides end-to-end encryption by default. The platform conceals participant identities, wallet addresses, and transaction amounts from public view.

Aleo COO Leena Im explained the stablecoin design incorporates Paxos’ issuance infrastructure. The system meets “oversight requirements while still protecting sensitive user information,” Im noted.

The balance between privacy and oversight represents a core technical achievement. Selective disclosure capabilities allow for regulatory compliance without compromising user confidentiality.

USAD supports traditional payment functions as well as advanced programmable applications. The stablecoin enables use cases difficult to execute on transparent blockchains.

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Target applications include discreet payroll processing, business-to-business payments, and anonymous decentralized finance activities. Furthermore, enterprises can embed trusted digital currency into their platforms.

Paxos Labs co-founder Bhau Kotecha emphasized the strategic value of the collaboration. “Working with Aleo, we are bringing digital dollars into an environment where privacy and programmability are built in from the start,” Kotecha said.

He added that enterprises gain “a way to embed money they can trust.” The executive expects more organizations to deploy custom assets on blockchain platforms.

Kotecha noted that stablecoins continue to impact traditional financial rails. He stated Aleo and its team are “already ahead of the curve” on this development.

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The trend toward programmable money reshapes financial infrastructure. Organizations increasingly value privacy-preserving transaction capabilities for commercial operations.

Market Context and Company Background

The launch occurs amid rising interest in institutional-grade privacy solutions for blockchain assets. Businesses want blockchain benefits without exposing sensitive commercial details on transparent networks.

Circle previously selected Aleo to develop USDCx, a privacy-focused version of its flagship token. The competitive landscape shows multiple issuers exploring privacy-preserving stablecoin technology.

Paxos has established experience in the stablecoin sector through partnerships with major platforms. The company previously issued stablecoins for PayPal and Binance.

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Moreover, Paxos plays a role in the Global Dollar consortium. The USDG initiative includes Anchorage Digital, Bullish, Kraken, OKX, Robinhood, and World.

Aleo Network launched its mainnet in September 2024 after several years of development. The Layer 1 project raised $200 million in a 2022 Series B funding round.

The company achieved a valuation of $1.45 billion during the financing. SoftBank’s Vision Fund 2 and Kora Management co-led the investment.

The project has attracted backing from prominent investors across the blockchain ecosystem. Notable supporters include a16z, Softbank, Coinbase Ventures, Samsung Next, and Tiger Global.

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The investor roster demonstrates confidence in zero-knowledge technology applications. Aleo’s platform aims to enable privacy-focused blockchain solutions for enterprise adoption.

 

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Crypto World

Drift Protocol Warns of Potential Cybersecurity Exploit

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Cybercrime, Cybersecurity, Hacks, Decentralized Exchange

Drift Protocol, a decentralized cryptocurrency exchange (DEX), detected “unusual” trading activity on the platform on Wednesday, warning users not to deposit funds until the issue has been resolved.

The Drift team did not disclose the specific cause of the ongoing incident or the damage in its initial announcement and is currently investigating the issue. 

In a subsequent update, the Drift team announced that deposits and withdrawals on the platform have been suspended. 

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Source: Drift Protocol

Blockchain cybersecurity threat researcher Vladimir S said the exploit was likely due to a crypto wallet private key leak, and the total funds lost in the incident could be as high as $200 million. 

“Admin signer was compromised, or whoever controls it intentionally executed these changes,” he said

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The stolen assets include wrapped versions of Bitcoin (BTC), Jito (JTO), the Fartcoin (FRT) memecoin, other altcoins, and various dollar, euro, and Japanese yen stablecoins, which have since been transferred to multiple wallets, according to Vladimir S.

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Source: Vladimir S

The exploiter started converting the stolen assets to the USDC (USDC) stablecoin, bridging the funds to the Ethereum network and purchasing Ether (ETH), according to Solana treasury company DeFi Development Corp.

Cointelegraph reached out to Drift Protocol but did not receive an immediate response by the time of publication. 

Cybersecurity exploits and hacks were responsible for $49 million in crypto losses during February, a sharp decrease from January, but a reflection of the ongoing security threats users and platforms face.

Related: Resolv temporarily halts protocol to ‘contain the impact’ of 80M USR exploit

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Drift token impacted by the exploit

The price of the Drift (DRIFT) token briefly reached $0.68 on Wednesday, but fell by about 18% following news of the exploit, according to data from CoinMarketCap.

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Drift token falls after news of the exploit. Source: CoinMarketCap

About 83% of the native crypto tokens of hacked platforms never recover to pre-hack prices, according to blockchain security company Immunefi. 

“The stolen funds are only the first layer of damage,” Immunefi CEO Mitchell Amador told Cointelegraph in March.

“What follows is often more destructive: sustained token price suppression, reduced treasury capacity, leadership disruption, lost development time, and erosion of user trust,” he added. 

Magazine: WazirX hackers prepped 8 days before attack, swindlers fake fiat for USDT: Asia Express

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