Zero-knowledge-powered Privacy Pools integrates Sky’s USDS stablecoin in first expansion into multi-asset pools

Privacy Pools, the onchain privacy solution backed by Ethereum co-founder Vitalik Buterin, is integrating Sky’s onchain USDS stablecoin, according to an announcement on Wednesday. The move is part of a planned expansion into “multi-asset Privacy Pools.”

“This is just the beginning,” the team wrote on X. “Over the coming weeks, we’re rolling out support for more assets, ecosystems, and use cases, giving these assets the compliant privacy they deserve.”

Privacy Pools, under development by blockchain startup 0xbow, rely on a type of zero-knowledge-powered mixnet system and an "Association Set Provider" to ensure that only "clean" funds enter the pool. The protocol offers everyday crypto users privacy while maintaining regulatory compliance.

The Association Set Provider was first theorized by Buterin in 2023 in a paper co-authored with Chainalysis researcher Jacob Illum as well as academics Matthias Nadler and Fabian Schar, among others. Unlike traditional blockchain mixers like Tornado Cash, Privacy Pools’ “association sets” act like a gatekeeper to prevent dirty funds from entering the mixing pool. 

“USDS Privacy Pools: hide which deposit is yours and prove your coins aren’t from bad actors, all in a ZK proof,” Sky creator Rune Christensen said on X. “Privacy ✅ USD Stability✅ No bad actors ✅ Very proud of this and how it delivers on the original vision of Dai, tying it together with the modern Sky Ecosystem.”

In June, 0xbow announced it would be adding support for the largest stablecoins, including Tether’s USDT, Circle’s USDC, and Sky’s algorithmic DAI stablecoin. The latest expansion integrates Sky’s USDS, an algorithmic token designed to strike a balance between decentralization and regulatory compliance.

Co-founded by Ethereum OGs Ameen Soleimani, Nathaniel Fried, and Zak Cole, 0xbow has raised funds from Bankless, Number Group, Public Works, and several angels, including Buterin.

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