Binance Co-Founder CZ Proposes Dark Pool DEX for Private Crypto Trading

Binance co-founder Changpeng “CZ” Zhao’s recent proposal to create a dark-pool perpetual swap decentralized exchange (DEX) highlights a critical gap in the current Web3 trading infrastructure. This proposal comes at a time when the market is increasingly dominated by institutions and large stakeholders, who require private execution and protection from maximal extractable value (MEV) attacks.

The recent alleged onchain manipulation of Hyperliquid, where a nearly $100-million liquidation was publicly traced and seemingly targeted, underscores the vulnerabilities in the current system. Public blockchains, while providing equal access to data, also expose high-volume traders to front-running, copy-trading, and wallet surveillance. In traditional finance, dark pools were created to avoid these issues, providing a more secure and private trading environment.

The mismatch between the maturity of the crypto market and its infrastructure is evident. Digital assets are now consistently valued in the billion-dollar range, and the user base has expanded to include institutional investors, regulated funds, and corporate treasuries. However, the execution models in crypto, such as over-the-counter desks, aggregators, and peer-to-peer swaps, are outdated and inefficient. These models are not sophisticated enough for institutional investors, who are accustomed to more advanced trading tools.

Moreover, the constant threat of exposure is a significant deterrent for sophisticated players and large institutions. Wallets belonging to founders, funds, and whales are often tracked in real time, making every movement a potential signal to the market. This level of visibility, while appealing to retail traders, is a major concern for those who need to enter and exit positions discreetly.

CZ’s proposal for a DEX with hidden liquidity, where orders are not visible until after execution, is not new to traditional finance but is still missing in crypto. The proposed protocol would use privacy-enhancing technology like zero-knowledge proofs or multiparty computation (MPC) to conceal the mechanics of trades until they’re finalized. This would protect against MEV bots, reduce manipulation, and create a safe space for high-volume trades.

However, full opacity could open the door to undisclosed manipulation, and regulators and some users may push back if dark pool structures reduce market transparency. The challenge will be balancing the need for discretion with the demand for accountability. CZ’s call for a dark pool DEX is not just a reaction to one event; it’s a diagnosis of a systemic need for infrastructure that supports private, large-scale crypto transactions without relying on centralized intermediaries or outdated tools.

As Web3 matures, the assumptions that have guided the industry for the past decade must evolve. The notion that every transaction must be public by default may appeal to ideological purists, but it no longer fits the realities of a growing, capital-intensive industry. If crypto is to attract serious capital, it must provide serious infrastructure. That means execution privacy, intelligent safeguards, and a clear distinction between transparency and exposure. Web3 is finally growing up, and now its tools need to do the same.