Decentralized Crypto Exchange dYdX Scraps Promotion Amid 'Liveness Check' Backlash

The exchange wanted to prevent users from farming the promo across multiple accounts, but the promotion also raised questions about decentralization.

AccessTimeIconSep 2, 2022 at 10:32 a.m. UTC
Updated May 11, 2023 at 6:56 p.m. UTC

Popular decentralized exchange dYdX has scrapped a recent $25 deposit promotion after being scrutinized for asking participants to conduct a "liveness check," which identified customers using their webcams.

  • In an announcement on Twitter, dYdX cited "extremely overwhelming demand" as the reason why the promotion was removed.
  • A liveness check scans a user's image and compares it with a database to see if the image has been used by another account.
  • One prominent trader on social media said they will never use dYdX again, and others raised questions about the decentralized nature of dYdX.
  • Trade volume on dYdX has fallen by 35.07% over the past 24 hours, according to Nomics.
  • In 2018, a decentralized exchange called IDEX, which at the time was the most popular following the collapse of EtherDelta, implemented know-your-customer rules in order to comply with sanctions and money laundering laws. The change resulted in a severe drop in activity. The exchange now struggles to reach $10 million in daily volume.
  • San Francisco-based dYdX was founded in 2017 and has since attracted investment from the likes of Paradigm, a16z, Polychain and the now-defunct hedge fund Three Arrows Capital.
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    Oliver Knight

    Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.