Category Labs has published the technical white paper for Monad Private Settlement Domains, or MPSDs, an architecture designed to let institutions operate private execution environments while retaining connectivity to the public Monad network. According to the official MPSD white paper, transactions are encrypted before entering Monad, ordered through the public network and then executed privately inside their designated domains. The design requires no change to the underlying Monad protocol.
Unlike a conventional private blockchain, each MPSD does not operate an independent consensus system. Encrypted transactions are submitted to a hub smart contract on Monad, where the public network determines their ordering. Domain operators subsequently retrieve and decrypt those transactions, execute them in the same sequence and commit the resulting state and outgoing messages back to Monad. The architecture separates public ordering and settlement from confidential execution rather than creating an isolated blockchain for each institution.
Private Execution Still Carries Trust Assumptions
The privacy boundary depends heavily on how an individual domain is configured. In the simplest implementation, a committee of designated operators shares access to the domain and attests to new state and message roots. Those operators can see the private state, meaning a single rogue operator could disclose confidential information even if it cannot independently falsify execution results. Category Labs therefore presents committee-based operation as only one possible security model.
MPSDs can instead use zkVMs, Trusted Execution Environments or multiparty computation depending on the application’s requirements. An MPC implementation, for example, can process secret-shared inputs without exposing the complete plaintext to any individual operator. MPSD is therefore a framework for several confidential-execution models rather than one fixed cryptographic privacy system.
Access restrictions extend into the application layer. Contracts can apply Solidity-based policies determining which accounts or other contracts may read protected state or interact with particular functions, while authorized auditors or regulators can receive broader visibility where required. The framework can also support KYC and sanctions controls around token bridging. Those capabilities provide building blocks for compliance but do not independently make an application legally compliant, something Category Labs explicitly acknowledges in the white paper.
The approach addresses a similar privacy requirement to systems already emerging elsewhere in crypto. NEAR’s Confidential Intents hide sensitive payment information while preserving blockchain settlement for agentic commerce. MPSDs apply the same broad separation between confidentiality and public infrastructure at a wider execution-environment level. The common objective is to prevent commercially sensitive activity from becoming globally readable simply because settlement occurs on a public blockchain.
Shared Liquidity Without Independent Sequencers
Category Labs argues that using Monad for sequencing avoids one source of fragmentation found in private chains and some rollup architectures. Contracts inside separate MPSDs can send asynchronous encrypted messages to one another, while domains can also interact with contracts and assets on public Monad. Private applications therefore remain connected to a common ordering and messaging layer rather than creating separate transaction silos with independent sequencers.
The privacy boundary becomes weaker when activity crosses onto the public network. The current specification says amounts transferred through public Monad liquidity can become visible, along with the domains involved. Category Labs plans additional confidential-transfer mechanisms in future versions. The first MPSD design therefore does not provide complete transaction confidentiality across every public-private interaction.
That limitation matters because Monad’s public liquidity infrastructure is already developing independently of MPSD. PancakeSwap has introduced liquidity incentives across five Monad pools, including stablecoin, Bitcoin-linked and tokenized-gold markets. MPSD could technically connect private applications to liquidity of that kind, but the architecture itself does not demonstrate that institutions are already routing transactions through those pools.
The framework has moved beyond documentation in one limited respect. Privacy infrastructure developer TACEO has built an experimental version of its Merces system as an MPSD, demonstrating deposits from Monad, private transfers and withdrawals back to the public network. The prototype provides an early implementation test, but it is not evidence of a production institutional deployment or named bank using MPSD for live financial operations.
Category Labs has not announced a production launch date or identified financial institutions operating live domains. The white paper also lists several features for later versions, including confidential cross-domain transfers, operator and key rotation, zkVM and TEE attestations, backup and recovery, and jurisdiction-aware data availability. MPSD therefore establishes a detailed technical path toward private institutional execution on Monad, while production readiness and institutional adoption remain separate milestones still to be demonstrated.
Liam Foster follows crypto markets from France, with a close eye on Bitcoin, Ethereum, Layer 1 assets, derivatives, sentiment and smart money flows. His coverage looks past the daily price move to understand what is happening underneath: liquidity, leverage, positioning and the behavior of larger players.
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