Last week, decentralized trading platform dYdX entered bonus program known to new users of the platform. Traders would have the chance of a USD 25 bonus in USDC with a deposit of USD 500.
The catch: In order to qualify for the bonus, users had to undergo a “liveness check”. For this purpose, their face should be scanned via their own webcam and compared with other face scans. This should prevent double claiming of the bonus.
The platform ended the bonus program after just two days. The official reason: The “overwhelming demand” allegedly brought several thousands of users to the site.
However, the promotion did not go down particularly well with many DeFi advocates. The platform was accused by some on Twitter of intentionally violating the privacy of users. Others even accused dYdX of bribing its users to scan their faces and selling it as a promotion.
The decentralized platform responded to the allegations, citing the fact that the face scan was a voluntary act. “Any user who is uncomfortable doing a liveness check can still use dYdX,” the promotion’s FAQ states.
Nevertheless: A financial motivation for submitting biometric data on a platform must be viewed critically. These actually promise free and unrestricted access.
Are regulators involved?
In addition to invading the privacy of users suspected Founder of DeFi-Watch Chris Blenc that upcoming regulation on DeFi may have played a role. According to Blenc, the platform “bribed users to give up their privacy to please regulators.” Accordingly, the doctorate would have been a means of regulatory compliance. Blenc claims to have seen at least the “testing of any mechanisms” that could become necessary for access to such platforms in the future.
Indeed, the free access and anonymity of DeFi platforms is a thorn in the side of many financial regulators around the world. Therefore, many projects face the prospect of legislators’ intervention when it comes to compliance with money laundering laws or customer identity. At least after the Tornado Cash saga, this is the reality. Whether intentional or not: dYdX sets a dystopian example for the implementation of KYC regulations in DeFi space.
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