Emerging Demand in the Blockchain World: Transparent Dark Pools

The cryptocurrency industry is facing a new demand - transparent dark pools. This concept originates from traditional financial markets, but it has unique significance and application prospects in the Blockchain field.

Around 2008, some developers attempted to put an end to the practice of exchanges providing preferential order information to large clients. However, the trading data display tools they developed were ultimately utilized by quantitative trading teams, and the disparity in information transparency still exists.

Recently, the founder of a well-known trading platform discussed the concept of "dark pools," which has sparked interest in the application of cryptographic technologies such as ZK, MPC, and FHE in this context. However, his understanding of dark pools seems to differ from the actual applications on the Blockchain.

In a recent incident, a large trader chose a certain on-chain trading platform instead of a centralized exchange. This choice reflects the advantages of decentralized platforms: no KYC, no fund scrutiny, and trading occurs on-chain to prevent manipulation. However, the transparency of on-chain trading also makes large orders and liquidation prices easy to observe.

It is worth noting that although privacy transaction technologies have been deeply explored, the mainstream market seems to favor convenience over privacy. The real challenge lies in how to address the MEV (Maximum Extractable Value) problem while protecting privacy.

The concept of dark pools on the Blockchain is closer to an optimized MEV execution process rather than simply hiding trading intentions. The ideal state is to enhance privacy protection while eliminating MEV.

With Ethereum adopting the Risc-V architecture, new possibilities are being opened up. Risc-V, as an open-source chip instruction set, allows Ethereum to customize its own system, freeing it from reliance on existing commercial hardware. This lays the foundation for building more efficient dark pools.

Dark pools can be divided into three levels:主体匿名,交易匿名, and交互匿名. In terms of technical approaches, the combination of ZK and TEE is currently the mainstream choice, while FHE may be the direction for future development, although it still has limitations in terms of cost and speed.

With the gradual relaxation of the regulatory environment and the clear market demand, the emergence of transparent dark pools seems imminent. This technology not only meets the needs of professional traders but may also become a new direction for the evolution of DEX.

We are in an era full of opportunities, at the intersection of technology and demand. Whether transparent dark pools can truly take root in the Blockchain world, we shall wait and see.