CZ Proposes Privacy Focused Perp DEX to Combat MEV and Front Running

CZ Proposes Privacy-Focused Perp DEX to Combat MEV and Front-Running

Changpeng Zhao (CZ), the founder of Binance, has proposed a new type of decentralized exchange (DEX) that hides user orders and liquidation points, aiming to shield traders from front-running and MEV (Maximal Extractable Value) attacks. The idea, shared on X (formerly Twitter), emphasizes the need for a "dark pool"-style perpetual DEX—a concept where trades are hidden until settlement.

CZ pointed out that most current Perp DEXs allow real-time visibility of all trades and liquidation thresholds, making them vulnerable to bots and arbitrage strategies that disadvantage regular users. This transparency, while aligned with DeFi’s ethos, can inadvertently increase slippage, worsen execution prices, and raise transaction costs.

To solve this, CZ suggests integrating zero-knowledge proofs (ZKPs) or similar cryptographic methods to encrypt trade data and smart contract interactions until finalization. This would allow for greater privacy and protection without compromising decentralization.

Experts echoed support for the idea. Komodo Platform CTO Kadan Stadelmann emphasized that such a system must offer trustless execution, non-custodial operations, and cross-chain compatibility. He highlighted Atomic Swaps using HTLCs (Hashed Timelock Contracts) as a crucial technology to ensure decentralized and secure trade settlement.

Annu Shekawat of Avail described CZ’s idea as a "next-gen DeFi infrastructure prototype," noting that while MEV bots benefit from current systems, serious investors are often harmed. Creating a private DeFi layer could attract institutional capital and redefine market norms.

Since stepping down as Binance CEO in 2023, CZ has continued engaging with the Web3 developer community. He invited developers to reach out via ReachMe.io, a paid messaging platform he launched to manage inbound contact requests more efficiently.