Golden Finance reported that CZ stated on X that, in light of recent events, I believe it may be a good time to launch a dark pool perp DEX.
I have always been confused by how everyone can see your orders in real-time on a DEX. This issue is even more serious on a perpetual DEX where liquidation exists.
Even when using the order book of a centralized exchange (CEX), orders are not associated with specific individuals, but if you want to buy $1 billion worth of cryptocurrency, you generally do not want others to notice your order before it is completed. Otherwise, others may front-run your purchase, effectively engaging in front-running. In decentralized exchanges (DEX), this can lead to MEV attacks. This can result in increased slippage, price drops, and higher costs for you.
Therefore, large traders in TradFi use dark pools, which are typically 10 times larger than "lit pools" (i.e., normal order books).
For position holders (or futures traders), it is more important not to let others know/see your orders. If others see your liquidation point, they may try to push the market to liquidate you. Even if you have 1 billion dollars, others may unite against you. This may be what we have seen recently.
The objection I see is that increasing transparency can allow market makers to absorb your large orders. This may be true. I don't want to argue about which is right or wrong. Different traders may prefer different types of markets.
Now may be a good time to launch an on-chain dark pool DEX + perpetual contracts, either by not displaying the order book or, better yet, by not showing the deposits of smart contracts at all, or displaying them much later. This should be achievable through zero-knowledge proofs or similar cryptographic technologies.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
CZ: Now might be a good time to launch an on-chain dark pool DEX + Perptual Futures.
Golden Finance reported that CZ stated on X that, in light of recent events, I believe it may be a good time to launch a dark pool perp DEX. I have always been confused by how everyone can see your orders in real-time on a DEX. This issue is even more serious on a perpetual DEX where liquidation exists. Even when using the order book of a centralized exchange (CEX), orders are not associated with specific individuals, but if you want to buy $1 billion worth of cryptocurrency, you generally do not want others to notice your order before it is completed. Otherwise, others may front-run your purchase, effectively engaging in front-running. In decentralized exchanges (DEX), this can lead to MEV attacks. This can result in increased slippage, price drops, and higher costs for you. Therefore, large traders in TradFi use dark pools, which are typically 10 times larger than "lit pools" (i.e., normal order books). For position holders (or futures traders), it is more important not to let others know/see your orders. If others see your liquidation point, they may try to push the market to liquidate you. Even if you have 1 billion dollars, others may unite against you. This may be what we have seen recently. The objection I see is that increasing transparency can allow market makers to absorb your large orders. This may be true. I don't want to argue about which is right or wrong. Different traders may prefer different types of markets. Now may be a good time to launch an on-chain dark pool DEX + perpetual contracts, either by not displaying the order book or, better yet, by not showing the deposits of smart contracts at all, or displaying them much later. This should be achievable through zero-knowledge proofs or similar cryptographic technologies.