Cross-chain token transfers have become fast and inexpensive, but privacy has remained the missing piece. LayerZero and TACEO are now addressing that gap: the two projects have integrated TACEO's Merces privacy layer with LayerZero's cross-chain messaging infrastructure, enabling token transfers across blockchains that shield both participant identities and transfer amounts.

LayerZero is an interoperability protocol: its messaging infrastructure lets independent blockchains, allowing data and assets to move between networks that would otherwise remain siloed.

The integration coincides with Merces' mainnet launch on Monad and World Chain on September 24, 2026.

How Merces Works

At its core, Merces wraps standard ERC-20 tokens, such as USDC, into private virtual accounts using a technique called secret sharing. The balances exist on-chain, but no single party can read the plaintext data.

Under the hood, the system relies on multi-party computation (MPC), a cryptographic approach in which multiple parties jointly compute a function over their inputs without revealing those inputs to one another. The technique is already established in institutional crypto custody, where MPC is widely used to split control of private keys across several parties. In practical terms, this means Merces can process transactions while keeping the underlying financial details confidential.

State changes are verified on-chain through what TACEO calls CoSNARKs technology, a framework for generating cryptographic proofs in a distributed manner.

TACEO reports that Merces has already processed roughly 5 million demo transactions on testnets at approximately 300 transactions per second.

Why LayerZero's Involvement Matters

Cameron Nili, LayerZero's Banking & Capital Markets Lead, framed the integration as filling the remaining privacy gap in cross-chain transfers. His emphasis on institutional use cases reflects a long-standing obstacle: banks, asset managers, and corporate treasuries have repeatedly cited the transparency of public blockchains as a dealbreaker. When a competitor can track treasury movements in real time, the appeal of on-chain finance diminishes considerably.

With the integration, a token wrapped through Merces can now travel across LayerZero-supported chains without exposing the details that institutions want to keep confidential.

The Team Behind the Cryptography

TACEO spun out of TU Graz, the Austrian university known for its applied cryptography research. The company was established in July 2022 by cryptographers who contributed to notable cryptographic standards, including Poseidon and SPHINCS+. SPHINCS+ is one of the post-quantum signature schemes selected by NIST as part of its post-quantum cryptography standardization process.

Compliance is built into the architecture as well. Merces includes allowlists, anti-money laundering hooks, and selective disclosure mechanisms. Rather than launching with pure privacy and retrofitting compliance later, TACEO embedded compliance tooling into the protocol from the start. That choice stands against a cautionary industry backdrop: in August 2022, the U.S. Treasury's Office of Foreign Assets Control sanctioned the Ethereum mixing service Tornado Cash, a precedent that underscored the regulatory exposure of privacy tools without compliance controls.

What It Means for On-Chain Finance

Stablecoin flows have become a primary use case. When a corporation moves millions in USDC between chains, the current default is full public visibility—a pain point Merces directly targets.

Most existing privacy solutions operate within a single chain. By integrating directly with a leading cross-chain messaging layer at mainnet launch, TACEO has positioned Merces as a multi-chain privacy solution from day one, rather than a single-chain tool that might eventually expand.

With Merces live on Monad and World Chain as of September 24, 2026, the near-term markers are whether mainnet throughput holds near the roughly 300 TPS recorded on testnets and how the compliance-gated privacy model is received by the institutional treasuries the integration is designed to serve.