Ethereum Community Doubts dYdX’s Decentralized Nature After This Controversy

The Ethereum-based trading protocol dYdX has ended its short-lived campaign today. The decentralized exchange has cited the overwhelming demand for its $25 deposit bonus promotion, as the reason for the immediate closure of this promotional campaign. However, there are different theories that are believed to have compelled dYdX to take this decision.

dYdX faces backlash over its new “liveness check”

Immediately after the launch of the promo on Wednesday, dYdX garnered huge controversy over its facial recognition feature called “liveness check”. As part of this promotional campaign, users were asked to do a “liveness check” through a webcam to verify their identity. However, this didn’t go down well with the Ethereum community and sparked a widespread debate on users’ privacy.

The “liveness check” scan was meant to scan users’ images using a webcam to check if their image has been used to open another account on dYdX. Outraged with this new feature, the community members took to Twitter and other social media platforms to express their opposition to this new method of verifying a user’s identity.

How has dYdX responded to this controversy?

dYdX was quick to respond to this controversy and its team maintained that “the verification of unique users to prevent fraudulent farming of reward fees does not represent a change in dYdX’s ideological conviction about accessibility, transparency, mutability, or censorship.”

On Friday, dYdX affirmed that it does not require users to provide personal information. It added that participation in the promotion is completely optional and requires image verification solely to prevent fraud.
Meanwhile, in the Liveness Checks FAQs, dYdX stated that the feature was not mandatory and any user uncomfortable with completing a liveness check can still use dYdX.

It seems that this controversy has marred the reputation of the platform as users are questioning the decentralized nature of its business. Some users are even considering moving off the platform and selling their dYdX tokens.

DYDX launched the promo on Wednesday awarding new users a $25 bonus on the condition that they make a qualifying deposit of $500 or more into the platform.