TL;DR

• Blockchain's biggest vulnerabilities - from MEV to bridge hacks - keep costing users millions.
• COTI's privacy-first infrastructure shows how these flaws can be fixed at the protocol level.
• Case studies include a $215K sandwich attack, the chaotic Otherside mint, MEV "dark forest" tactics, vault liquidation fee thefts, and the $190M Nomad Bridge hack.
• Each case proves that today's blockchain problems are systemic - but solvable.
• COTI's model rethinks security and privacy, offering a path to safer, enterprise-ready crypto rails.

Web3 has delivered breakthroughs in open finance and digital ownership, but it has also introduced systemic flaws. From frontrunning bots exploiting traders to bridges losing hundreds of millions overnight, users often pay the price for design gaps.

COTI launched its “Fixes This” series to highlight exactly how these problems occur and more importantly, how COTI V2’s privacy-preserving, compliant-by-design infrastructure could solve them. Each case study isn’t just a post-mortem; it’s a window into what a safer, more sustainable Web3 looks like. That's why COTI's "Fixes This" series is so valuable. Instead of abstract promises, it examines real-world failures - then asks the hard question: What if this had been built differently from the ground up?

In this article, we'll walk through five major incidents where COTI's privacy and computation model could have prevented disaster.

Case Study 1: The $215,000 Sandwich

Sandwich attacks are one of the most infamous tricks in decentralized trading. In 2020, a trader on Uniswap lost over $215,000 when an attacker manipulated transaction order flow. The attacker spotted the victim's trade in the public mempool, then inserted their own trades before and after it - essentially "sandwiching" the victim and draining value.

This wasn't a bug in Uniswap. It was a structural weakness in Ethereum's open transaction pool. Transactions wait in the mempool where bots can scan, predict, and exploit them before they're finalized. If that same transaction had run through COTI's garbled circuits, order flow could have been shielded from mempool sniping. Private execution would hide transaction details until they're confirmed, preventing sandwich bots from seeing the target trade at all.

For more deep knowledge about this incident, please check out the full article on COTI: The $215,000 Sandwich 

Case Study 2: The Otherside Mint

In May 2022, Yuga Labs' Otherside NFT mint broke Ethereum. Demand spiked so high that gas fees skyrocketed to thousands of dollars per transaction, while failed mints cost users tens of millions collectively. The frenzy became a cautionary tale of scalability limits. Ethereum's open execution meant that every single mint request fought to get into blocks. Users spammed transactions, paying more and more gas just to have a chance.

COTI's privacy-enabled batching could have transformed this mint. With programmable privacy, all bids could have been processed off-chain securely, with only the finalized state written on-chain. This would keep costs predictable, prevent failed mints, and stop users from competing in a blind auction of gas fees.

For more deep knowledge about this incident, please check out the full article on COTI: The Otherside Mint

Case Study 3: MEV and Escaping the Dark Forest

MEV (Miner Extractable Value) is a shadow economy that drains billions from DeFi each year. Whenever a transaction enters the mempool, sophisticated bots battle to reorder, front-run, or back-run it.

This "dark forest" environment makes users vulnerable even when they think they're playing by the rules. In fact, a Cornell University study estimated Ethereum users lose hundreds of millions annually to MEV extractions.

COTI's privacy-by-default infrastructure solves this at the root. With garbled circuits, order flow is encrypted during execution, so miners and validators cannot peek into transactions and manipulate them. Instead of hiding patches on top, COTI builds immunity into the system itself.

For more deep knowledge about this incident, please check out the full article on COTI: Escaping the Dark Forest 

Case Study 4: Vault Liquidation Fee "Thefts"

In lending protocols like MakerDAO and Aave, vault liquidations are supposed to protect the system when collateral drops in value. But liquidators have exploited loopholes in liquidation auctions, pocketing outsized fees at the expense of borrowers.

One example saw borrowers lose significant value not because their loans defaulted, but because the liquidation process itself was gamed by opportunistic actors. Under COTI's model, liquidation processes could be executed in privacy-preserving smart contracts, where auction logic is hidden until it finalizes. This prevents attackers from gaming predictable mechanics and ensures fairer liquidation outcomes.

For more deep knowledge about this incident, please check out the full article on COTI: Vault Liquidation Fee Thefts 

Case Study 5: The Nomad Bridge Exploit

In August 2022, Nomad Bridge lost nearly $190 million in one of the most chaotic exploits in crypto history. A single vulnerability in the bridge's smart contract allowed anyone to copy-paste a transaction and drain funds. The result looked less like a hack and more like a bank run, as hundreds of addresses piled in to grab funds. Bridges remain some of the weakest points in crypto. They connect chains but expand the attack surface dramatically.

With COTI's privacy layer, sensitive logic like validation checks could be protected from public inspection. Garbled circuits ensure computation integrity, making it much harder for attackers to reverse-engineer or replicate vulnerabilities.

For more deep knowledge about this incident, please check out the full article on COTI: The Nomad Bridge Exploit

Lessons From the Fixes

Across these case studies, one theme repeats: transparency without privacy creates risk. The open design of early blockchains made innovation possible, but it also opened doors for attackers. COTI’s vision for V2 programmable privacy isn’t about hiding wrongdoing, it’s about shielding users from predation while keeping systems compliant and auditable. That balance is what the next wave of Web3 infrastructure requires.

As CEO Shahaf Bar-Geffen often stresses, “Privacy isn’t just a feature but an essential component of blockchain’s future” (Source: Decrypt). Without it, fairness, security, and institutional adoption will remain out of reach.

Final Thought

The history of blockchain is littered with costly lessons. From sandwich bots to bridge exploits, the same flaws repeat because public blockchains were not designed for confidentiality or enterprise use.

By studying past failures, COTI shows how programmable privacy and compliance can turn fragile experiments into sustainable financial infrastructure. Web3’s future will belong to the systems that can prevent the next $215,000 sandwich or $190 million bridge exploit before it happens. And if these case studies prove anything, it’s that the future might already be here.