Binance founder Changpeng Zhao (CZ) has called for the creation of a secretive decentralized exchange (DEX) following a high-profile liquidation on Hyperliquid that cost trader James Wynn approximately $100 million.
According to CZ, current DEX models expose traders to coordinated manipulation due to the transparency of the full order book.
The incident on Hyperliquid has raised concerns over how visible liquidation levels and real-time order tracking can be exploited. Traders may have either copied Wynn’s open positions or deliberately acted to push the market against him, triggering massive liquidations.
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CZ noticed that, as all orders and positions appear on-chain, others in the market can unite to force liquidations. He stated that disclosing a firm’s liquidation points to the public is enough to put its reserves at risk, even with large reserves.
Besides criticizing real-time transparency, CZ highlighted the issue of front-running. A larger trader attempting to get in on a trade can be followed by smaller traders using the viewable information.
Given recent events, I think now might be a good time for someone to launch a dark pool perp DEX.
I have always been puzzled with the fact that everyone can see your orders in real-time on a DEX. The problem is worse on a perp DEX where there are liquidations.
Even with a CEX…
— CZ 🔶 BNB (@cz_binance) June 1, 2025
For this reason, order execution is generally poor, and much slippage happens on perpetual DEXs, so knowing the right timing is crucial.
The comparison was made to traditional stock trading, in which huge trades can take place in secret through dark pools. These private trading environments are designed to protect institutional strategies from being exploited by the public.
CZ Supports Zero-Knowledge Tech to Build Private On-Chain Trading Platforms
To address these challenges, CZ proposed building a dark pool-style DEX using zero-knowledge proof technology. This approach could enable private order matching and hidden liquidation thresholds while preserving the security of blockchain networks.
While agreeing that clear order books can help market makers stay safe and supply liquidity, CZ insisted that privacy tools also play a key role in supporting traders. He trusts that decentralized markets should become more secure in their operations for larger deals to happen.
The recent developments in Hyperliquid have made more people want to see changes in DeFi. CZ mentioning encrypted, privacy-focused DEX solutions suggests that some major businesses in the industry are now trying to find other options for trading.
CZ’s reaction to the $100 million loss has sparked a new push for stealth-based DEX platforms. As concerns grow over market manipulation, the demand for privacy in decentralized trading may soon shape the next phase of DeFi development.
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