To start this ARTICLE, I would like to make it clear that this is MY OPINION and it is not a statement against any particular character.
In recent days, with all the madness happening with the whale WYNN, who has been constantly liquidated, an idea that had been cultivated for a long time was hastened: THE CREATION of a DEX broker where we could open BUY and SELL positions 100% anonymously, thus making it impossible for other traders to know the value and who was there.
Although the idea of creating something 100% anonymous in this sense is old, it ONLY GAINED strength after Wynn started being liquidated in all his positions, but before getting into why I don't like the creation of such a DEX (AND IT DOESN'T MATTER WHO IS RESPONSIBLE FOR IT), I'll talk a little about Wynn's situation... let's go;
Naturally, we have understood for a long time that Wynn likes attention, so if he simply didn't keep posting the stamps of his trades, I'm sure it wouldn't make such a fuss; of course, many will still say that other whales could see his order there, etc., etc., etc. IF HE DIDN'T POST, far fewer whales would know or care about it.
If Wynn had been winning in his positions, we wouldn't have so much noise; also in this sense, no one mentions that Wynn's positions were particularly very poor for the size of his positions, and that's why it was really very easy for other whales to liquidate him.
When we have mass liquidations of small investors because the broker wants more profits, or due to irresponsible movements by whales aiming to liquidate the small bringer, THEN WE HAVE NO NOISE 😒😅 how funny that is.
IN LIGHT OF THIS, any DEX where large investors (such as hedge funds, brokers, whales, banks, and institutional investors) execute orders without displaying the size, the price of the orders in the public book, and is 100% anonymous, will only create even more ways for manipulation by a half dozen 'people'.
BEFORE we have any platform that provides such privacy to large traders, I would like to know how we will deal with the lack of TRANSPARENCY; small traders usually depend on the transparency of the order book and the visible volume to make decisions. In a DEX like a Dark Pool, where large orders are hidden from the average trader, they do not have a real view of the actual liquidity or buying/selling pressures.
I WOULD ALSO like to understand regarding unexpected slippage, because when large hidden orders are executed, they can cause sharp price movements that small traders cannot foresee. This can generate excessive slippage, and small traders will end up buying or selling at worse prices, being 'run over' by large orders.
Let's now mention what touches the half dozen the most; the big players have privileged access or more 'optimized' strategies to operate in a dark pool, while the small ones do not have enough tools to protect themselves from any NEW form of manipulation that will be developed with a 100% anonymous platform, and how will we deal with that?
In my opinion, wash trading will be even more practiced, and front-running attacks will be something that small investors will not be able to anticipate.
So, I THINK that for small traders, a DEX like the Dark Pool could be disadvantageous because it removes transparency and exposes them even more to manipulation risks (only increasing for the small trader and decreasing for the large trader).
It's curious that in this idea of the Dark Pool, no one has yet addressed public auditing, transparency in execution rules, or defense mechanisms to protect smaller users; why is that?
Good luck!