Twitter and Square co-founder Jack Dorsey came out with a white paper on Friday. It explains the plans and features of tbDEX, which is a decentralized bitcoin exchange of Square. Unlike other similar exchanges, tbDEX will have a trustless model, so it will avoid its governance token. Rather, it will use a message protocol that will allow trust relationships that will not depend on any Federation for control. It will also have several other features that will make it less decentralized compared to a standard DEX. Under this protocol, all participants must have background checks through KYC (know your customer) process. It will help this setup to comply with the regulations prevalent in the region of the user.
Other Information in the White Paper
It calls for deploying blockchain analytics solutions that have been built directly in the DEX. The purpose is to track transactions. This type of forensic blockchain solution can be controversial. Government authorities can check the personal identities of transacting parties by cross-referencing payment IDs with public wallet addresses stored in the KYC database. On the other hand, supporters say that it is a necessary feature to avoid illegal activities on this platform.
The Centralized Features
The tbDEX features can get the support of crypto enthusiasts. The white paper discusses the issue of chargebacks that currently do not exist in most DEX systems. If this feature is implemented, Square will be able to reverse any transaction held through tbDEX, preventing irreversible losses that investors suffer when scams happen on a centralized finance setup. The tbDEX will remove the gap between fiat and bitcoin