Changpeng Zhao, famously known as CZ, has proposed the creation of a dark pool-styled decentralized exchange (DEX) for perpetual futures trading. With so much transparency in DEXs, CZ’s believes that such a DEX would help promote privacy for perps traders who often fall victim to front-running and liquidations induced by other whales. 

In fact, CZ’s proposal could have stemmed from the huge losses experienced by James Wynn, a high-leverage crypto trader on Hyperliquid. Due to his high-leverage trades, Wynn has even been nicknamed the ‘Hyperliquid 40x whale.’ Wynn recently lost $100 million in trades in just a week. 

CZ’s Vision for Privacy in Decentralized Perps Trading

Changpeng Zhao shared his dark-pool style DEX proposal on X (formerly Twitter) on June 1, 2025. The former CEO of Binance pointed out that current decentralized exchanges have a significant flaw. CZ argued that the transparency of order books exposes traders to front-running and liquidation risks.

“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,” CZ noted.

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

In his elaboration, CZ explained that if a trader attempts to execute a large order, such as a $1 billion crypto buy, others can detect the move and exploit it by buying ahead. This pushes the $1 billion trader into a loss as the front-running behavior increases costs and leads to slippage. For perpetual futures trading, the risk is even more as other traders try to trigger targeted liquidation via market manipulation. 

The proposal by Changpeng Zhao thus suggests using dark pool technologies in combination with sophisticated encryption methods such as Zero-Knowledge Proofs (ZK), to hide the details of perps trading activities. With this system in place, traders doing large or risky trades can have more privacy and secure their trades. 

Wynn’s $100M Liquidation Inspires CZ’s Dark Pool DEX Idea

As reported by Arkham Intelligence on May 30, the Hyperliquid 40x whale James Wynn lost $100 million after his high-leverage positions were liquidated. Wynn reportedly flipped $4 million into $100 million, only to lose it all and end up with a $13 million deficit.

Wynn’s liquidation point was likely visible to other traders, enabling them to capitalize on his positions. Notably, Lookonchain data revealed that a trader identified as 0x2258 repeatedly shorted when Wynn bought, and vice versa, earning $17 million while Wynn suffered staggering losses.

The winning strategy lately? Do the opposite of James Wynn.

0x2258 has been counter-trading James Wynn—shorting when James Wynn goes long, and going long when James Wynn shorts.

In the past week, 0x2258 has made ~$17M, while James Wynn has lost ~$98M.https://t.co/NhOE1YD4QN pic.twitter.com/aO13boYza2

— Lookonchain (@lookonchain) May 30, 2025

Many in the community believe this high-profile example underscores the need for more private trading solutions, like the dark pool DEX proposed by CZ. The idea has received notable support from crypto traders. Notably, crypto trader EnHeng456 agreed with CZ’s proposed dark-pool style DEX. 

“We haven’t really seen a project that combines dark pool mechanisms with perpetual contracts yet. That’s actually a very promising direction,” he shared. 

Combining dark pools with perps could be a promising development ushering in a new era of decentralized finance (DeFi). Some crypto enthusiasts even speculate that the project could eventually launch on the BNB Chain.