What seemed like an innocent promotion campaign might have cost the crypto exchange greatly.
Decentralized derivative crypto exchange dYdX has halted its liveness check after facing heavy criticism from the crypto community after it launched the new function that basically requires users’ images in order to qualify for a $25 new user bonus.
The decentralized trading platform announced earlier this week that all new users get a $25 bonus on all deposits over $500. According to the FAQs section on the dYdX website, the liveness check prevents users from creating multiple accounts, thereby effectively countering any user with the intention of taking advantage of the offer.
Crypto users have called out the exchange, expressing suspicion, and some have vowed to stop using the platform even though dYdX subsequently cleared the air, pointing out that the process was not mandatory and doesn’t in any way affect other functions.
The platform also explained that Sybil-attacks are rife with dApps offering promotions.
“…it is quite difficult for a dApp to offer promotions without being Sybil-attacked. After reviewing many solutions in the market, we determined that liveness checks offered the best UX for our users to indicate that they are, indeed, one person without revealing their full identity.” noted dYdX
The decentralized exchange called the promotion an experiment in another section of its FAQs, saying it is a test to see if people will want a deposit bonus. According to the platform, users’ images obtained from the liveness check through their webcam will be stored on an external server.
It has since halted these checks after massive disapproval across crypto communities. However, the platform says it scrapped the offer due to “excessive demand.” One Twitter user in the crypto community had this to say,
“I hope to see meaningful change in DyDx, but in the meantime, I’ve got to vote with my wallet. It’s their choice what path to take, and if it’s this one, that’s fine-it’s just not for me and I will always be loud about things that harm user privacy.”
Founded by ex-Coinbase employee Antonio Juliano and headquartered in Zug, Switzerland, dYdX offers up to 10x leverage and runs on smart contracts on the Ethereum blockchain.
Image Credit: Shutterstock
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