Binance co-founder Changpeng “CZ” Zhao has floated the idea of a dark pool perpetual swap decentralized exchange (DEX) to help large traders avoid front-running and targeted liquidations.
In a post on X, Zhao questioned the logic of fully public orderbooks on decentralized platforms:
“I’ve always been puzzled with the fact that everyone can see your orders in real-time on a DEX… The problem is worse on a perp DEX where there are liquidations.”
Zhao’s comments came just days after $100 million worth of long positions on Hyperliquid — allegedly held by a trader known as James Wynn — were wiped out following a sharp drop in Bitcoin, prompting claims that some users coordinated to target the liquidation.
In traditional finance, dark pools are private venues where large trades are executed away from public orderbooks. Zhao said large players in TradFi routinely use dark pools “10 times bigger” than open venues to avoid tipping off the market.
A decentralized version of this model, Zhao suggested, could hide order size, price, and entry points from bots and rival traders, preventing front-running and maximum extractable value (MEV) attacks.
“If you’re looking to purchase $1 billion worth of a coin, you generally wouldn’t want others to notice your order until it’s completed,” Zhao wrote.
Building such a system wouldn’t be simple. Zero-knowledge proofs (ZKPs), multiparty computation, and delayed settlement would likely be needed to ensure trades remain private but still verifiable.
Philipp Zentner, CEO of Li.Fi, pointed to protocols like Renegade and Penumbra as early movers. Renegade encrypts orders using multiparty computation and validates them via ZK proofs. Penumbra uses sealed-bid auctions, revealing only net flows.
Maria Carola, CEO of StealthEX, said the biggest challenge is balancing privacy with verifiability.
“ZK-SNARKs or zk-STARKs can help validate trades without revealing the details,” she said, though adding that regulatory issues could follow.
Zhao argued that public liquidation levels create dangerous dynamics in leveraged markets.
“If others can see your liquidation point, they could try to push the market to liquidate you. Even if you got a billion dollars, others can gang up on you.”
Still, he acknowledged counterpoints: some argue transparency helps market makers absorb large trades without destabilizing prices.
Zhao ended his thread by encouraging developers to build such a platform, saying it could function without a visible orderbook — or even hide deposits into smart contracts until much later.
