Binance co-founder Changpeng "CZ" Zhao has proposed launching a decentralized perpetual swap exchange with a "dark pool" function. This would avoid market manipulation by keeping large orders hidden from the public until they are fulfilled.
Zhao contends that transparent order books on decentralized exchanges (DEXs) leave them vulnerable to front-running and maximum extractable value (MEV) assaults. Dark pools, which are widely utilized in traditional finance, could address this issue by concealing order details.
Implementing decentralized dark pools needs advanced technology such as zero-knowledge proofs. However, this strategy poses regulatory issues. Furthermore, opacity may mask manipulation attempts, necessitating effective risk management and accountability procedures.
Despite the hurdles, Zhao believes this strategy could benefit major traders who want to execute massive orders without tipping off the market. As the crypto sector evolves, creative solutions such as decentralized dark pools may develop to satisfy the derivatives market's specific needs and hazards.
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