Stellar previews a Nethermind-built privacy pool for payments

A Shielded Pool for Counterparty Privacy

@BuildOnStellar has previewed Stellar Private Payments (SPP), a privacy pool built by @Nethermind that conceals the identities of counterparties and transaction amounts on the $XLM network. Users hold a private balance in a shared shielded pool and pay each other inside it, while the public ledger records only that the pool was used, keeping who paid whom and how much private.

The system is a privacy-preserving payment solution using zero-knowledge proofs, enabling users to deposit, transfer, and withdraw tokens while maintaining transaction privacy through Groth16 proofs. Funds entering and leaving the shared pool remain publicly visible, but transfers inside it reveal neither counterparties nor amounts.

Where a Confidential Token keeps amounts and balances between known counterparties private, Stellar Private Payments provides privacy for counterparties themselves. The two tools form part of a broader privacy stack that Stellar is assembling at the application layer.

Compliance Controls Built In from the Start

SPP gives pool administrators, auditors, and regulators the controls they require: KYC-gated access, the ability to freeze non-compliant users, selective disclosure of individual transactions, and global viewing keys for authorized oversight. The design reflects a deliberate choice to treat privacy and compliance as complementary rather than competing goals.

The system incorporates Association Set Providers (ASPs) as a control mechanism, maintaining membership and non-membership Merkle trees that allow proving whether specific deposits are part of approved or blocked sets, enabling pool operators to enforce administrative controls without compromising user privacy. Pools can also be configured with block-lists and allow-lists, making the tool suited to compliance-sensitive flows such as B2B settlements and donations.

The contracts are live on testnet only. The code has not undergone security audits and has not been approved for mainnet deployment. For developers, the SPP testnet offers multiple integration options, including a prebuilt WebAssembly SDK and a command-line interface, alongside demos showcasing private transfers and withdrawals using Stellar's native XLM and EURC pools, with full documentation available through Nethermind's GitHub repository.

Sources:
Stellar Development Foundation: Developer Preview of Stellar Private Payments
Nethermind: Stellar Private Payments Technical Writeup
Nethermind GitHub: Stellar Private Payments Repository