Former Solana Executive Tackles DeFi Unfairness with Wall Street-Inspired Solution

Austin Federa, former head of strategy at the Solana Foundation, left his position in 2024 to address the unfairness in the crypto trading environment. Eighteen months later, his company, DoubleZero, claims to have a solution. DoubleZero seeks to eliminate the proximity to exchange 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. The issue, according to Federa, is that the crypto industry 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 when milliseconds determine the outcome of a trade. For example, on platforms like Hyperliquid, traders based in Tokyo have a roughly 200-millisecond advantage over their international counterparts. Federa stated 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 because asymmetric access was detrimental to business, not just because it was required by regulators. Simply put, traders who felt disadvantaged would route their orders elsewhere. 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. 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 ordinary network congestion from something more intentional. Federa said, '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. While 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 - the gap narrows, and more importantly, the variance shrinks. Traders receive not just lower latency but also predictable latency, which is the property high-frequency trading firms actually pay for in traditional markets. Federa's broader point is that crypto misinterprets what makes traditional markets fair. Regulators are important, but they are not the primary drivers. 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 Federa is correct, DeFi's latency problem is not waiting on regulators; it is waiting on the moment a major venue decides fairness is a competitive advantage worth paying for. Crypto has spent a decade proving it can build decentralized systems. The next decade will test whether anyone wants to build distributed ones, where the advantage is not based on the location of a server in Tokyo. 'No one wants to trade on an unfair platform,' Federa said.