What Is the Risk of a “Dark Pool” Implementation in DeFi to Mitigate Mempool Front-Running?

A dark pool in DeFi would involve a mechanism where orders are matched privately and only the final executed trade is broadcast to the blockchain. The risk is the re-introduction of centralization and a lack of transparency.

The operator of the dark pool could potentially front-run the orders within the pool, or the pool could be used for illicit activities due to the lack of public scrutiny. This undermines the core decentralized and transparent ethos of DeFi.