TL;DR
- Aleo launches USAD, a Paxos-issued stablecoin with privacy-by-default using zero-knowledge cryptography.
- Transactions hide participants, amounts, and addresses while remaining auditable for regulators.
- Use cases include confidential payroll, B2B payments, and anonymous DeFi participation.
Aleo, a privacy-focused Layer 1 blockchain, went live with USAD, a stablecoin issued by Paxos Labs that operates on zero-knowledge cryptography. The token brings privacy-by-default transaction features to a stablecoin product, hiding participant identities, wallet addresses, and transaction amounts from public view while maintaining auditability for regulatory purposes.
Paxos Labs co-founder Bhau Kotecha described the project as a way to bring digital dollars into an environment where privacy and programmability exist from the start, giving enterprises access to money they can trust without compromising confidentiality. Kotecha added the firm expects more organizations to deploy custom assets on platforms capable of supporting additional value layers, something Aleo’s infrastructure already addresses.
“Working with Aleo, we are bringing digital dollars into an environment where privacy and programmability are built in from the start, giving enterprises a way to embed money they can trust,” Paxos Labs co-founder Bhau Kotecha said.
USAD supports traditional stablecoin use cases like payments, but also extends into programmable applications difficult to run on transparent blockchains. Aleo COO Leena Im explained the stablecoin uses Paxos’ issuance infrastructure to meet oversight requirements while protecting sensitive user information. The combination lets regulated entities operate on-chain without exposing transaction details publicly.
“As stablecoins continue to impact traditional financial rails, we anticipate more organizations will look to deploy their own custom assets that provide additional value to their platforms, something that Aleo and its team are already ahead of the curve on.”
Applications Range From Discreet Payroll to Anonymous DeFi Participation
The USAD website highlights specific applications: discreet payroll processing, business-to-business payments, and anonymous participation in decentralized finance protocols. Each use case solves a friction point for institutional adopters. Payroll on transparent blockchains exposes exact salary amounts to anyone who looks. B2B payments broadcast transaction sizes and counterparty relationships. DeFi activity on public chains creates a permanent, traceable record of every position, trade, and liquidity provision.
Zero-knowledge crypto solves the exposure problem by encrypting end-to-end transaction data while still allowing validators to confirm the transaction’s legitimacy. Regulators and auditors retain access through controlled disclosure mechanisms, but the general public cannot see the details.
Aleo launched its mainnet in September 2024 after several years of development. The network raised $200 million in a 2022 Series B round at a valuation of $1.45 billion, co-led by SoftBank’s Vision Fund 2 and Kora Management. Backers include a16z, Coinbase Ventures, Samsung Next, and Tiger Global.
Paxos Labs also issues stablecoins for PayPal and previously served Binance. The firm plays a central role in the Global Dollar (USDG) stablecoin, supported by a group of companies including Anchorage Digital, Bullish, Kraken, OKX, Robinhood, and World.
Aleo is not the only network exploring privacy-preserving stablecoins. Rival issuer Circle tapped Aleo earlier to pilot USDCx, a private version of its flagship USDC token. The parallel development suggests privacy-enabled stablecoins may become a standard offering rather than a niche experiment as institutional adoption deepens and demand for confidential transaction rails grows.
