Jack Dorsey’s Whitepaper Gets Criticism

Jack Dorsey, Twitter CEO and a tech billionaire in the United States, has been pro-cryptocurrency for a few years and recently announced that Twitter would be looking into decentralized applications.

Dorsey has also been speaking about his new decentralized exchange which has been highly anticipated. This exchange was meant to be the bridge between traditional and crypto accounts and would utilize wallets that fit the desired experience. It was also meant to be the first decentralized exchange that could facilitate both Bitcoin and Ethereum products.

On 19 November, in a Twitter post, Jack Dorsey released the 18-page long whitepaper for the new platform, which led to some very confusing comments – the new exchange was called tbDEX.

Many had speculated this would be one of the first DEX on the chain, however, only mentioned is the subject of using Layer 2 to complete transactions. The first main question that came from the community was about the involvement of Bitcoin, although not much is said in the whitepaper about being on the Bitcoin blockchain.

The next concern was about the term ‘trustless’. Most of the decentralized exchanges, like Uniswap are trustless. There is no need for intermediary involvement and the swap can go without any permission being given.

While the introduction mentions trustless transactions, further in the whitepaper it says, “The tbDEX protocol approaches trust differently than other decentralized exchange protocols in the sense that it does not utilize a trustless model, such as atomic swaps.

This is a big shock for many who want the experience of trading without any roadblocks. The tdDEX whitepaper hints that it will utilize a reputation system but does not clarify what this entails, it rather states that there is no universal system that can be implemented due to varying jurisdictions.

The final question posed in the comments is about the platform’s liquidity. There is no discussion around users providing liquidity to different tokens and pairs, but instead, the liquidity comes from participating financial institutions.

This is worrisome as a token’s liquidity could become zero instantly if a financial institution decides to withdraw. When liquidity is removed, the token becomes non-tradable, essentially creating a very centralized system.

The overall reaction to tbDEX has been mixed. It is unclear whether the feedback given will impact how the platform is run and how popular this exchange will be. If tdDEX struggles to get participating financial institutions, the platform will never run.


Updated: 11/23/2021 — 21:00