Former Solana Executive Utilizes Wall Street Strategy to Promote Fairness in DeFi

Austin Federa, 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 found a solution. DoubleZero aims to eliminate the proximity to an exchange's servers as a competitive advantage for traders by utilizing a private fiber network that removes latency and creates a more equitable environment, despite the fact that regulators and traders are not yet demanding it. According to Federa, the issue stems from 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, resulting in a competitive advantage for those with closer proximity. For instance, traders based in Tokyo enjoy a 200-millisecond edge over their international counterparts on platforms like Hyperliquid. Federa notes that this issue has already been addressed in traditional finance, citing the New York Stock Exchange's development of its Mahwah, New Jersey data center, which implemented cable-length equalization to within a nanosecond to prevent asymmetric access. DoubleZero's solution involves timestamping, which aggregates private bandwidth from operators to route blockchain data over dedicated links and provides venues with tools to timestamp orders across global entry points, reconstructing a fair sequence. The challenge lies not only in speed but also in verifiability, as traders using the public internet have no way to distinguish between ordinary network congestion and deliberate actions. 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, providing traders with not only lower latency but also predictable latency. Federa's argument is that crypto is misinterpreting what makes traditional markets fair, and that regulators are not the primary drivers. Instead, exchanges themselves are responsible for maintaining fairness, as their business depends on it. If a major venue decides that fairness is a competitive advantage worth paying for, DeFi's latency problem may be resolved without waiting for regulators. The next decade will test whether anyone is willing to build distributed systems, where the advantage is not based on server location.