Ex-Solana Executive Employs 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 perceived unfairness in the cryptocurrency trading environment. Eighteen months later, his company, DoubleZero, claims to have a solution. DoubleZero aims to remove the proximity to an exchange's servers as a competitive advantage for traders by utilizing a private fiber network that minimizes latency, thereby creating a more equitable environment, despite the fact that regulators and traders are not yet demanding it. The issue, according to Federa, lies in the conflation of decentralized and distributed systems in the crypto space. While 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, giving some traders a millisecond-based edge. For instance, on platforms like Hyperliquid, traders based in Tokyo have a roughly 200-millisecond advantage over their international counterparts. 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 problem is not unique to the crypto space, as traditional finance has already 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, 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, 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 lies not only in speed but also in verifiability. On a venue using the public internet, a trader whose order arrives late has no way to distinguish between ordinary network congestion and intentional interference. 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 competitor in AWS's ap-northeast-1 region, the gap and variance shrink. Traders receive not just lower latency but also predictable latency, a property that high-frequency trading firms are willing to pay for in traditional markets. Federa's broader point is that the crypto space is misinterpreting what makes traditional markets fair. Regulators play a role, but they are not the primary driver. The day-to-day work of maintaining fair markets is done by exchanges themselves, 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 investing in. The next decade will test whether anyone is willing to build distributed systems, 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.'