Stellar Unveils Private Payments Tool With Counterparty-Level Privacy

Stellar (XLM) has released a developer preview of its Private Payments tool, dubbed Stellar Private Payments (SPP). This innovation enables counterparty-level privacy for transactions on the Stellar blockchain. SPP is built by Nethermind and is now live on testnet.

The core feature of SPP is its use of privacy pools. Users can deposit funds into a shared pool, where transactions occur privately. On the public ledger, only the pool activity is visible, while the identities of counterparties and transaction amounts remain hidden.

SPP uses a zero-knowledge proof system to ensure transactions remain private while maintaining compliance. When funds are deposited into the pool, they generate cryptographic commitments stored in a Merkle tree. Transfers within the pool spend these commitments and create new ones, while a nullifier ensures no double-spending.

Stellar emphasizes that SPP is built with compliance in mind. The platform features an Association Set Provider (ASP) model that supports block-lists, allow-lists, or a combination of both to meet regulatory requirements.