Shorting would always happen off chain. As it usually does in the crypto world. So people who want leveraged trades would always do them on exchanges, who can t

Shorting would always happen off chain. As it usually does in the crypto world. So people who want leveraged trades would always do them on exchanges, who can then do the exact same thing as regular exchanges. Basically you can't force everyone to do transactions on chain. The benefit you mentioned only exists if everyone is on chain.