“Given the recent events, I think it’s going to be a good time for someone to throw a permanently distributed exchange in a dark pool,” these were the words of Changpen Zhao, the old CEO of Binance.
According to CZ, dark pools that generate “hidden” purchase orders solve the problem Front Running Or the advantages in cryptocurrency transactions or derivatives. This benefit occurs when you notify us in public accounting. Traders make purchase or sale decisions with the express purpose of passing on othersthis is particularly sensitive in the enduring trade of the future.
It has always been intriguing to see your orders in real time in DEX (distributed exchange). This issue is even greater in DEX to trade permanent contracts with liquidation,” CZ said.
Even if you have a centralized exchange (CEX) order whose order is not linked to a particular person, if you are trying to buy $1 billion worth of currency, you usually don’t want others to notice it until it’s finished. Otherwise they could have tried to buy before you in anticipation. In the case of DEX, this can cause an attack of Maximum Removable Value (MEV). This will be converted to something bigger Slippage (slip), it’s a bad price and expensive.
CZ, former CEO of Binance.
Explaining the words of Changpeng Zhao
Permanent contracts are financial derivatives that have no expiration dates, allowing assets to be exchanged for leverage. They maintain open positions indefinitely with adjustable finance rates. In these markets, trader margins fall below the minimum requirements will result in the well-known liquidation and forced closure of the position.
This process is affected by the slides (Slippage), this is the difference between the expected price of an order and the real price of the execution. Slides are caused by lack of liquidity or sudden changes in the market.
With all orders published, large traders can predict movements and adjust their position. Deterioration of final prices for other users. This is something CZ blames. This is a fact that is exacerbated by the maximum removable value (MEV) practice. This is caused by the maximum removable value (MEV) that occurs when relocating or inserting transactions into blocks to maximize profits at the expense of other participants.
Most permanent contracts do not directly execute transactions. On-chainYes collateral for these positions. This gives way to MEV practice.
“It’s even more important to prevent others from knowing or seeing your orders. When others see the points they have been settled, they can push the market and try to liquidate you. Even if there’s a billion dollars, others can attack you in groups. This is something we’ve seen recently.”
In this context, CZ warns how extreme transparency of DEX can expose resistance to resistance; We propose “dark pool” as a solution. This already exists in the traditional world of finance. And even with Ethereum defi.
Dark Pool: An Unpopular Solution Already Existing
This could be a good opportunity for someone to throw a dark pool of dark pools into the DEX+ perpetual contract chain. This should be possible with similar ZK or encryption.
CZ, former CEO of Binance.
Dark pool is a sensitive market exchange market generally for institutional investors. The purpose of a dark pool is for the participants to operate without revealing details. Price, position size, liquidation price, the rest of the market, etc.
CZ recommends using Zero Knowledge Encryption (ZK Proof) to create these dark pools and prevent public information from leading to benefits. As reported by Cryptonotics, such solutions already exist on the Ethereum Network. This is Renegade, a market that runs on the second Arbitr-Layer network.
Rebellion implements the use of zero knowledge technology Therefore, it is not possible for validators to know the details of the operation, It promotes anonymity in trading on decentralized platforms.
The implementation of dark pools in decentralized finances is not exempt from controversy or contradictions. The foundation of a decentralized fiscal philosophy is the demand and promotion of total transparency. Transactions with encrypted information attempt to this principle. That is the opinion of advocates of some of the public nature of accounting in cryptocurrency networks.
“I understand why people hate liquidation. Front Running. That’s annoying, there’s no discussion. But CZ: A dark pool of cryptocurrency? That’s exactly what we came to avoid. As soon as you hide your order book, the insider game will be recreated (…). Do you need decentralization? good. Leave it open. Transparency is confusing, but at least everyone is playing in the same land. A user of Social Network X said:
(tagstotranslate) Exchange Houses (Exchange) (T) Investment (T) Futures Market (T) Personality (T) Price and Related Transactions (T)
