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 injustices in the cryptocurrency trading environment. Eighteen months later, his company, DoubleZero, claims to have a solution. The primary objective of DoubleZero is to eliminate the proximity to an exchange's servers as a competitive advantage for traders. By utilizing a private fiber network, latency is reduced, creating a more equitable environment for all participants, despite the fact that regulators and traders have not yet demanded 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 when milliseconds determine the outcome of a trade. For instance, traders based in Tokyo enjoy a 200-millisecond advantage over their international counterparts on platforms like Hyperliquid. Federa explained 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 issue is not unique to the crypto industry, as traditional finance has previously faced similar challenges. 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 operating over the public internet, a trader whose order arrives late has no way to distinguish between ordinary network congestion and intentional actions. Federa pointed out that "the counter-factual is really hard to prove." DoubleZero's pitch is that a 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 only lower latency but also predictable latency, which is 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 driver. FINRA, the body 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 authority, but the day-to-day work of maintaining fair markets is done by exchanges themselves. They do this because their business depends on it. Venues that gain a reputation for asymmetric access lose volume to venues 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 demonstrating its ability to build decentralized systems. The next decade will test whether anyone is willing to build distributed ones, where the advantage is not based on the location of a server in Tokyo. As Federa stated, "No one wants to trade on an unfair platform."