Binance Founder CZ Proposes DEX to Prevent Front-Running
Changpeng “CZ” Zhao proposed a new decentralized exchange (DEX) model that conceals trades, positions, and deposits to protect traders from front-running and liquidation attacks. He highlighted the vulnerability of current DEXs, where real-time visibility of orders can lead to market manipulation. Zhao emphasized the risks associated with perpetual DEXs, where liquidation points are exposed, making traders susceptible to coordinated attacks. He suggested a "dark pool-style" approach using zero-knowledge proofs or similar encryption to enhance privacy until settlement. Experts noted that this model must be trustless, non-custodial, and cross-chain to be effective. The proposal has sparked discussions on the balance between transparency and privacy in decentralized finance (DeFi), with potential implications for institutional trading. Zhao invited developers to collaborate on this initiative through his messaging platform, ReachMe.io.
