Shadow

Shadow Protocol is a privacy-preserving copy trading platform for DeFi that solves MEV exploitation and centralized data custody. Traditional on-chain copy trading exposes every trade to MEV bots who front-run and extract value, while centralized alternatives like eToro require custody and store trader data in vulnerable databases. Shadow executes all trades off-chain in Yellow Network state channels with instant finality, zero gas fees, and complete invisibility to the blockchain. When a leader executes a trade, copiers automatically receive proportional positions in their own isolated channels with no mempool exposure and zero MEV risk. Trader profiles live in ENS text records storing metrics like win rate, ROI, and achievements, making them censorship-resistant and verifiable on-chain rather than in hackable databases. Leaders and copiers each maintain private bilateral channels with market makers where nobody can see others' balances or positions. Settlements only occur when closing positions, aggregating everything into single transactions.

Shadow integrates Yellow Network'sDK, where each trader gets a bilateral state channel via EIP-712 authentication and trades execute off-chain. All trader profiles are stored in ENS text records like winrate, trading.roi, and trading.achievements using viem/wagmi to fetch data directly from the ENS registry on-chain. Smart contracts written in Solidity were deployed to Sepolia testnet, including ShadowRegistry for registration management and ShadowFeeManager for performance fee distribution.