There’s no denying DeFi is thriving. The total value locked (TVL) across protocols is over $113.6 billion as of today, according to DeFiLlama. But as the numbers go up, the cracks are starting to show and they all trace back to one thing: lack of privacy.

If you’ve ever used a DEX, placed a limit order, or interacted with a lending protocol, your data and strategy was out in the open. Every action on-chain is public, traceable, and visible not just to other users, but to bots and attackers who’ve built entire playbooks around exploiting it.

This isn’t just a philosophical issue. It’s financial.

MEV: The Invisible Tax DeFi Users Are Paying

One of the biggest, and least understood, issues in DeFi today is Maximal Extractable Value (MEV),  a form of invisible exploitation that costs users hundreds of millions per year.

• MEV bots extract between $300M–$900M annually from users by manipulating transaction order.

• Between September 2022 and June 2024, at least 526,207 ETH (~$1.3 billion) was stolen via MEV attacks.

• In October 2023 alone, sandwich attacks cost users over $1.3 million, hitting 20,400 wallet. Source

The attacks haven’t stopped in 2025 either.

On March 12, a trader tried to swap $220,764 in USDC for USDT on Uniswap v3. An MEV bot sandwiched the transaction, drained the liquidity, and left the user with just $5,271 - a 98% loss. The attacker made $8,000, while the block builder “bob-the-builder.eth” walked away with a $200,000 tip.

That same day, two more wallets lost $138,838 and $128,003 in near-identical MEV exploits. Source – Binance Square

The big question is now: What makes these attacks possible? 

Simple: every trade, every transaction, every liquidation point is visible to everyone, including bots.

And this is where COTI steps in.

COTI’s Breakthrough: Smart Contracts with Built-In Privacy

COTI V2 isn’t another ZK rollup or privacy coin. It’s a new kind of Layer 2, one that’s Ethereum-compatible, fast, and designed from the ground up for confidential DeFi.

COTI uses Garbled Circuits, a cryptographic technique that encrypts not just the data, but the computation itself. That means:

• Smart contracts execute without revealing internal logic

• Transaction data is encrypted, not just hidden

• Even node operators can’t see who did what

This isn’t theoretical. It’s already live. And it’s powering the next generation of privacy-first DeFi applications.

PriveX, one of the earliest projects building on COTI V2, is putting this encryption to work by offering stealth DeFi infrastructure. Unlike traditional DEXs where all swaps, orders, and liquidity are publicly visible (and thus vulnerable), PriveX enables private swaps and confidential strategy execution, shielding large trades from bots and predatory algorithms.

COTI’s CEO Shahaf Bar-Geffen Commented:

Projects like PriveX make clear that COTI’s privacy rails aren’t just academic. They’re usable - today.

Why This Changes Everything

With privacy at the base layer, developers can now build DeFi apps that:

1. Resist MEV:  no one can front-run what they can’t see

2. Protect strategies: DEX logic, liquidations, limit orders all stay hidden

3. Meet compliance needs: privacy on demand, with jurisdictional control

4. Enable new use cases: dark pools, undercollateralized lending, DAO treasuries

COTI is redefining what’s possible.

Final Thoughts: DeFi Needs Confidentiality

The evolution of DeFi has been defined by innovation in speed, accessibility, and composability. But what it has lacked and urgently needs is the infrastructure to keep strategies private, data secure, and users protected.

COTI’s entry into the privacy layer conversation is not about adding another privacy coin. It’s about rethinking how smart contracts should work in a world where visibility comes with risk. With encrypted computation and compliance-aware privacy, COTI V2 offers a practical foundation for developers who are ready to build the next generation of DeFi protocols.

With over $1 billion extracted through MEV, regulators circling, and TradFi starting to pay attention, DeFi’s survival depends on evolving. And evolution starts with infrastructure.

COTI is building that infrastructure.

Now we want your take. Share your thoughts: Should DeFi prioritize confidentiality by design, or keep it opt-in?

READ MORE : What is COTI V2: Revolutionizing Blockchain Privacy with Garbled Circuits