TuongVy Le, General Counsel at Veda Labs and host of the DEX in the City podcast, shared her paper titled “Fairness by Design: Verifiable Execution in On-Chain Markets.” Released recently on SSRN, this latest work challenges conventional approaches to securities regulation, arguing that regulators should prioritize outcomes like investor protection and market integrity over clinging to outdated structures.
Regulators don’t regulate technology; they regulate outcomes like investor protection, fairness, and market integrity. But when rules focus on preserving legacy market structures, they risk freezing yesterday’s systems in place, and missing new market designs that may better… pic.twitter.com/blhf4FOEoW
— TuongVy Le (@TuongvyLe12) January 20, 2026
Le’s analysis suggests that on-chain systems could inherently embed fairness, potentially transforming how we ensure equitable trading. Traditional U.S. securities regulation emphasizes “best execution,” a principle requiring brokers to seek the most favorable terms for client orders.
However, enforcing this has proven challenging.
Le highlights structural issues in legacy markets, such as fragmented liquidity pools, where orders are split across multiple venues, leading to inefficiencies.
Conflicted incentives, like payment for order flow—where brokers receive rebates for routing orders to specific exchanges—further complicate matters.
Latency arbitrage, or “speed games,” allows high-frequency traders to exploit tiny time differences for profit, often at the expense of retail investors. These elements make it hard not only to achieve optimal execution but also to verify it retrospectively.
Regulators rely on rules, mandatory disclosures, and after-the-fact audits, but opacity in order routing and handling persists, fostering distrust and potential misconduct.
Le’s paper pivots to on-chain markets, decentralized platforms built on blockchain technology / DLT, as a viable alternative.
Unlike centralized systems, these leverage architectural strengths to integrate fairness directly into the infrastructure.
For instance, smart contracts can enforce execution rules at the protocol level, making processes transparent and auditable in real-time.
Constraints on order inclusion prevent manipulative practices, while embedded incentives align participants’ interests with overall market health.
In some designs, cryptographic proofs enable verifiable outcomes, allowing anyone to confirm that an order was handled fairly without needing external oversight.
Investors gain agency too: they can specify preferences for factors like price, execution speed, atomic settlement (ensuring all parts of a trade succeed or fail together), or privacy, bypassing discretionary broker decisions.
This shift represents a paradigm change.
Rather than treating fairness as a legal mandate enforced post-trade, on-chain designs make it a provable property of the system itself.
Le doesn’t advocate for dismantling regulations or replacing laws with code; instead, she proposes that verifiable mechanisms could augment existing frameworks.
As tokenized equities and on-chain settlement become mainstream, regulators might incorporate these tools to enhance oversight, reducing reliance on costly, reactive enforcement.
The implications are seemingly quite broad.
For fintech innovators and investors, this could mean more robust protections in decentralized finance (DeFi).
Le envisions this as the first in a “Fairness by Design” series, extending the framework to areas like asset custody, information disclosure, and capital raising.
By focusing on blockchain‘s potential to “bake in” accountability, the paper urges a modernization of regulatory thinking.
In an era of increasing on-chain adoption, ignoring these innovations risks perpetuating inefficiencies while missing opportunities for stronger market integrity. Critics might question whether on-chain systems fully address private order flows or complex instruments, but Le’s work sparks a vital dialogue.
