As DEXs capture up to 25% of the global spot market share, Binance founder Changpeng Zhao (CZ) unexpectedly proposed the idea of creating a dark pool DEX, which would conceal all trading information from the public to solve DeFi's challenging problem: MEV (Miner Extractable Value).
CZ expresses concerns about excessive transparency on DEX
In a post published in the early hours of June 2, CZ expressed his 'confusion' over how easily people can track trading positions on DEXs, especially derivative DEXs (Perp DEX). He believes this makes large investors vulnerable to 'order hunting' and price manipulation – a common form of MEV that causes them to buy high, sell low, or get unfairly liquidated.
A classic case is Hyperliquid, where many whales were quickly discovered by the community for their large positions and swiftly 'played foul', leading to serious losses.
'Dark pool' on the blockchain – a solution or a source of risk?
CZ proposes building #DEX capable of hiding order books, deposit/withdrawal history, utilizing technologies like zero-knowledge proof or advanced encryption to enhance privacy and protect users from MEV.
However, this idea immediately divides the community:
Support: Many agree that DeFi needs a new direction, increasing privacy and optimizing the experience for everyday users. A 'untrackable' DEX could be a major breakthrough, especially as memecoins and new assets often launch first on DEXs.
Opposition: Another section warns that this contradicts the transparency principle of blockchain. Open data is the factor that builds trust in DeFi. If all transactions are hidden, who controls the system? Will it replicate the #CEX disguised model, where 'the person holding the reins' is actually the exchange?
Some are skeptical of CZ's motives, suggesting that Binance is trying to maintain market share amid the strong rise of DEXs like PancakeSwap, Aerodrome, or PumpSwap – which recently recorded a total trading volume of $410.2 billion in May.
The future: Private DEX, is it feasible?
The idea of #CZ has not been implemented, but it has sparked a debate about the future direction of DeFi: prioritizing privacy or maintaining transparency?
If successful, a 'dark pool' DEX could completely address MEV – the most persistent issue in DeFi today. But if it fails to balance control, it could turn into a CEX masquerading as a DEX, breaking community trust.
Crypto connection:
CZ's idea of an 'order-hidden DEX' shows that exchanges are entering a new race for transaction privacy and security. With DEX volumes continuing to increase, crypto users – especially large investors on Binance – will increasingly need safer trading solutions that still retain the advantages of decentralization.
Risk warning: The crypto market is always volatile and carries many risks. This article is not investment advice. Always do thorough research and consider carefully before participating.