TACEO, a cryptography company specializing in secure computation on encrypted data, has launched Merces, a privacy-focused payments network designed to enable confidential financial transactions over public blockchain infrastructure.

The network is now live on Monad, a Layer 1 blockchain, and World Chain, an Ethereum Layer 2 network, marking TACEO's latest effort to address a major obstacle to broader institutional use of public blockchains: the exposure of transaction information.

Merces is built to let banks, corporations, and financial institutions conduct private blockchain transactions while retaining cryptographic verification of payment validity and available funds. Public blockchains typically maintain transparent transaction records, a feature that can conflict with the confidentiality requirements of businesses handling payments, treasury operations, and other sensitive financial activity. According to TACEO, Merces is intended to offer an alternative by keeping critical payment information private while preserving the security properties associated with blockchain-based settlement.

TACEO was founded in 2022 after emerging from Graz University of Technology in Austria and has received backing from investors including Andreessen Horowitz's a16z Crypto Startup Accelerator.

Cryptography Aims at Institutional Blockchain Adoption

Chief Executive and co-founder Lukas Helminger said the company identified confidentiality, rather than transaction speed or cost, as a major reason banks and corporations have been reluctant to move financial activity onto public blockchains.

Helminger also described Merces as TACEO's second product, noting that it applies cryptographic technology previously used to protect digital identities to financial transactions.

The company is seeking to expand Merces through integrations with other financial and blockchain infrastructure providers. Four organizations are participating in initiatives covering banking connectivity, cross-chain transfers, tokenized investment products, and shared financial data.

IntellectEU, a banking infrastructure provider, is integrating Merces with its CatalyX platform. The integration is intended to connect confidential blockchain transactions with bank back-office systems and regulated financial institutions, potentially creating a link between on-chain activity and existing financial infrastructure.

Cross-Chain and Tokenized Finance Integrations

LayerZero, an interoperability protocol, is developing an integration designed to allow confidential Merces balances to move between multiple blockchain networks. The initiative addresses a potential limitation of privacy-focused financial infrastructure by enabling assets and balances to operate across different blockchain ecosystems.

Orion Finance is working with TACEO to incorporate privacy features into tokenized investment vaults. The arrangement aims to protect sensitive information while preserving investor visibility into investment performance.

TACEO is also collaborating with Zenith, an extension for the Canton Network, on shared-state privacy. The technology is intended to allow multiple participants to transact against a common financial position without exposing the full underlying dataset to every participant.

Taken together, the planned integrations extend Merces beyond private payments, targeting banking systems, cross-chain finance, tokenized investment products, and shared financial positions as potential institutional blockchain use cases.

Balances Stay Off Public Ledgers

Merces is designed to keep account balances and counterparty information off public blockchain ledgers. Rather than recording detailed transaction data directly on-chain, the system stores a cryptographic representation of its state. Underlying balances are divided into secret shares and distributed across multiple independent computers, a structure intended to prevent any single participant from obtaining the complete financial dataset.

The system combines multiparty computation (MPC), a branch of cryptography that grew out of academic research in the early 1980s, with cryptographic proofs. MPC allows sensitive information to be processed without revealing complete underlying data to any individual participant. Cryptographic proofs are then used to establish that transactions satisfy required conditions, including whether they are valid and adequately funded, without exposing the confidential financial information involved.

TACEO refers to this combined architecture as coSNARKs, a framework intended to provide verifiable transaction processing while preserving confidentiality. The name builds on SNARKs, a class of compact cryptographic proofs designed to let computations be verified efficiently without re-executing them.

Privacy as a Core Layer for On-Chain Finance

The launch comes as financial institutions explore blockchain-based settlement, tokenized assets, and other forms of on-chain financial infrastructure. While public ledgers provide transparency and auditability, unrestricted visibility into individual transactions can create challenges for businesses that need to protect customer, counterparty, and treasury information.

Merces attempts to resolve that tension by separating transaction verification from public disclosure of sensitive financial data. By combining multiparty computation and cryptographic proofs, the network aims to deliver verifiable blockchain payments without publicly exposing balances or counterparty information, potentially creating a privacy layer for institutional on-chain finance.

The network's success will depend on adoption among financial institutions, integration with existing infrastructure, and the ability to maintain privacy without compromising verification and regulatory requirements. Its deployment on Monad and World Chain provides an initial operating base as TACEO develops integrations across the broader blockchain and financial infrastructure ecosystem.