In the rapidly evolving landscape of Web3, transparency has been both a strength and a vulnerability. While open ledgers ensure trustlessness and decentralization, they also expose user data, transaction histories, and smart contract interactions to public scrutiny. This lack of privacy has become a significant barrier to adoption, especially for enterprises and individuals concerned about data confidentiality.
What is COTI V2: A Paradigm Shift in Blockchain Privacy
COTI V2 represents a significant evolution in blockchain technology, transitioning from its original DAG-based Layer 1 protocol to a privacy-centric, Ethereum-compatible Layer 2 solution. This transformation is not merely a technical upgrade but a strategic reorientation to address the pressing need for confidentiality in decentralized applications.
The transition to COTI V2 brings a revamped economic model for the COTI crypto token, integrating advanced cryptographic techniques to provide a secure, scalable, and private environment for decentralized applications. By bridging the gap between transparency and confidentiality, COTI V2 aims to redefine privacy standards in blockchain technology.
Understanding COTI and Its Evolution to V2
COTI has evolved significantly with the introduction of V2, which addresses the critical need for privacy in blockchain applications. The original COTI platform was built on a DAG (Directed Acyclic Graph) structure, which offered certain advantages in terms of scalability and transaction speed. However, as the blockchain ecosystem matured, the need for enhanced privacy features became increasingly apparent.
With its transition to a Layer 2 solution, the COTI blockchain offers improved scalability and reduced transaction costs while maintaining the security benefits of the underlying Ethereum network. This evolution positions COTI as a forward-thinking project that adapts to the changing needs of the blockchain ecosystem.
Key Innovations of COTI V2
EVM Compatibility
COTI V2 is designed to be fully compatible with the Ethereum Virtual Machine (EVM), allowing developers to deploy existing Ethereum-based smart contracts without modification. This ensures seamless integration and broadens the potential user base by tapping into Ethereum’s extensive ecosystem.
Developers looking to build privacy-focused applications can leverage COTI V2’s comprehensive suite of tools and resources while utilizing familiar development environments and languages like Solidity.
How Garbled Circuits Blockchain Technology Powers COTI V2
At the heart of COTI V2 lies the implementation of Garbled Circuits—a cryptographic protocol enabling secure multi-party computations. This technology allows for confidential transactions and smart contract executions, ensuring that sensitive data remains private even during processing.
Garbled Circuits were introduced by Andrew Yao in the 1980s as a solution to the “Millionaire’s Problem,” where two parties wish to determine who is wealthier without revealing their actual wealth. In this protocol, one party (the “garbler”) encrypts a Boolean circuit representing the function to be computed, and the other party (the “evaluator”) computes the output using encrypted inputs, without learning anything about the other party’s input.
Unlike other privacy solutions like Zero-Knowledge Proofs (ZKPs) which are limited to one-to-one relationships, garbled circuits blockchain technology enables multi-party computations with complete input privacy. This makes it possible to build sophisticated applications with multiple users, such as decentralized exchanges, while maintaining privacy.
COTI V2’s implementation of garbled circuits blockchain technology achieves computation speeds up to 1,800-3000 times faster and requires up to 250 times less storage compared to Fully Homomorphic Encryption (FHE) systems, making it a more practical solution for real-world applications.
Enhancing Layer 2 Privacy with COTI’s Decentralized Sequencer Network
To enhance scalability and reduce central points of failure, COTI V2 introduces a decentralized sequencer network. This network orders transactions efficiently while maintaining the integrity and decentralization principles of blockchain technology.
In Layer 2 blockchain architectures, sequencers are responsible for ordering transactions and generating blocks. Unlike traditional Layer 1 blockchains, where miners or validators package transactions through competitive processes, Layer 2 sequencers perform this role without such competition. However, centralized sequencers introduce risks, including single points of failure, transaction censorship, and MEV (Miner Extractable Value) monopoly.
COTI V2 addresses the growing demand for layer 2 privacy solutions in the blockchain ecosystem by implementing a decentralized sequencer model with the following key components:
- Shared Sequencer Network: A cluster of sequencers operates in a rollup-agnostic manner, ensuring that valid transactions are included in the blockchain within a finite time frame, providing necessary liveness and censorship resistance.
- Operator Selection and Rotation: Sequencer operators are selected through a transparent and fair consensus mechanism, possibly utilizing a Proof-of-Stake (PoS) model. The right to sequence transactions is rotated among operators to prevent centralization and ensure fairness.
- Staking and Slashing Mechanisms: Operators are required to stake tokens as a form of security deposit. Misbehavior or failure to perform duties results in slashing of their stake, aligning operators’ interests with the network’s integrity.
- Modified PBFT Consensus: COTI V2 employs a modified Practical Byzantine Fault Tolerance (PBFT) algorithm to ensure secure, fair, and transparent sequencer operation.
The decentralized sequencer network in COTI V2 enhances layer 2 privacy while maintaining efficient transaction processing, making it an ideal solution for applications handling sensitive data.
Community-Driven Governance
Emphasizing decentralization, COTI V2 incorporates a governance model that empowers community members to participate in decision-making processes. Through on-chain voting mechanisms, stakeholders can influence protocol upgrades, fee structures, and other critical aspects of the network.
This approach ensures that the development and evolution of COTI V2 align with the needs and preferences of its user base, fostering a sense of ownership and engagement within the community.
gcEVM: Extending Ethereum’s Capabilities
At the heart of COTI V2 lies the gcEVM (garbled circuits-enhanced Ethereum Virtual Machine), a groundbreaking extension of the standard EVM. This innovation enables confidential smart contract execution, allowing computations on encrypted data without exposing the underlying information.
The gcEVM is an augmentation of Ethereum’s EVM, integrating garbled circuits to facilitate secure multi-party computations. This allows for the execution of smart contracts where inputs, outputs, and internal states remain encrypted throughout the process. Such a design ensures that sensitive data remains confidential, addressing a significant limitation of traditional EVMs where all data is publicly visible.
Key features of gcEVM include:
- Confidential Smart Contracts: Developers can write and deploy smart contracts that process encrypted data, ensuring privacy for users and applications.
- EVM Compatibility: gcEVM maintains compatibility with existing Ethereum tools and languages, such as Solidity, allowing for seamless integration and migration of applications.
- Efficient Performance: By leveraging garbled circuits, gcEVM achieves faster computation times and reduced storage requirements compared to other privacy solutions like Fully Homomorphic Encryption (FHE).
COTI V2 provides a developer-friendly environment with tools and resources to facilitate the creation of privacy-preserving applications, including SDKs available in TypeScript and Python, comprehensive documentation, and a dedicated developer network for testing and deploying applications.
The Evolution of COTI' Blockchain: From DAG to Layer 2
The COTI blockchain now leverages garbled circuits to enable secure multi-party computations while ensuring data privacy. This evolution from a DAG-based structure to a Layer 2 solution represents a significant shift in COTI’s approach to blockchain technology.
The transition involves a seamless upgrade of the native $COTI tokens. All V1 native COTI deposited in the Treasury will be automatically upgraded to V2 $COTI and will be accessible via the Treasury App. For V1 native $COTI held outside the Treasury, users can utilize the COTI bridge for a 1:1 token swap. Notably, $COTI ERC20 holders are not required to take any action, as the ERC20 contract remains unaffected.
Starting in 2025, coinciding with the launch of the new mainnet, COTI V2 will initiate the minting of new tokens every 103 hours (period), featuring a gradually reducing inflation rate that adjusts according to the network’s changing demand and usage. The initial expansion of the total supply will occur at a periodic rate of 0.45%, which will subsequently decrease periodically by 0.50% over a decade.
Treasury and Staking
Investors in COTI crypto can participate in the network through staking and running nodes in the V2 ecosystem. COTI V2 introduces a flexible staking model through its Treasury system. Users can deposit COTI tokens into the Treasury, selecting parameters such as deposit amount, multiplier, and locking period to customize their staking experience. This model allows participants to tailor their risk and reward profiles, with higher multipliers and longer lock-up periods potentially yielding greater returns.
The COTI network functions as a self-sustaining economic ecosystem where nodes, license holders, and stakers collaborate to grow and secure the network. Full Nodes operate as decentralized, lean clients that play a critical role in maintaining the network’s security, scalability, and overall functionality. These nodes validate transactions, safeguard data integrity, and ensure the confidentiality of user information.
In the COTI network, anyone with the appropriate license can run a Full Node to support the network and earn Node Rewards, furthering the network’s decentralization. Node operators also gain the ability to run their own “staking pool,” which is a customized version of COTI’s Treasury application with configurable parameters, including locking periods, fees, and multipliers.
Tokenomics: Powering the Privacy Layer
COTI V2 introduces a forward-thinking economic model designed to support its privacy-centric Layer 2 infrastructure. This model ensures scalability, sustainability, and community engagement within the ecosystem.
Dynamic Inflation Model
Starting in 2025, with the launch of the new mainnet, COTI V2 will implement a dynamic inflation mechanism:
- Minting Schedule: New tokens will be minted every 103 hours.
- Initial Inflation Rate: Set at 0.45% per period.
- Gradual Reduction: The inflation rate will decrease by 0.50% over a decade, adapting to network demand and usage.
This approach aims to balance token supply with the growing needs of the network, ensuring long-term stability.
COTI V2 Among Leading Blockchain Privacy Solutions in 2025
The integration of privacy-preserving technologies in blockchain has become increasingly important in 2025, with several solutions competing in this space. COTI V2 stands out among these blockchain privacy solutions due to its unique approach using garbled circuits and its compatibility with the Ethereum ecosystem.
While other privacy solutions like Zero-Knowledge Proofs (ZKPs) and zk-SNARKs have gained popularity, they often face limitations in terms of computational requirements and flexibility. COTI V2’s implementation of garbled circuits offers advantages in terms of efficiency and multi-party computation capabilities, positioning it as a competitive option in the privacy-focused blockchain landscape.
Behind the Privacy Curtain: The Use Cases Powering COTI V2's Silent Revolution
Intro: Privacy Isn’t Just a Feature. It’s a Foundation.
In a world obsessed with transparency, privacy has become a paradox. The blockchain movement promised freedom, but it also exposed every wallet, every transaction, and every strategy. COTI V2 rewrites this narrative with its privacy-first Layer 2, powered by Garbled Circuits. And in doing so, it doesn’t just patch a flaw – it unlocks use cases the world never thought blockchain could handle.
1. Whispering Wallets: DeFi, Finally Discreet
DeFi turned heads, but it also turned pockets inside out. On Ethereum, every move is visible. With COTI V2, users can swap, lend, and yield-farm without leaving a trail of breadcrumbs. No more front-running bots. No more copy traders. Just encrypted financial sovereignty.
Think SecretSwap or Railgun, but faster, lighter, and more versatile.
2. The Invisible Dollar: Private RWAs, CBDCs & Stablecoins
Tokenized bonds. Fractional real estate. CBDCs in pilot mode. The future of money is on-chain – but it demands confidentiality. COTI V2 allows compliant, confidential transactions for RWAs, stablecoins, and sovereign digital currencies.
Imagine BlackRock issuing tokenized assets on-chain, but with the discretion of private banking.
3. Intelligence Encrypted: AI That Doesn’t Spy
Hospitals, banks, and governments want to train models – but not share raw data. COTI V2 enables privacy-preserving machine learning (PPML). It’s federated learning on steroids, enabling collective AI without compromise.
Use case: Banks collaborating on fraud detection algorithms without sharing customer data.
4. Know Less, Prove More: Dynamic DID
Why should proving you’re 18 require revealing your birth certificate? With COTI’s DyDID, you prove facts without exposing the details behind them. Perfect for KYC, age-gating, or token-holder verification.
It’s not about anonymity. It’s about precision disclosure.
5. Corporate Contracts in Stealth Mode
Enterprises have stayed away from public chains for one reason: exposure. COTI V2 makes confidential smart contracts a reality. Inventory logic, insurance triggers, or partner payouts – all processed in silence.
From ERP systems to global logistics, enterprise blockchain just got real.
6. A Treasury with Secrets (and Smarts)
The new COTI Treasury isn’t just a staking vault. It’s a programmable, adaptive reward engine. With private voting and logic execution, it adjusts to network demand, user loyalty, and governance outcomes – all without oversharing.
7. DAOs That Don’t Leak Voter Preferences
Governance is broken when whales sway votes and users fear retribution. COTI enables private voting systems that preserve anonymity while maintaining integrity.
Think Snapshot, but confidential.
8. Identity Registries Without Doxxing
Web3 wants decentralized ID. Regulators want KYC. COTI V2 offers both. Its private identity registry lets users be verified without being surveilled, and gives platforms flexible, compliant access control.
9. GameFi with Fog of War
Competitive gamers hate exposure. COTI V2 makes GameFi and GambleFi more secure, preventing exploits based on visible moves, strategies, or betting patterns.
Secret in-game assets. Confidential bids. Private tournament play.
10. Messaging & Social Media That Respects Boundaries
Blockchain-based messaging apps exist – but few preserve message confidentiality. COTI allows encrypted, on-chain comms with access controls and zero data leakage.
Your DM’s aren’t just end-to-end encrypted. They’re never visible to begin with.
11. Legal & Medical Data That Can Move, But Not Escape
HIPAA, GDPR, SOC 2. These aren’t buzzwords – they’re barriers to blockchain adoption. COTI’s privacy layer allows encrypted processing of legal and health data, enabling true cross-org collaboration.
12. Bridging the Chains, Without Bridging the Leaks
COTI doesn’t just build bridges. It cloaks them. When moving assets cross-chain, it hides amounts, source chains, or wallets as needed.
Closing Note: Privacy Isn’t the Past. It’s the Path Forward.
From AI to RWAs to DeFi, privacy is the missing link. COTI V2 isn’t a privacy coin. It’s a privacy layer – and the foundation for what comes next.
Building on COTI V2: Developer Tools and Ecosystem
COTI V2 offers a robust suite of tools and resources designed to facilitate the development of privacy-preserving applications. By integrating advanced cryptographic techniques with familiar development environments, COTI V2 lowers the barrier to entry for developers aiming to build confidential decentralized applications (dApps).
To cater to a diverse developer base, COTI V2 provides Software Development Kits (SDKs) in multiple programming languages, including TypeScript and Python. Both SDKs are designed to simplify tasks such as account onboarding and smart contract deployment, streamlining the development process for privacy-focused applications.
COTI V2’s developer environment includes a range of tools to support the entire development lifecycle, including Hardhat and Remix Plugin for smart contract development, COTI MetaMask Snap for wallet integration, and a Developer Sandbox for experimentation.
To foster innovation and support the growth of its ecosystem, COTI has established several grant programs, including the ABC Growth Fund offering grants ranging from $1,000 to $100,000 for projects that contribute to the COTI ecosystem, and a partnership with Gitcoin launching a $500,000 grant program aimed at accelerating the development of privacy solutions within the Web3 space.
Conclusion: The Future of Privacy in Web3
COTI V2 represents a significant leap forward in addressing the pressing need for privacy in blockchain technology. By introducing advanced cryptographic techniques like garbled circuits and fostering an inclusive ecosystem, COTI empowers users and developers to engage in secure, private, and compliant decentralized activities.
As the blockchain ecosystem continues to evolve, the demand for privacy-preserving solutions will only increase, particularly in sectors where data confidentiality is paramount. COTI V2’s approach to balancing privacy with scalability and compatibility positions it as a promising solution for the future of Web3.
With its comprehensive suite of tools, innovative technology, and community-driven approach, COTI V2 is poised to play a significant role in shaping the next generation of privacy-focused blockchain applications.
