How Garbled Circuits could put an end to one of DeFi’s worst flaws
Front-running has quietly drained millions from retail users. COTI’s Garbled Circuits architecture might finally kill it for good. This could redefine DeFi privacy in the process.
Introduction
Front-running has long haunted DeFi. It is a subtle but powerful exploit that lets bots intercept your transaction and profit off it before it settles. Every time you try to swap tokens on a DEX, there’s a chance someone is watching, racing ahead of you, and making your outcome worse.
Now, with the launch of COTI V2 and its integration of Garbled Circuits, that might finally change.
By enabling privacy-preserving smart contracts that hide who is involved, what is being done, and how much is being transacted until the transaction is complete, COTI could put front-runners out of business. This resets expectations for secure and fair decentralized finance.
Context and Background
In April 2025, COTI launched its fully EVM-compatible Layer 2 network powered by Garbled Circuits. This is a privacy-first computation technique that encrypts both logic and input data before it ever hits the blockchain.
For years, chains like Ethereum and Solana have operated transparently by default. But that transparency has come at a cost. It has enabled front-running, MEV attacks, sandwiching, and other forms of information leakage that harm users.
DeFi protocols have tried to solve this with batching, private mempools, and delay windows. But these have been only partial solutions. COTI’s Garbled Circuits offer something different. They provide full confidentiality at the logic level.
Under the Hood: What Makes COTI V2 Different
The Invisible Engine
COTI V2 introduces a virtual machine and sequencer architecture that allows developers to build smart contracts with hidden inputs and logic. These details remain confidential until execution.
This means:
- Trade sizes are hidden
- Slippage conditions are private
- Even the function being called can be encrypted
All of this prevents malicious actors from knowing what is about to happen. This eliminates the edge they need to front-run.
Why It Actually Matters
Here’s why Garbled Circuits are a breakthrough for DeFi users:
- Blocks MEV and front-running across DEXs
- Enables truly private DeFi with no on-chain trade history
- Allows builders to hide sensitive contract logic
- Maintains full EVM compatibility, so devs can use familiar tools
This goes further than ZK-rollups or private mempools. It ensures that both inputs and computation logic are fully private.
The Industry Is Catching On
The issue of front-running in DeFi has been well documented. Coinbase explains that frontrunners are automated bots that execute transactions faster than retail users. These bots often outbid others or manipulate mempool timing to exploit trades.
Source: Coinbase
This supports the idea that front-running is not a bug in DeFi. It has become part of the business model. COTI’s architecture challenges this directly.
Power Stats That Back It Up
According to COTI’s whitepaper, Garbled Circuits offer major speed and efficiency gains:
- Up to 1,800-3000 times faster than most zero-knowledge proof methods
- Around 250 times lighter than homomorphic encryption
Source: COTI V2 Whitepaper
These stats make the tech viable for real-world DeFi use, even at scale.
Community and Ecosystem Impact
This potential for private and fair DeFi has drawn interest from developers. Many are applying to the COTI Builders Program, which supports projects that prioritize privacy and performance.
Stealth-mode trading tools, confidential lending apps, and privacy-first DEXs are already testing and many have also went live on COTI's Mainnet already.
If successful, these tools will redefine what users expect from decentralized applications.
How to Get Involved
Sources and References
- Coti V2 Whitepaper-
- Chainanalys: Understanding MEV- https://www.chainalysis.com/blog/mev-explained
- Coinbase on Front-Running- https://www.coinbase.com/learn/advanced-trading/what-are-frontrunners-and-mev-when-it-comes-to-crypto-trading
Conclusion
DeFi has offered massive innovation. But until now, it has not been fair. Front-running has damaged trust, especially for everyday users.
COTI V2’s Garbled Circuits introduce a bold alternative. They let you trade, build, and invest without fear of being exploited.
If this catches on, privacy will no longer be a niche feature. It will be the foundation. And COTI is making that future possible.
