Imagine a dapp that takes a small fee every time it's used. This fee is sent to some wallet. This wallet address is, of course, listed right there in the smart contract and so anybody can see how much the dapp dev is making and how and where that dapp dev uses the eth.

I think this alone is a privacy concern since this would associate the dev and dapp with all transactions done via that wallet. The problem seems to get worse when you consider that the dev might want to off ramp their eth via some KYC exchange to get some fiat. Everyone would be able to see their, say, coinbase eth wallet address and have access to even more of the dev's transaction info.

How do dapp devs avoid this problem? All I can think of is exchanging all that eth for monero on some dex, then back to eth, then finally for fiat on the kyc exchange. The eth would have been effectively 'scrubbed' from your dapp. Is this a legitimate strategy? Am I overthinking this?

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I'm not sure how CEXes handle user wallets - whether one user always uses just one wallet or whether there's a new wallet for each transaction, for example. This probably depends on the CEX, as well.

Many dapp developers aren't anonymous, so that's not a problem for them. Those who choose to be anonymous, seeing some of their asset movement shouldn't be a big issue, since it would be very difficult to find out a person's identity based only on that.

If a user is really concerned about privacy, there exist various solutions even on-chain, such as Tornado Cash and other types of mixers. Those obfuscate the link between what assets came in and which assets are taken out.

  • Makes sense. I guess if you can get a new wallet address for each transaction (I googled it and apparently a lot of CEXes do this), this isn't really an issue. Thanks! Mar 26, 2022 at 8:14

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