2.3 Web3 Exposure

How transparency in blockchain creates risks like wallet tracking, copy trading, and doxxing.

Transparency is core to blockchain design: every transaction, balance, and approval is permanently recorded and publicly visible. While this underpins decentralization and trust, it also creates systemic exposure risks for users.

• Wallet Tracking & Profiling: Attackers and analytics platforms can monitor wallet activity, mapping addresses, linking transactions, and building detailed behavioral profiles. This allows malicious actors to identify high-value wallets and target them with tailored phishing or exploits.

• Copy Trading & Strategy Exploitation: High-volume traders and whales have their every move copied by bots and rivals. By simply watching an address, competitors can mirror strategies in real time, undermining the value of sophisticated trading approaches.

• DAO Doxxing: Governance participation often exposes members to political and financial scrutiny. Voting records are linked to wallets, which in turn can be traced back to identities, creating risks for activists, journalists, or corporate decision-makers.

• Front-Running & MEV Attacks: Public transaction mempools enable adversaries to insert or reorder transactions, extracting value directly from users and reducing their profitability.

In traditional finance, privacy is assumed — bank balances, trades, and votes are not publicly visible to competitors. In Web3, the opposite is true: absolute transparency is the default. Without a privacy layer, users expose not just their assets, but also their strategies, affiliations, and risk profile to the entire world.