dYdX promotion sparks controversy after asking users to verify identity

dYdX promotion sparks controversy after asking users to verify identity

A few days ago, dYdX announced a promotion that offered new users a $25 bonus if they deposited at least $500. However, in order to be eligible for the bonus, the users had to verify their identity via webcam. 

dYdX is the biggest decentralized perpetual exchange at this moment, with a daily volume of $809M in the last 24 hours. It was launched in 2018 and is currently developed by dYdX Foundation, a legal entity headquartered in Switzerland.

As dYdX proclaimed itself a decentralized perpetual exchange, many users weren’t happy about the “liveness check” requirement.

dYdX team quickly came up with a response meant to address their concerns claiming that the verification of the users eligible for this reward is necessary “to prevent fraudulent farming of reward fees.”

Community response

Even though the giveaway was voluntary, important names in the crypto space including Adam Cochran, a partner of Cinneamhain Ventures and a Yearn Finance contributor, stated in a Twitter post that the campaign isn’t aligned with the crypto ethos and that personal data privacy is crucial. 

“In their eyes, your data privacy is a commodity and an acceptable risk if they get growth.”

Chris Blec, the DeFi watch founder, also showed his displeasure about this promotion, claiming that dYdX “is bribing users to allow their faces to be scanned & disguising it as a “promotion”.”

“overwhelming demand”

Only a few days after the promotion was announced, dYdX team chose to end effective immediately the promotion due to “overwhelming demand”.

The team of the project stated that thousands of people participated in the campaign in order to get the bonus and that they underestimated the amount of interest the campaign garnered. 

dYdX has also recently attracted attention after being one of the first DEXes that started to block the accounts that interacted with Tornado Cash after the U.S. treasury sanctioned the virtual currency mixer.

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About the Author
Armando Sebi
Armando Sebi
Armando is a DeFi analyst that started his crypto journey in 2021. He is passionate about cryptocurrencies and the future of decentralized finance.