Transparency becomes a trap? DEX privacy revolution debate: CZ calls for development of dark pool on-chain perpetual contract exchange

Here's the English translation: Binance founder CZ today posted on X that the overly transparent design of decentralized exchanges (DEX) has triggered a series of market manipulations and user rights violations, especially in the perpetual contract market (Perp DEX). He suggested developing a "dark pool Perp DEX", sparking community discussions about the future possibilities of DEX. In traditional concepts, blockchain transparency symbolizes trust and openness, but CZ points out that this quality has become a double-edged sword on DEX. Since all trading orders are publicly entered into the mempool, malicious bots can monitor in real-time and front-run by executing "front-running trades" and "sandwich attacks", inserting transactions before and after to manipulate prices, causing trades to occur under worse conditions. These behaviors belong to MEV (Maximum Extractable Value) attacks. According to DeFi ecosystem statistics, user funds lost annually amount to millions of dollars. Not only does slippage increase, but overall trading experience and costs are increasingly deteriorating. CZ further emphasized that these issues are more fatal in the perpetual (perp) contract market. Once liquidation prices are detected, market whales might collaborate to push prices to that point, forcing mandatory liquidation. Even with substantial funds, they can't escape being "collectively surrounded". Regarding these structural problems, CZ proposed a disruptive suggestion: "Create a perpetual contract DEX combining 'dark pool' trading logic." Dark pools are widely used in traditional finance for large institutional trades, featuring "non-public orders" that prevent market pre-reaction and price manipulation. Theoretically, dark pool trading volumes are usually several times higher than public order books. CZ suggests the new DEX should adopt zero-knowledge proofs (ZK Proof) or similar encryption technologies to achieve: - Completely non-public order information - Delayed publication of user fund entry records in smart contracts - Proving transaction legality and validity without exposing specific details This approach would protect traders' privacy and security while maintaining decentralization spirit. CZ's post quickly sparked industry and developer responses, with different perspectives on transparency versus privacy in trading.

What's Next? The Challenge of Balancing Privacy and Decentralization

CZ also stated that he does not intend to argue which market mechanism is better, but believes different traders have different needs: "Dark pool-style DEX may provide a new choice." He encourages developers to take action, while not guaranteeing investment or response, but is willing to listen to ideas and provide feedback.

The current crypto market is facing new risks triggered by transparency, and "privacy-oriented decentralization" may become a key trend in future DEX development.