On June 2, Binance founder CZ proposed a controversial idea on the X platform, namely using zero-knowledge (ZK) proof technology to create a dark pool decentralized exchange. This proposal directly addresses the current DeFi field's most thorny problem of MEV (Maximum Extractable Value) attacks.
MEV (Maximum Extractable Value) refers to the behavior of maximizing returns by manipulating the order of transactions, inserting or excluding specific transactions in a blockchain network. MEV first appeared on Ethereum and has now become an important issue in the DeFi (Decentralized Finance) ecosystem.
The Dilemma of CEX and DEX Order Books
In the order book of a centralized exchange (CEX), although orders are not associated with personal identities, when you plan to buy a large amount of token orders, you still do not want others to notice in advance, otherwise you may encounter front-running transactions.
A typical example is that cryptocurrency trader James Wynn bet more than $1 billion to buy Bitcoin at the end of last month, and was later liquidated on 4 different positions, totaling more than $100 million.
In a decentralized exchange (DEX) environment, this situation may evolve into an MEV attack, ultimately leading to increased slippage, deteriorated transaction prices, and higher transaction costs.
Dark Pool DEX theory sparks heated discussion
This proposal quickly sparked heated industry debate. Supporters believe that hiding transaction intentions through technical means such as zero-knowledge proofs until the transaction is completed and then disclosing the information can effectively protect traders from MEV attacks. The core idea of the solution proposed by CZ is to use cryptographic technology to ensure the effectiveness of transactions while either not displaying the order book or delaying the public release of key information.
In fact, many projects have explored this direction, such as Tristero's similar solution secretly developed for two years, 0x0's upcoming Spectre privacy trading platform, and SKALE network's BITE protocol, all of which are trying to solve this pain point from different angles.
However, opposition is also strong. Some believe that the design concept of dark pools runs counter to the original intention of cryptocurrencies to pursue transparency and fairness. Decentralization advocate Cedric Beau pointed out sharply that this solution actually brings the insider trading games that have been criticized in traditional finance into the blockchain world.
In the eyes of opponents, although complete transparency can lead to some chaos, it is a necessary price to pay to ensure that everyone competes fairly under the same rules. This difference essentially reflects the core contradiction facing DeFi development, that is, how to choose between pursuing efficiency and maintaining the concept of decentralization, which is worthy of industry discussion and in-depth study.
Conclusion:
It is worth noting that CZ's proposal is not groundless. With the maturity of privacy protection technologies such as zero-knowledge proofs, it is technically feasible to realize this dark pool DEX. But the question is whether this approach of moving closer to the traditional financial "black box operation" will cause DeFi to gradually lose its most valuable decentralized characteristics, and the industry still needs to find a balance between application innovation and decentralized principles.
In summary, this debate on transparency may profoundly affect the future development direction of DeFi. As the MEV problem becomes increasingly serious, the industry does need innovative solutions, but any changes need to strike a balance between efficiency and principles. As industry insiders say, the evolution of DeFi is always a difficult trek between ideal and reality.
Finally, do you agree with CZ's proposed Dark Pool DEX concept? Do you support protecting traders through technical means, or are you worried that this will violate the decentralized original intention of cryptocurrency? Leave your views and opinions in the comment area!
