Changpeng Zhao, the founder and ex-CEO of Binance, proposed on Sunday a new type of decentralised exchange. The hook: it hides trades and market positions from the public.
Zhao’s pitch may fly in the face of DeFi’s embrace of transparency. But his idea came following the $100 million liquidation of the trader known as James Wynn on May 29.
Some traders said the fact his trades were visible onchain may have helped drive down the price of Bitcoin and liquidate his position.
“Given recent events, I think now might be a good time for someone to launch a dark pool perp DEX,” Zhao, who goes by CZ, said on Sunday.
“I have always been puzzled with the fact that everyone can see your orders in real-time on a DEX.”
Dark pools
A “dark pool perp DEX” is a decentralised exchange that allows users to trade with leveraged derivatives while their positions are kept hidden.
This prevents market manipulation by avoiding front-running and maximal extractable value (MEV) attacks.
CZ’s post on X sparked a debate on whether transparency in DeFi is always beneficial to the trader, specifically those trading leveraged derivatives.