Summary
- Changpeng Zhao mentioned a series of recent incidents involving decentralized exchanges (DEX) and raised the need for derivatives DEXs adopting the dark pool model.
- Zhao stated that full order book transparency on DEXs can lead to front-running.
- He explained that the current DEX structure allows for MEV manipulation, increasing transaction costs and liquidation risk.
Changpeng Zhao, founder of Binance, recently pointed out a series of incidents occurring on decentralized exchanges (DEX), emphasizing the need for a dark pool-style derivatives DEX. A dark pool is a private alternative trading system (ATS) where trading information such as order prices and quantities is not disclosed before execution.
On the 1st (local time), Changpeng Zhao stated on his X (formerly Twitter), "Considering recent events, now is a great time to launch a dark pool DEX," adding, "It is problematic that everyone can see all order books on a DEX in real time." He further noted, "The problem is even more severe for derivatives DEXs where liquidations occur."
Specifically, Zhao explained, "Even on centralized exchanges (CEX) where orders are not linked to individuals, measures are taken so others cannot detect a buyer’s order," highlighting, "Otherwise, others may attempt front-running ahead of the buyer."
Currently, Zhao described that DEX mechanisms enable MEV (Maximal Extractable Value) manipulation. He explained, "If MEV manipulation occurs, buyers can face significantly higher transaction costs, and in severe cases, liquidations or forced closures may be intentionally triggered by timing the liquidation."
Uk Jin
wook9629@bloomingbit.ioH3LLO, World! I am Uk Jin.
