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

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.