- dYdX is launching a $ 25 promotional offer for users who have deposited at least $ 500 on the exchange on their first transaction, but must complete webcam checks to receive the bonus.
- The cryptocurrency community rejected the “vitality checks”, but dYdX defended its decision.
- It is just the latest of the project’s many major mistakes.
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The decentralized derivatives exchange was recently targeted for blocking some accounts linked to Tornado Cash following the Treasury Department ban. He reneged on the blocks days later.
dYdX scores the own goal
dYdX has made yet another mistake–and as a result it is facing the wrath of the crypto community.
The decentralized exchange advertised a new promotion this week, asking users to confirm their identity with a webcam in order to qualify for a $ 25 promotional offer. Users who deposit at least $ 500 on their first transaction can receive a bonus of $ 25. $ 25, but they have to show their face with a webcam first.
Described as “viability checks” on the dYdX blog, the team said they were conducting the checks to prevent people from taking advantage of the offer multiple times. The post explained that since Ethereum addresses serve as accounts for DeFi apps such as dYdX, “it’s quite difficult for a dApp to offer promotions without being attacked by Sybil.” He added that he decided that the webcam controls “offered the best UX for our users to indicate that they are, in fact, a person without revealing their full identity.”
Although dYdX noted that checks are not mandatory for all users of the exchange, the decision to run them as part of the promotion has received overwhelming rejection from the cryptocurrency community.
Twitter user LeftsideEmiri highlighted the update in a tweet on Wednesday, asking “but is dydx smoking?” The post was widely shared, leading many to criticize the project. “Regardless of the cause, this is an absolutely horrible idea and you should go back immediately, “wrote Cinneamhain Ventures partner Adam Cochran after dYdX replied to the post.” There is absolutely no acceptable reason to collect biometric data from users. . You better abandon the incentive program altogether. ” DYdX team member Corey Miller responded to Cochran to defend the decision. “Honest question: What other ways are there to run sybil resistant campaigns natively on web3 (which actually has good UX)?” he has written. Another user passing by R89 described upgrade as “crazy shit”. The popular merchant Clark added “DYDX just shot himself. I would never use this platform ”.
The “integrity checks” update comes weeks after dYdX faced criticism for its response to the Treasury Department’s Tornado Cash ban. A few days after the US government sanctioned the mixing protocol, dYdX confirmed that it had blocked accounts linked to wallets that had interacted with Tornado Cash. dYdX posted a blog update after the ban, confirming that its compliance provider had reported some accounts and some had been unblocked.
dYdX also ran an airdrop last year, but US users of the exchange found they were barred from receiving tokens, which amounted to six digits for some of the protocol’s most active users. It has been widely speculated that dYdX excluded Americans for fear that the SEC would investigate the platform. Over the past year, SEC President Gary Gensler has repeatedly warned that some crypto tokens could constitute unregistered securities.
dYdX was one of the most promising Layer 2 derivatives exchanges to launch on Ethereum, but opted to roll out its own blockchain on Cosmos in June. Along with the likes of Uniswap and Sushi, it was one of several decentralized exchanges that DeFi enthusiasts hoped could outperform or “flip” centralized exchanges like FTX and Binance in trading volume. But after a string of own goals that have ended up irritating freedom-focused cryptocurrency aficionados, dYdX seems bent on destroying itself with bad decisions that betray DeFi’s core values. According to CoinGecko, dYdX has managed around $ 1 billion in daily trading volume in the past 24 hours, which is still only a fraction of what its centralized counterparts see every day.
Information on cryptocurrencies contacted dYdX for comment, but had not received a response at press time.
Disclosure: At the time of writing, the author of this piece owned DYDX, ETH, and many other cryptocurrencies.