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You connect to proxy 1 and ask it to set up a tunnel to proxy 2 (the tunnel to proxy 2 rides inside the tunnel to proxy 1).

Proxy 1 knows your source IP, its own IP, and the destination IP (proxy 2). Proxy 2 knows the incoming source IP (proxy 1), its own IP, and the destination IP (the website you're accessing). Neither proxy knows both your IP and your destination IP.

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I read your comment and still don't get what prevents proxy 1 and proxy 2 from sharing this information with each other.

Ah, I was thinking "share" more technically... yeah, the fact that they're operated by distinct entities makes that less likely but it's not guaranteeing anonymity, anyone tapping both proxies (NSA) could probably correlate your connections pretty easily too, but it's an improvement over a direct connection or a single proxy.

It's highly likely once someone figures out a way to financialize it

Unless Proxy 1 and Proxy 2 have a contract that says, oh hey, let's share data, OK?

Presumably they have to have a contract anyway to agree to tunnel the traffic using this protocol.

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