CZ Proposes New Solutions to Protect Whales from MEV Attacks and Liquidations

In a recent post, CZ proposed creating a permanent swap exchange in a dark pool style, providing institutional-level anonymity to protect large players from MEV bot exploitation, front-running, and liquidation hunting.

The issue of transparency on DEX CZ highlighted a core vulnerability in the current DEX infrastructure—real-time transparency. While this feature promotes openness, it also exposes traders to opportunistic behavior. In the perpetual futures market, where positions and liquidation levels are visible, the risks will increase. "If others can see your liquidation point, they may try to push the market to liquidate you... even if you have a billion dollars," CZ warned, noting that this move may have contributed to recent high-profile liquidations. Unlike centralized exchanges (CEX), where order books are anonymized and buffered by institutional liquidity providers, DEX reveals users' intentions to the entire network. This transparency, while consistent with the nature of DeFi, makes large traders particularly vulnerable. Dark Pool solution CZ's proposal: to build a future DEX that operates as a dark pool, concealing trading intentions and executions from the public eye. This will reflect traditional finance (TradFi), where dark pools are often more than 10 times larger than public "lit" exchanges. The main features of CZ's vision include No order book displayedHidden deposits into smart contractsTrading vision delayedZK (zero-knowledge) or encryption-based security infrastructure This approach will allow whales to trade without impacting the market, minimizing slippage and reducing the likelihood of MEV bots or coordinated liquidation attacks targeting them. Timing and market fit CZ believes that "now might be a good time" for such an innovation, especially when recent events have exposed systemic weaknesses in on-chain trading. He acknowledges opposing views, such as the argument that a transparent order book allows market makers to absorb large trades more efficiently. However, he emphasizes that "different traders may prefer different types of markets." Although CZ has clarified that he is not committed to supporting such a project, he has invited builders who are working on similar ideas to contact him through reachme.io and stated: "There is no guarantee that I will invest or even respond. 🙏 Just an idea on Sunday." As market structure becomes the focus in the next phase of DeFi development, CZ's proposal could spark a new wave of privacy-focused centralized exchange platforms designed for institutional-scale operations.