@LayerZero_Core and @TACEO_IO are joining forces to bring private transfers to cross-chain finance. The two projects are building an integration that will allow token balances to move between networks with both the participants and the transfer size shielded in transit.

How Merces Works

The integration plugs into TACEO's Merces privacy layer, which went live on mainnet on September 24, 2026, with funds already running on @monad and @world_chain_. The system enables token transfers across blockchains that shield both participant identities and transfer amounts.

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. Every output is verified on-chain via coSNARKs, and no single node or participant ever holds unencrypted data. Independent node clusters perform joint computations directly over encrypted shares without revealing raw inputs.

TACEO positions Merces as "compliant privacy": confidentiality that is meant to be compatible with the regulatory requirements financial institutions face, so supervisors and auditors retain their view. Compliance is baked into the architecture from the start, with allowlists, anti-money laundering hooks, and selective disclosure mechanisms built into the protocol rather than retrofitted later.

The Institutional Case

Cameron Nili, LayerZero's Banking and Capital Markets Lead, framed the integration as filling the remaining privacy gaps in cross-chain transfers, with an emphasis on institutional use cases. Banks, asset managers, and corporate treasuries have long cited the transparency of public blockchains as a dealbreaker. Stablecoin flows are a primary use case: when a corporation moves millions in USDC between chains, the current default is full public visibility. Merces directly targets that pain point.

State changes are verified on-chain through TACEO's 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. The full cryptographic specification has been published on the portal of the International Association for Cryptologic Research (IACR ePrint 2026/850).

Sources
Crypto Briefing: LayerZero integrates with TACEO Merces to enable private cross-chain token transfers
IACR ePrint 2026/850: Merces: Confidential Token Transfers via MPC and CoSNARKs
TACEO Merces: Confidential Payments on Public Rails