Twitter creator and great bitcoin evangelist Jack Dorsey revealed on Friday (27) your payments company Square will launch in the future a decentralized exchange (Dex) focused on bitcoin. The project is being developed through “TBD”, a division of Square focused on the cryptocurrency announced last month, but whose purpose was only made public this week. “We've set TBD's direction: help us build an open platform to create a decentralized exchange for bitcoin,” Dorsey wrote while sharing a Twitter thread from lead executive Mike Brock. Decentralized exchanges are already common in other blockchains, such as Ethereum's Uniswap and Binance Smart Chain's PancakeSwap. On these platforms, there is no company behind them and all negotiations take place directly between network participants, without intermediaries. By not integrating decentralized finance (DeFi) in the same way as other networks that rely on smart contracts, bitcoin is often left out of this medium.
Project leader Mike Brock explained that the creation of DEX was motivated by the fact that in order to obtain bitcoin nowadays, the user is required to interact with centralized custody services from companies such as Coinbase and Cash App, which in their opinion, “they have several problems and are not evenly distributed around the world”.
This is the problem we’re going to solve: make it easy to fund a non-custodial wallet anywhere in the world through a platform to build on- and off-ramps into Bitcoin. You can think about this as a decentralize exchange for fiat.— Mike Brock (@brockm) August 27, 2022
“This is the problem we're going to solve: making it easier to fund a non-custodial portfolio anywhere in the world through a platform to build bitcoin entry and exit ramps. You can think of it as a decentralized exchange for fiat,” he wrote. However, using fiat currency on a decentralized exchange is tricky as these platforms are not connected to traditional financial institutions. Brook recognized the problem and pointed to cost and scalability as the project's main shortcomings: “Lightning Network is solving this with payments. We need a solution for the exchange infrastructure between digital assets, such as stablecoins”. The goal is for the platform to be built using just the bitcoin infrastructure. RSK, an intelligent contract platform protected by the BTC blockchain, was flagged as a possible option, but Brook conceded that bridges from other networks might need to be used to ensure full DEX functionality. Finally, the executive pointed out that the platform will be developed in open source and that it can be used by any wallet. He further clarified that although a division of Square is developing the exchange, there will be no foundation or governance model that will allow the company to exert any control over the platform once it goes live. There is still no date when DEX will be released. In parallel, Square is also developing a hardware portfolio of bitcoin that, like the exchange, is intended to be open source and accessible to all.