Jack Dorsey, co-founder and CEO of Square and Twitter, published a white paper on Friday detailing plans for Square’s decentralized Bitcoin (BTC) exchange, tbDEX. Unlike most decentralized exchanges, or DEXs, tbDEX will not use a trustless model, and therefore will not have its own governance token. Rather, it is a message protocol designed to facilitate trust relationships without relying on a federation to control access.
tbDEX also claims to include many features that make it much less decentralized than one of the DEXs already on the market. To get started, The protocol requires all participants to go through a Know Your Customer, or KYC, process to comply with relevant regulations depending on the user’s region. Once the KYC is approved is when users can connect their wallets to the exchange and exchange tokens with each other.
Besides, andThe document called for the deployment of blockchain analytical solutions, either incorporated into the DEX or through a third party, to track transactions on the platform. This class of blockchain forensic solutions is a potentially controversial topic. Such a system would likely allow authorities to cross-check payment IDs and public wallet addresses with KYC information to reveal the personal identities behind the transaction parties. However, its supporters claim that these means of control are necessary to prevent illicit activities.
But the centralized features of tbDEX could also win the support of cryptocurrency enthusiasts. One distinctive aspect discussed in the white paper is that of chargebacks, which does not exist in most current DEXs. If implemented, Square’s ability to reverse transactions on tbDEX could potentially stop the irreversible losses suffered by investors in decentralized finance rug pull scams. Square is currently open to comments on the white paper on a newly created Twitter account.
We made a white paper. https://t.co/ffvYGjQQ7T
– TBD (@ TBD54566975) November 19, 2021
We did a white paper.
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