Paxos Labs Launches Privacy-Preserving USAD Stablecoin on Aleo Network

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.

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.

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.

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.

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.

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