Former Solana Executive Seeks to Revolutionize DeFi with a Novel Approach

Austin Federa, the ex-head of strategy at the Solana Foundation, abandoned his post in 2024 to combat the perceived injustices in the cryptocurrency trading landscape. Eighteen months later, his brainchild, DoubleZero, claims to have found a solution. The company's mission is to eradicate the proximity of an exchange's servers as a competitive edge for traders by utilizing a private fiber network that minimizes latency. This network aims to provide a more level playing field, despite the fact that neither regulators nor traders are clamoring for it yet. According to Federa, the issue lies in the fact that the cryptocurrency industry mistakenly equates decentralization with distribution. Although DeFi protocols are decentralized due to their open-source code and permissionless validator sets, the laws of physics dictate that validators cluster in the same data centers when milliseconds determine the outcome of a trade. For instance, on platforms like Hyperliquid, traders based in Tokyo enjoy a 200-millisecond advantage over their international counterparts. Federa noted 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." Traditional finance has already encountered this problem. The New York Stock Exchange developed its Mahwah, New Jersey data center over a decade ago and 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 elsewhere. DoubleZero's solution involves timestamping. The network aggregates private bandwidth from operators to route blockchain data over dedicated links, while 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 something more deliberate. Federa stated, "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. Physics still applies: A New York trading desk using DoubleZero to reach Hyperliquid in Tokyo will not outrun a competitor in AWS's ap-northeast-1 region. However, the gap narrows, and more importantly, the variance shrinks. Traders receive not just lower latency but predictable latency, which is the property high-frequency trading firms actually pay for in traditional markets. Federa's broader point is that the cryptocurrency industry is misinterpreting what makes traditional markets fair. Regulators matter, 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 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 paying for. The cryptocurrency industry has spent a decade proving that 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. As Federa said, "No one wants to trade on an unfair platform."