Binance co-founder CZ proposes dark pool DEXs to tackle manipulation

Binance co-founder Changpeng “CZ” Zhao has projected creating a acheronian excavation perpetual swap decentralized speech (DEX) to forestall marketplace manipulation.

In a June 1 X post, Zhao said that helium has “always been puzzled with the information that everyone tin spot your orders successful real-time connected a DEX.”

“The occupation is worse connected a perp DEX wherever determination are liquidations,” helium said.

Zhao added that “if you’re looking to acquisition $1 cardinal worthy of a coin, you mostly wouldn’t privation others to announcement your bid until it’s completed.” This is to forestall front-running and maximum extractable worth (MEV) bot attacks, which effect successful accrued slippage, worse prices and higher costs.

His comments travel the liquidation of astir $100 million successful Bitcoin agelong positions connected Hyperliquid, reportedly held by a trader known arsenic James Wynn. The event, which occurred aft Bitcoin fell beneath $105,000, sparked claims connected X that immoderate users had coordinated to “hunt” Wynn’s liquidation.

Source: CBB

One X idiosyncratic claimed that Tron co-founder Justin Sun showed involvement successful participating, but the assertion remains unconfirmed. He besides went truthful acold arsenic to invite Eric Trump, the lad of the United States’ President Donald Trump, to the group.

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What are acheronian pools?

Zhao said that “large traders successful TradFi usage acheronian pools, which are often 10 times bigger” than traditional, transparent pools. Dark pools are backstage trading venues wherever ample orders are hidden from nationalist presumption until aft they are executed.

This prevents front-running, slippage and MEV attacks by concealing bid size, terms and intent. Still, implementing decentralized acheronian pools requires analyzable systems, specified arsenic zero-knowledge proofs (ZK-proofs) oregon delayed colony mechanisms.

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Trade privateness is captious to derivatives

Zhao argued that privateness is peculiarly important successful derivatives markets. He said nationalist visibility of liquidation levels exposes ample traders to coordinated attacks that could unit premature liquidation:

“If others tin spot your liquidation point, they could effort to propulsion the marketplace to liquidate you. Even if you got a cardinal dollars, others tin pack up connected you.“

The Binance co-founder admitted that determination are counter-arguments to specified designs, with the added transparency perchance allowing marketplace makers to sorb ample orders. He said that this is “possibly true.”

“I won’t get into an statement connected which is close oregon wrong. Different traders whitethorn similar antithetic types of markets,“ helium said.

Zhao concluded by encouraging developers to motorboat an onchain acheronian excavation decentralized speech with perpetual swaps. He said that this could beryllium achieved “either by not showing the orderbook, oregon adjacent amended not showing deposits into astute contracts astatine all, oregon until overmuch later.”

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