Former Solana Executive Utilizes Wall Street Strategy to Promote Fairness in DeFi

Austin Federa, the former head of strategy at the Solana Foundation, left his position in 2024 to address the perceived unfairness in the cryptocurrency trading environment. Eighteen months later, his company, DoubleZero, claims to have found a solution. The goal of DoubleZero is to eliminate the proximity to an exchange's servers as a competitive advantage for traders by utilizing a private fiber network, which reduces latency and creates a more equitable environment, even if regulators and traders are not yet demanding it. According to Federa, the issue lies in the fact that the crypto industry often confuses decentralization with distribution. Although DeFi protocols are decentralized due to their open-source code and permissionless validator sets, the laws of physics cause validators to cluster in the same data centers, which can result in advantages for certain traders. For instance, on platforms like Hyperliquid, traders based in Tokyo have a 200-millisecond advantage over their international counterparts. Federa explained in an interview with CoinDesk, 'Hyperliquid may be a decentralized system from a governance and user perspective, but it is not a distributed system. It is still co-located in the same environment, even if it's run by multiple different entities.' This problem has already been encountered in traditional finance. When the New York Stock Exchange developed its Mahwah, New Jersey data center over a decade ago, it implemented cable-length equalization to within a nanosecond, not because regulators required it, but because asymmetric access was detrimental to business. Simply put, traders who felt disadvantaged would route their orders to other platforms. DoubleZero's solution involves timestamping. The network aggregates private bandwidth from operators to route blockchain data over dedicated links, while providing venues with tools to timestamp orders across global entry points and reconstruct a fair sequence, similar to the cable equalization used by the NYSE. The challenge is not only speed but also verifiability. On a venue using the public internet, a trader whose order arrives late has no way to distinguish between ordinary network congestion and something more deliberate. Federa stated, 'Is that true because the public internet drops packets all the time, or is that true because you saw my transaction and said, 'Hey, this guy's pretty good, I don't want to include this block,' The counter-factual is really hard to prove.' DoubleZero's pitch is that a managed network with deterministic latency makes that distinction provable. Physics still applies: A New York trading desk routing through DoubleZero to reach Hyperliquid in Tokyo will not outrun a nearer competitor in AWS's ap-northeast-1 region. However, the gap narrows, and more importantly, the variance shrinks. Traders receive not just lower latency but predictable latency, which is the property high-frequency trading firms actually pay for in traditional markets. Federa's broader point is that crypto is misinterpreting what makes traditional markets fair. Regulators matter, but they're not the primary driver. FINRA, the body that polices most of Wall Street's day-to-day conduct, is technically a voluntary self-regulatory organization. The Securities and Exchange Commission and Commodity Futures Trading Commission serve as backstops with enforcement teeth, but the day-to-day work of keeping markets fair is done by exchanges themselves. They do it because their business depends on it. Venues that get a reputation for asymmetric access lose volume to venues that don't. If he's right, DeFi's latency problem isn't waiting on regulators. It's waiting on the moment a major venue decides fairness is a competitive advantage worth paying for. Crypto has spent a decade proving you can build decentralized systems. The next decade will test whether anyone wants to build distributed ones, where the advantage isn't based on where in Tokyo your server sits. 'No one wants to trade on an unfair platform,' Federa said.