Over the past few days, the crypto community has been voicing concerns about the alleged arrival of KYC on Uniswap (UNI). Is this really on the agenda, and what is fuelling these rumours?
Is KYC really coming to Uniswap?
With regulation gaining momentum across the globe, identity verification across the entire decentralized finance (DeFi) ecosystem is a topic of growing concern to users. Indeed, such a prospect would remove a great deal of substance from the concept of decentralization.
It is in this climate that a new extension enabling Know Your Customer verification on Uniswap (UNI) V4 has begun to stir the community. Over the past few days, posts have been appearing on X, claiming that KYC would soon arrive on the famous decentralized exchange (DEX):
KYC is coming to Uniswap. pic.twitter.com/OOiIjzVh5y
– Chris Blec (@ChrisBlec) October 13, 2023
To understand these concerns, we first need to go back to how Uniswap V4 works. This evolution of the protocol does indeed offer “Hooks”, a kind of extension that allows liquidity pools to be customized as desired.
As these Hooks can be created by the community, it didn’t take long for a developer to propose a KYC module :
Hook enabling KYC on Uniswap
As the screenshot above shows, this extension is not offered by Uniswap, but by an independent developer.
Nevertheless, the facts are there and KYC would therefore be technically possible on DEX, although it’s important to point out that Uniswap’s development teams are not behind it and it would be wrong to claim otherwise.
Be that as it may, KYC in DeFi is a real subject, with legitimate debates to be held.
For the time being, the idea of generalized KYC on Uniswap is not on the agenda. Indeed, the strength of Hooks is that they can be deployed only on certain predefined pools, which then leaves the choice to users.
