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

Austin Federa, the former head of strategy at the Solana Foundation, left his position in 2024 to address the unfairness he perceived in the crypto trading environment. Eighteen months later, his company, DoubleZero, claims to have a solution. DoubleZero's objective is to remove the proximity to an exchange's servers as a competitive advantage for traders by introducing a private fiber network that minimizes latency. This network is designed to create a more equitable environment, even if regulators and traders are not yet demanding it. According to Federa, the issue lies in the conflation of decentralized and distributed systems in the crypto space. 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, thereby introducing latency issues. For instance, on platforms like Hyperliquid, traders based in Tokyo have a roughly 200-millisecond advantage over their international counterparts. Federa emphasized that while Hyperliquid may be a decentralized system from a governance and user perspective, it is not a distributed system, as it is still co-located in the same environment. This problem is not unique to the crypto space, as traditional finance has already faced similar issues. The New York Stock Exchange, for example, developed its Mahwah, New Jersey data center over a decade ago, implementing cable-length equalization to within a nanosecond to address asymmetric access. 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 main challenge is not just speed, but also verifiability. On a venue running over the public internet, a trader whose order arrives late has no way to distinguish between ordinary network congestion and intentional interference. 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 receive not just lower latency but also predictable latency, which is a property that high-frequency trading firms pay for in traditional markets. Federa's broader point is that crypto is misinterpreting what makes traditional markets fair. Regulators play a role, but they are not the primary driver. Instead, exchanges themselves are responsible for maintaining fair markets, as 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, but rather on the moment a major venue decides that fairness is a competitive advantage worth paying for. The next decade will test whether anyone wants 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.'