Square has been doing a lot in the crypto space, and now it’s time for their own DEX. The company has shared a white paper with the title “a decentralized exchange for Bitcoin.” And this suggests that Square’s decentralized exchange is coming soon. If this happens, it is going to be an instant hit because of the association with Jack Dorsey, the CEO of Twitter and Square.
What else do we know?
Square hasn’t talked much about the exchange, and whatever information we have is from the whitepaper. The same has design principles and other details which explain a protocol that discovers liquidity and helps exchange assets for fiat and other assets. Square has named the protocol tbDEX, which makes use of decentralized identity, verifiable credentials to establish social trust. Only this will then enable users to exchange assets on the platform.
Another great thing will be the fact that it won’t need any kind of centralized support like intermediaries or trust brokers. Square also believes that the platform will make crypto-assets and DeFi more accessible to everyone. Since it will be coming from a large and trusted company, a lot of users might be inclined to use a DEX for the first time.
How does the model work?
For centralized exchanges, we have verification models like KYC or Digital Identity verification. So, in the case of decentralized exchanges, we have something similar as well. The tbDEX protocol that Square is planning to use will not be a complete trustless model like most other DEX’s. It will be very difficult to implement this as anywhere a fiat is involved, there is regulation involved. So, the company has to figure out a way how to evaluate or govern trust in the system to filter out any wrong activities.
The current whitepaper is just a draft that gives us an idea of what Square is planning. The authors clearly mention in the whitepaper itself that this isn’t complete. There is a lot of questions right now, which the future versions will answer.
What are your thoughts on Square’s decentralized exchange that’s launching soon? And do you think that this could move a lot of users from CEX’s to DEX’s? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.