Binance Founder CZ Proposes DEX to Prevent Front-Running

Binance founder Changpeng “CZ” Zhao proposed a new kind of decentralized exchange on Sunday, one that hides transactions, positions and deposits of the public to protect traders against so-called attacks and liquidation attacks.

“Given recent events, I think it’s a good time for someone to launch a dark Pool Perp Dex,” Zhao written On X. “I am always surprised that everyone can see your orders in a DEX in real time. The problem is worse on a Perp Dex where liquidations are.”

Perp Dexs are Decentralized exchanges that offer Perpetual futures contractsenable users to place very leverage betting on asset prices without end.

“If others can see your liquidation point, they can try to push the market to liquidate you,” he wrote. “Even if you have a billion dollars, others can be with you.”

Zhao noted that although CEX’s user identities hide, Dex’s wallet-linked orders and liquidation points exposes, so that the front of the front and Maximum extremable value (MEV) attacksWhere Bots detect and exploit pending transactions for profit.

“This results in increased slippery, poorer prices and higher costs for you,” he wrote.

To reduce these risks, ZHAO proposed a “dark Pool -style” approach to those transactions and smart contract activity.

Zhao suggested the use of zero-knowledge certificates (ZK) or similar coding to hide activity to later stages of settlement.

“CZ is really on something here. Such a solution must be confidential, non-chain, cross-chain and safe,” said Kadan Stadelmann, CTO of Komodo platform, said Decrypt. “For example, non-cleaning function promotes privacy.”

Zhao’s Post has revived a long -term debate Defi About whether transparency is always favorable, especially for institutional players.

Annu Shekhawat, Global Ecosystem Lead at Bepass, said CZ’s Post “makes a compelling matter for the next limit in Defi infrastructure.”

“Today’s DEXs are too exposed: Real-time order Visibility, wallet-linked order books and predictable liquidation points,” Shekha said Decrypt. “However, that is great for mev -bots, terrible for serious traders.”

Stadelmann said that building the type of Dex Zhao has in mind, would require full decentralization, interoperability of the cross-chain and trustless performance, pointing to “Atomary Swaps” that use “hash-time lock contracts”.

These are smart contract mechanisms with which two parties can only act on block chains if a party offers a specific code within a specified time limit; Otherwise, the transaction is automatically canceled and both parties repair their funds.

Shekhawat said that the first to build such a platform, could set the benchmark for private Defi, and noted that it would “unlock a whole new design space for Defi of institutional quality.”

Zhao, that kicked As Binance CEO in 2023, developers invited to contact him via Reachme.io, a paid message platform that he introduced in March.

He introduced the position To manage the overwhelming message volumeGradually increase the price to filter spam.

Edited by Sebastian Sinclair