Ex-Solana Executive Utilizes Wall Street Strategy to Create a Level Playing Field in DeFi

Austin Federa, former head of strategy at the Solana Foundation, left his position in 2024 to address the perceived unfairness in the crypto trading environment. Eighteen months later, his company, DoubleZero, claims to have a solution. The goal of DoubleZero is to remove the proximity to an exchange's servers as a competitive advantage for traders by utilizing a private fiber network, thereby introducing a more equitable environment. However, regulators and traders have yet to demand such a solution. According to Federa, the issue lies in the conflation of decentralized and distributed systems in crypto. Although DeFi protocols are decentralized due to their open-source code and permissionless validator sets, the physical laws governing data transfer cause validators to cluster in the same data centers, thus negating the benefits of decentralization. For instance, on platforms like Hyperliquid, traders based in Tokyo have a roughly 200-millisecond advantage over their international counterparts. Federa notes that Hyperliquid, despite being a decentralized system from a governance and user perspective, is not a distributed system due to its co-location in the same environment. This issue is not unique to crypto, as traditional finance has faced similar challenges. The New York Stock Exchange developed its Mahwah, New Jersey data center over a decade ago, implementing cable-length equalization to within a nanosecond to address asymmetric access, not due to regulatory requirements, but because traders who felt disadvantaged would route their orders elsewhere. DoubleZero's solution involves timestamping, which aggregates private bandwidth from operators to route blockchain data over dedicated links. This allows venues to timestamp orders across global entry points and reconstruct a fair sequence, similar to the cable equalization used by the NYSE. The challenge lies not only in speed but also in verifiability, as a trader whose order arrives late has no way to distinguish between ordinary network congestion and deliberate actions on a venue running over the public internet. DoubleZero's managed network with deterministic latency makes it possible to prove the distinction. While physics still applies, and a New York trading desk routing through DoubleZero to reach Hyperliquid in Tokyo will not outrun a nearer competitor, the gap and variance shrink. Traders benefit from lower and predictable latency, a property that high-frequency trading firms value in traditional markets. Federa's point is that crypto misinterprets what makes traditional markets fair, with regulators playing a lesser role than perceived. Instead, exchanges themselves drive fairness, as their business depends on it. Venues that gain a reputation for asymmetric access lose volume to those that do not. The latency problem in DeFi may not be waiting on regulators but rather on the moment a major venue decides that fairness is a competitive advantage worth investing in. The next decade will test whether anyone wants to build distributed systems, where the advantage is not based on server location. As Federa states, 'No one wants to trade on an unfair platform.'