The decentralized finance (DeFi) trade is witnessing a wave of modifications as Uniswap, a number one decentralized cryptocurrency trade, introduces Know Your Buyer (KYC) hooks within the upcoming V4 replace. This improvement sparked controversy and criticism inside the neighborhood.
In Uniswap V4, hooks had been launched as a dynamic characteristic that allowed customers so as to add fully new pool capabilities. These confer with items of code which can be executed at totally different factors within the life cycle of a sink course of.
These hooks will be described as good contracts totally different from the primary V4 liquidity contract. They can be utilized to dynamically modify prices or create revolutionary order varieties.
Uniswap’s resolution to incorporate KYC hooks within the V4 replace got here as a shock to many. The brand new characteristic permits US-based liquidity swimming pools to particularly request KYC and Whitelist functions from customers who want to be part of the pool. Nevertheless, you will need to observe that Uniswap, as a platform, is not going to implement this requirement for all transactions.
The introduction of KYC hooks has generated blended reactions. Whereas some see this as a disappointing shift towards centralization, others argue that an open and permissionless hook market can co-exist with centralized hooks. They declare that the existence of KYC hooks doesn’t imply that each transaction processed by Uniswap V4 should essentially bear KYC verification.
Equally, AAVE had additionally launched the Aave Arc protocol, which additionally consists of KYC and Anti-Cash Laundering (AML) measures.
*This isn’t funding recommendation.