Private DEX pool Night Market

Recently returning from the Delphi Cosmos Hackathon, Sunny Aggarwal is impressed with the range of innovative developments in the Osmosis ecosystem he witnessed at the event.

The co-founder of Osmosis, a cross-chain automated market maker on Cosmos, says he is “really happy with the results” and that there’s “a lot of cool stuff being built right now.”

Speaking to Blockworks on the 0xResearch podcast (Spotify/Apple), Aggarwal says one particular application caught his eye.

Although it was difficult to choose only one project demonstrated at the event, Aggarwal says his favorite, dubbed Night Market, showed the most interesting potential.

Among the winners of the hackathon, Night Market is a “private trading pool,” Aggarwal explains, using “ZCash-style” shielding for depositing assets. The app enables users “to engage with protocols through swaps, staking, and [liquidity providers] while safeguarding their identity,” according to an Osmosis tweet.

5/ 🥈 @Aegis_finance (Night Market)

– Night Market is bringing privacy to Osmosis through the use of a secure platform for holding multiple assets privately.

Enabling users to engage with protocols through swaps, staking, and LPs while safeguarding their identity.

— Osmosis 🧪 (@osmosiszone) June 15, 2023

Users can trade from a shielded pool, so “no one will be able to see who’s trading what,” he explains.

“On centralized exchanges today, you can’t see who’s making which trade” but in DeFi, “everyone’s just leaking all of that information and leaking their trading strategies.”

Private trading, Aggarwal says, will be a “game-changer for DeFi.” Without privacy protections, more advanced traders can take advantage of leaked information to extract value at the expense of others.

Blockworks Research analyst Dan Smith says he’s hesitant to buy into fully private decentralized exchange (DEX) tech “because I love seeing which addresses are active, what they’re doing and how funds are flowing through DEXs.”

Aggarwal explains that while individual user trading behavior will be obscured, it is still possible to observe the sum of pool trades and to follow order books.

“People want a visible order book. That’s the point of having an order book,” he says. “You want all of that to be publicly visible.”

“What we’re really trying to hide is who is making what trade,” he says. “We’re trying to get the privacy level to basically match what’s on a centralized exchange.”

The next big challenge, Aggarwal says, is enabling more advanced mechanisms like margin and perpetual trading in a private and decentralized setting. “It gets more complicated when you have to start thinking about liquidations.”

Keeping things simple for now, private spot trading is “definitely something we’ll see live by end of year,” he says.

Adventurous dabblers can try Night Market on the testnet right now, Aggarwal adds. “But hopefully, we’ll have it more productionized and integrated into the Osmosis experience.”

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