dYdX Has Stopped Promoting After Receiving Much Criticism From The Community
Just one day after the announcement, dYdX ended this incentive program due to the mounting controversy within the community. By doing so, they were able to halt the case from progressing and avoid creating unneeded misunderstandings.
Following the Treasury Department’s ban, the decentralized derivatives exchange recently came under fire for suspending several accounts connected to Tornado Cash. Days later, it reneged on the blocks. On the other hand, the exchange just mentioned that its brief advertising campaign ended on Thursday with an immediate effect due to “overwhelming demand.”
Additionally, dYdX reiterated that the project requires picture verification to prevent fraud and does not request consumers to submit any personal information to participate in the promotion.
This assertion does not signal a change in the platform’s “holistic” decentralized position on censorship, accessibility, or transparency.
dYdX Caused their problem
dYdX has made yet another error, and as a result, it is now the target of ire from the cryptocurrency community.
In order to qualify for a $25 promotional offer, members of the decentralized exchange were asked to verify their identity using a webcam, according to a new promotion that was publicized this week.
Users who make their initial deposit of at least $500 are qualified to receive a $25 bonus, but they must first use a webcam to reveal their faces. On Wednesday, a promotion offering new customers a $25 reward if they made a $500 or higher platform deposit went live.
The team stated it was performing the checks, referred to as “liveness checks” on the dYdX blog, to stop users from taking advantage of the offer more than once. According to the report, it is “very difficult for a dApp to offer promotions without being Sybil-attacked” because Ethereum addresses function as accounts for DeFi apps like dYdX.
Although dYdX clarified that the checks are not required for all exchange users, the choice to implement them as part of the promotion has been met with vehement opposition from the cryptocurrency community.
The only catch was that numerous group members found it annoying to consent to a “Liveness Check” via webcam to verify their identities. It begs the question: Will participants who finished the program on Wednesday earn $25?
Notably, dYdX did not mention the outrage from the community in its most recent tweet but afterward apologized for using face recognition software in an earlier post, saying it was only done to make sure consumers weren’t claiming the bonus on more than one identity.
Adam Cochran, a contributor to Yearn. finance announced that he would be quitting the platform and selling his DYDX tokens until he sees fundamental improvements there, despite previously being a fervent backer of dYdX:
DYDX Reputational Damage
Weeks after receiving criticism for its response to the Treasury Department’s Tornado Cash prohibition, dYdX released an update on “liveness checks.” dYdX said that it had blocked accounts linked to wallets that have interacted with Tornado Cash just days after the US government approved the mixing protocol. Following the suspension, dYdX provided a blog update noting that its compliance provider had highlighted several accounts and that some of them had been unblocked.
Last year, dYdX launched an airdrop as well, but American users of the exchange discovered that they were not eligible to receive any tokens, amounting to six figures for some of the protocol’s more active users. It was widely believed that dYdX did not accept American users out of concern that the SEC would look into the platform. SEC head Gary Gensler has regularly issued warnings over the past year that some crypto tokens may be unregistered securities.
dYdX, a well-known layer two exchange
One of the most exciting Layer 2 derivatives exchanges to debut on Ethereum was dYdX, but it decided to switch to Cosmos in June and install its own blockchain. It was one of several decentralized exchanges that DeFi advocates thought would surpass or “flip” centralized exchanges like FTX and Binance in terms of trading volume, among the likes of Uniswap and Sushi.
But following a string of mistaken actions that led to the rule of crypto’s freedom-focused fans, dYdX now looks determined to ruin itself by going against DeFi’s fundamental principles. Data from CoinGecko shows that during the last 24 hours, dYdX handled roughly $1 billion in daily trading volume, which is still a small amount compared to what its centralized competitors experience daily.