CZ Is Right: Web3 Trading Infrastructure Needs a Major Upgrade

A Growing Reality: Web3 Isn’t Built for Big Players

Web3 has evolved. It's no longer just niche traders and hobbyists splashing around. Now, Wall Street funds, corporate treasuries, and large-scale investors are entering the space, bringing billions of dollars in assets and expectations of professionalism and discretion. Yet the trading tools they encounter remain frustratingly basic.

That’s where Binance’s co-founder, Changpeng “CZ” Zhao, comes in. CZ recently suggested the creation of a dark-pool-style decentralized exchange (DEX), and he’s right to point out this glaring gap in infrastructure. Web3 offers transparency, but without tools that protect large trades from public exposure and manipulation, it’s leaving advanced users stranded.

The Hyperliquid Incident: A Wake-Up Call

Take Hyperliquid, for example. There, nearly a $100 million liquidation unfolded in the open, making it easy for bots and trolls to front-run or target the position. It was public, relentless, and damaging.

On a permissionless blockchain, data is always viewable. That’s great for trust but terrible for anyone trying to execute a sophisticated trade. It’s like shouting your trading strategy into a megaphone in a crowded market.

For institutions, that’s a deal-breaker. They need to move huge volumes without triggering chaos or exposing their intentions. And Web3 right now can’t offer that.

Why Institutional Traders Are Holding Back

In legacy finance, dark pools are standard. These private trading venues let large investors swap stocks discreetly without influencing markets. They offer protection from predatory traders and avoid tipping off competitors.

That same need exists in crypto. Right now, institutions are forced to juggle between OTC desks, centralized exchanges, or using multiple aggregators, each costing them efficiency, transparency, or privacy. It’s painful, slow, and often exposes them to slippage or leaked strategies.

And let’s not forget MEV bots that detect incoming transactions and leverage them to profit, often squeezing large orders or disrupting the trader’s plans. It’s not just unfair; it’s unworkable at scale.

CZ’s Dark-Pool DEX: A Privacy-First Design

CZ has proposed a new kind of DEX one that keeps orders hidden until after execution, inspired by dark-pool logic. Privacy tools like zero-knowledge proofs and multiparty computation could make it happen. It's a vision: a platform where big orders execute discreetly, MEV bots are blocked, and traders get real capital efficiency.

But it’s not easy. How do you balance privacy with transparency? Regulators demand some visibility. And there’s risk if a platform is too opaque; it could hide manipulation rather than prevent it.

Still, this idea is a step in the right direction. It's an admission that current systems, though revolutionary in some ways, aren’t sophisticated enough for serious financial players.

Beyond CZ: A Wider Market Demand

Even if CZ never launches this DEX himself, his vision is a signal. It proves there’s a real demand for infrastructure that supports large, confidential trades without relying on centralized intermediaries.

Web3 must offer layers. some protocols remain fully transparent; others may allow discretion. It’s about choice. Not every block or transaction needs to be public, especially if it harms market function or strategic execution.

A Balancing Act: Privacy vs. Integrity

Of course, a fully hidden trading system could attract nefarious activity. Manipulation could become easier if no one can review trades. So regulators, auditors, and governance teams will need to design systems that allow oversight without exposing every transaction.

New fairness rules could mandate post-execution disclosures or require certain audits. Tech and policy need to work hand-in-hand, offering security without erasing transparency entirely.

What This Means for Web3’s Maturity

The real message here is bigger than a product idea. It’s a challenge: Web3 has entered adulthood, and its tools need to reflect that. Institutions won't commit if infrastructure feels amateurish.

A dark-pool DEX is just one area that requires innovation. But once we fix execution access, privacy, and scale, other problems like settlement efficiency, cross-chain integration, and compliance will come into view. We’ll be ready to build the next generation of on-chain finance.

Final Takeaway

CZ put his finger on something critical: for Web3 to mature, it must accommodate everyone, including those who trade in the tens or hundreds of millions. That means private trade execution, protection from MEV, and systems built for scale.

Yes, that challenges some crypto ideals of total transparency. But it doesn’t break them. The goal is better choice, not blind secrecy.

Web3 can and should have both trust and discretion. It’s time we built it.