Former Solana Executive Tackles DeFi's Latency Issue with Wall Street-Inspired Solution

After leaving his position as head of strategy at the Solana Foundation in 2024, Austin Federa set out to address the unfairness he perceived in the crypto trading landscape. Eighteen months later, his company, DoubleZero, claims to have a solution. The goal of DoubleZero is to eliminate the competitive advantage that traders gain from being physically closer to an exchange's servers. By utilizing a private fiber network, the company aims to create a more level playing field for traders, regardless of their location, despite the fact that 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. While DeFi protocols are decentralized due to their open-source nature and permissionless validator sets, the need for speed pushes validators to cluster in the same data centers, effectively undermining the decentralized aspect. For instance, on platforms like Hyperliquid, traders based in Tokyo have a roughly 200-millisecond advantage over their international counterparts. Federa pointed out in an interview with CoinDesk that '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 is not unique to the crypto space, as traditional finance has already encountered it. 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, 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. However, the challenge extends beyond speed to verifiability. On a venue using the public internet, a trader whose order arrives late has no way to distinguish between ordinary network congestion and intentional interference. As Federa explained, '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 this distinction provable. While physics still applies - a New York trading desk using DoubleZero to reach Hyperliquid in Tokyo will not outrun a competitor in a closer region - the gap narrows, and more importantly, the variance shrinks. Traders gain not just lower latency but also predictable latency, a property that high-frequency trading firms are willing to pay for in traditional markets. Federa's broader argument is that the crypto industry is misinterpreting what makes traditional markets fair. Regulators play a role, but they are not the primary drivers. FINRA, the organization responsible for policing 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 capabilities, but the day-to-day work of maintaining fair markets is done by the exchanges themselves. They do this because their business depends on it - venues that gain a reputation for asymmetric access lose volume to those that do not. If Federa is correct, DeFi's latency problem is not waiting on regulators; it is waiting for the moment a major venue decides that fairness is a competitive advantage worth investing in. The crypto industry has spent a decade proving that decentralized systems can be built. The next decade will test whether anyone is willing to build distributed systems, where the advantage is not based on the location of a server. As Federa stated, 'No one wants to trade on an unfair platform.'