The Future of Blockchain Transactions: Balancing Transparent Dark Pools and Privacy Protection

In the cryptocurrency space, a discussion about trading transparency and privacy protection is underway. This stems from early desires to end the preferential treatment of large clients by traditional exchanges, but ultimately it was exploited by quantitative trading teams. Today, Blockchain technology offers new possibilities for reconstructing trading mechanisms.

The head of a large trading platform recently discussed the concept of "dark pools", sparking attention within the industry regarding the application of privacy protection technologies in trading. However, his understanding of dark pools seems to differ from the actual applications on the Blockchain.

Taking the recent experience of an investor on the Hyperliquid platform as an example, the reasons for choosing this platform over mainstream centralized exchanges are: no KYC required, funds are not subject to scrutiny, and the transparency of on-chain transactions. However, it is precisely this transparency that allows others to see his positions and liquidation price information.

This raises a contradiction: although there are various technological solutions for on-chain privacy transactions, they have not been widely adopted so far. In contrast, some convenient but problematic solutions are more popular. This reflects that most users value convenience more than privacy protection.

Returning to the concept of dark pools, its essence is not merely to hide trading intentions, but to conceal trading prices, which is closer to the execution process of MEV( (Maximum Extractable Value)). An ideal blockchain dark pool should be an upgraded version of Hyperliquid, built on the solution of the MEV problem, combined with technologies such as zero-knowledge proofs or fully homomorphic encryption.

As Ethereum embraces the Risc-V architecture, the MEV issue may be alleviated to some extent. Risc-V, as an open-source chip instruction set, allows Ethereum to customize its own system, freeing it from reliance on existing commercial hardware and bringing more possibilities for new technology applications.

In terms of implementation in dark pools, it can be considered from three levels: subject anonymity, transaction anonymity, and interaction anonymity. Currently, the combination of zero-knowledge proofs and Trusted Execution Environment ( TEE ) is the mainstream choice. Although Fully Homomorphic Encryption ( FHE ) technology is costly and slow, with the support of Risc-V customized hardware, it is expected to achieve a better privacy protection effect.

Overall, the implementation of transparent dark pools requires substantial financial and technological investment. However, as regulations gradually loosen, market demand becomes clear, and industry leaders pay attention, this concept is likely to become a reality in the future. The blockchain world is exploring how to seek a balance between trading transparency and privacy protection, which will be a challenging yet promising direction for development.