Update (June 2 at 3:33 pm UTC): This article has been updated to incorporate comments from Li.Fi’s Philipp Zentner and StealthEX’s Maria Carola.
Binance co-founder Changpeng “CZ” Zhao proposed creating a dark pool perpetual swap decentralized exchange (DEX) to prevent market manipulation.
In a June 1 X post, Zhao said that he has “always been puzzled with the fact that everyone can see your orders in real-time on a DEX.”
“The problem is worse on a perp DEX where there are liquidations,” he said.
Zhao added, “If you’re looking to purchase $1 billion worth of a coin, you generally wouldn’t want others to notice your order until it’s completed.” This is to prevent front-running and maximum extractable value (MEV) bot attacks, which can result in increased slippage, worse prices and higher costs.
His comments follow the liquidation of nearly $100 million in Bitcoin long positions on Hyperliquid reportedly held by a trader known as James Wynn. The event, which occurred after Bitcoin fell below $105,000, sparked claims on X that some users had coordinated to “hunt” Wynn’s liquidation.
One X user claimed that Tron co-founder Justin Sun showed interest in participating, but the claim remains unconfirmed. He also went so far as to invite Eric Trump, the son of the United States’ President Donald Trump, to the group.
Related: Financial freedom means stopping crypto MEV attacks — Shutter Network contributor
What are dark pools?
Zhao said that “large traders in TradFi use dark pools, often 10 times bigger” than traditional, transparent pools. Dark pools are private trading venues where large orders are hidden from public view until after they are executed.
This prevents front-running, slippage and MEV attacks by concealing order size, price and intent. Still, implementing decentralized dark pools would require complex systems such as zero-knowledge proofs (ZK-proofs) or delayed settlement mechanisms.
Philipp Zentner, founder and CEO…
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