The giveaway itself and the verification process were entirely voluntary on the part of customers, but many crypto enthusiasts accused dYdX of interfering with their users' privacy - while the exchange did not collect any other information. The response from the community was so negative that the platform scrapped the campaign just 24 hours later, citing "too much demand" from users.

How to get free cryptocurrency

Verifying the identity of new customers by photo/video with a camera was supposedly a measure to protect dYdX from the influx of bots, who could simply create new accounts, transfer funds and take the free 25 USDC. For the same purpose, the platform did not plan to store the videos and simply compared them to each other.

Note that some platforms choose another way to insure against an influx of bots. For example, some Solana-based NFT token collections sometimes require a user to have at least 0.1 SOL or other amount in their wallet in order to participate in the minting. This can be a key factor in putting a particular address on the so-called whitelist - that is, the list of those who are allowed to mine NFTs. Of course, this isn't ideal protection, because it can be circumvented by creating many addresses and sending coins to them, but still.

Announcement of the dYdX promotional campaign

However, that didn’t convince many critics on Twitter – among them, DeFi Watch platform founder Chris Black left a comment. Here’s his rejoinder.

What dYdX is doing now is simply wrong:
1) They are deliberately misleading users.
2) They know that anyone who shares their face shot is innocent. Fraudsters can still use dYdX. They bribe users with harm to their privacy, just to satisfy regulators.

Scanning with Orb

When asked by Cointelegraph journalists, a dYdX spokesperson did state that customers “are not required to provide personal information” about themselves. Allegedly facial verification is strictly necessary to combat potential fraudsters.

Read also: What's the difference between centralised and decentralised crypto exchanges?

Chris Bleck’s comment above received a response from former dYdX general counsel Mark Boyron. He too confirms that the exchange’s promotional campaign will not lead to a leak of “extra” customer information. Here’s his rejoinder.

Think about that for a second. How could a random vetting of only some users satisfy the regulators? It would be incomplete and ineffective if not combined with other data. Obviously, there is another reason – resilience against the Sibylline attack.

Eye scanning with Orb

As a reminder, dYdX is a decentralised exchange where you don’t have to go through identity verification (KYC) for transactions and deposits/withdrawals. Therefore, this initiative is even stranger.

It is not known if massive criticism was the main reason, but just about 24 hours after the launch, the dYdX campaign came to an end. The following message appeared on the exchange’s official Twitter account.

Due to the extremely high demand for the $25 deposit bonus, we are ending the campaign immediately. Thank you to the thousands of new users who joined dYdX today. We really underestimated the scope of the initiative’s popularity.

Tweet from dYdX about the end of the promotional campaign

It’s worth noting that at the time of the coin giveaway launch, the dYdX team didn’t announce exactly how long the promo campaign was supposed to last. But the community reaction clearly had weight in the exchange’s decision.

One would like to believe that this situation will be a lesson for other platforms that suddenly want to get their users' personal data under any pretext. After all, the decentralisation and encryption industry is not a good place for such actions. And on top of that, such initiatives would probably harm the reputation of the company's developers going forward.

What do you think about it? Share your opinion in our Millionaire Crypto Chat. There we will discuss other important developments related to the decentralization industry.