Issue 1/Transaction Supply Chain

By Dr. Corey Petty

I've spent a good amount of time in "crypto," and I've always been displeased at the incompleteness of everyone's view around privacy and security. When my focus was security, I tried to convey that there's a lot of risk to be concerned about outside of smart contracts, but the industry only really talked or was concerned about them.

The same concept within privacy seems to be shaping up as it becomes a strong "meta" narrative across the ecosystem. It's always a focus on the blockchain itself and how operations occur above it. But it's so ridiculously incomplete if you take a step back and look at it. What hits the blockchain is actually the end of the entire lifecycle of a transaction.

You agree size and price with someone over Telegram, then settle it through a perfectly shielded onchain leg. Telegram knew both parties, the amount, and the timing before a single byte hit the chain. The shielding bought you nothing because the leak already happened upstream.

A transaction is seven stages; exactly one of them is onchain.

#	Stage	What happens
1	Discovery	Finding who has what you want
2	Diligence	Verifying they are who they claim
3	Negotiation	Agreeing on price and terms
4	Contracting	Committing in enforceable form
5	Ordering	Deciding whose trade goes when
6	Settlement	The only link where value moves
7	Enforcement	Making the outcome stick

Every stage of that lifecycle leaks something, and every leak has a price tag attached to it:

Stage	What transparent rails expose	Cost of leaks in crypto	Cost of leaks in the real world
Discovery	Counterparties, intent	$100M+ losses from physical-coercion attacks, Jan–Apr 2026	A single M&A leak in the UK added £42M to the acquisition cost
Diligence	Address history, identity graph	$3B+ surveillance industry monetizes the graph; $84M lost in address-poisoning	$0.5B+ settlement for exposing 147M IDs
Negotiation	Size, terms, reservation price	~80% of ETH DeFi routes through private RPCs	>50% of US equity volume trades off-exchange
Contracting	Frontend and signing context	~$1.5B stolen from Bybit; ~$0.5B/yr lost to wallet-drainer phishing	$2.8B/yr lost to manipulated payment instructions
Ordering	Pending order flow	$800M+ from sandwich and other attacks over 3 years	$5B/yr latency-arbitrage tax on global equities
Settlement	Balances, approvals, positions	$4.3B lost across 49 cross-chain settlement attacks	$81M stolen through a forged SWIFT payment instruction
Enforcement	Identifiable operators	$4.2B frozen post-settlement with selective enforcement	Breaking offshore and Swiss bank secrecy introduced $2B+ in enforcement costs