Enterprises want the benefits of stablecoin rails without public visibility into payments. Tempo Zones enable private stablecoin transactions, fully interoperable with Tempo Mainnet and other Zones. Several enterprises and financial institutions are exploring using Zones. Reach out if you are interested in exploring how Zones could serve your use-case.
Stablecoin rails reduce settlement time, simplify cross-border movement, and lower reconciliation overhead. These are the properties that consistently draw enterprises and financial institutions to stablecoins.
But today’s stablecoin networks still broadcast everything publicly by default. A company running payroll would publish every salary. A payment processor settling with merchants would leak confidential volume data on every onchain transaction.
Banks and financial institutions face a version of the same problem. Tokenized deposits, trade settlement, and capital markets use cases require counterparty information and transaction data to be private, while the tokens themselves still need to follow compliance rules and remain interoperable across institutions.
In every case, the requirement is the same: the parties to a transaction should see the details, the broad public should not, all while retaining the usability and interoperability of stablecoin rails.
Introducing Tempo Zones
We’re solving this with what we call Tempo Zones. A Zone is a private execution environment, i.e., a parallel blockchain connected to Tempo Mainnet. Within a Zone, participants can transact privately without revealing any information to the public.
Assets on Tempo Mainnet are interoperable across zones. Users on a zone can seamlessly interact with other zones and Tempo Mainnet, including accessing onramps and offramps through Mainnet as well as liquidity in decentralized exchanges on Mainnet.
A Zone can be operated by an enterprise itself or by an infrastructure provider and customized to the needs of their use case(s). The operator manages transaction processing and system availability. The operator does not control the underlying assets. Funds are locked in a zone contract on Tempo Mainnet and can only be withdrawn by the user owning the asset.
Who sees what.
The zone operator has visibility into all transactions within the zone. This is by design: a regulated institution running a zone may have additional compliance or reporting requirements. Enterprises can exercise tighter control by operating their own zone. Users of the zone can only see their own transactions and balances. Everyone else only sees cryptographic proofs of the zone’s validity.
Enterprises managing payroll on Tempo are early users of Zones:
A company onramps to Tempo Mainnet and funds a payroll account within a Tempo Zone. It pays employees and contractors inside that Zone. Recipients can withdraw to Tempo Mainnet for swaps or offramps. The payroll ledger remains private and is not visible to the public.
Compliance rules travel with the token.
Every token on Tempo natively allows issuer-defined compliance controls, including allowlists, blocklists, and freeze capabilities. Those controls are enforced across zones, ensuring transfers adhere to issuer policies and blockchain rules. Every time an issuer updates a blocklist or allowlist, or freezes a token on Mainnet, all zones enforce the change automatically.
The operator never has custody of funds.
Funds are locked on Tempo Mainnet in a Zone contract, only withdrawable by the user. The operator can only include, sequence and process valid transactions on the zone. The validity of transactions processed and compliance rule enforcement are verified cryptographically by Tempo Mainnet, independent of the operator.
Read more about the technical details of Tempo Zones.
How Zones compare to other solutions
Any privacy solution inevitably involves tradeoffs across three axes: privacy, usability, and interoperability. Enterprises are forced to choose between the level and scope of privacy, usability for their teams and users, and interoperability with public blockchain infrastructure such as DeFi protocols and onramps.
Most existing approaches to privacy force an enterprise into suboptimal tradeoffs:
- The default model on most blockchains, pseudonymity, does not ensure privacy. Transaction patterns and external data make it possible to link wallets to real-world identities.
- Some approaches only provide partial privacy, e.g., hiding only amounts or only participants.
- Some projects rely on advanced cryptography to hide transaction data entirely or completely anonymize users. While powerful, these approaches introduce unnecessary operational complexity and usability tradeoffs, often require users to have specialized wallets, be responsible for storing their own data, or aren’t compliant with enterprise requirements.
- Finally, there are private ledgers. These enterprise blockchain projects address privacy by creating separate, permissioned networks but in turn isolate assets, fragment liquidity, and require custom integrations.
Zones remove these tradeoffs, allowing enterprises and their users complete privacy from the public while remaining usable (high throughput, standard wallets) and fully benefiting from liquidity and infrastructure on Tempo Mainnet and interoperability with other zones.
Privacy is not a one-size-fits-all, and we are excited to work with enterprises to help shape Zones for their use-case, or guide them to one of these other solutions on Tempo if that best fits their needs.
Build on Zones
Tempo Zones are available with design partners today, with production deployments planned in phases. If your team is evaluating private stablecoin workflows for payroll, treasury, settlement, or tokenized deposits, we can walk your finance, compliance, and platform teams through the operating model. Get in touch with our Enterprise team.