On June 2, Binance founder CZ posted on X, saying, "Given the recent events, I believe now might be a good time to launch a dark pool perpetual decentralized exchange (DEX). I have always been confused by the fact that everyone can see your orders in real-time on a DEX. This problem is more severe on a perpetual decentralized trading platform with liquidation. Even in a centralized exchange (CEX) order book, orders are not associated with specific individuals, but if you want to buy a cryptocurrency worth $1 billion, you usually would not want others to notice your order before it is completed. Otherwise, others might buy ahead, essentially front-running. In a DEX, this could lead to MEV attacks. This would increase slippage, worsen prices, and increase your costs. Therefore, large traders in TradFi use dark pools, which are typically 10 times larger than 'lit pools' (i.e., regular order books)."
"For perpetual contracts (or futures), it is even more important not to let others know/see your orders. If others can see your liquidation point, they might try to push the market to liquidate you. Even if you have $1 billion, others might unite against you. This might be what we have recently seen."
"The opposing view I see is that increasing transparency can allow market makers to absorb your large orders. This might be true. I do not want to argue which statement is right or wrong. Different traders might prefer different types of markets. Now might be a good time to launch an on-chain dark pool-style DEX + perpetual contracts, either not displaying the order book, or better yet, completely hiding smart contract deposits, or displaying them much later. This should be achievable through zero-knowledge proofs or similar cryptographic technologies."
