THORSwap Token Swaps Return, But at What Cost?

THORSwap will re-open token swaps after finalizing surveillance capabilities contrary to DeFi principles.

Thorswap back on a lookout.
Created by Kornelija Poderskytė from DailyCoin
  • THORSwap is close to relaunching token swaps.
  • The function relaunch will incorporate surveillance capabilities to curb illicit transactions. 
  • Some community members have panned the move. 

Decentralized finance (DeFi) promised to revolutionize finance by enabling access to financial services without the approval of an intermediary. However, the DeFi dream is turning sour as authorities continue to push for censorship and monitoring, as happened on October 6 when officials turned their attention to THORSwap. 

At the request of authorities, THORSwap paused token swaps over the flow of illicit funds into the platform. This triggered a backlash from loyal users who accused the exchange of abandoning core decentralization principles. Despite the community pushback, THORSwap is set to double down by adding surveillance capabilities when it relaunches its token swaps.

THORSwap Beefs Up Compliance

On October 10, THORSwap announced that it is close to finalizing “a final component” of development work that would enable the relaunching of token swaps. THORSwap apologized for the downtime, reassuring its users that the team is working flat out to deliver the changes that “will permit us” to reopen swaps.

Hours following the initial announcement, THORSwap revealed that the development work involved integrating elements from an unnamed chain analysis firm to “provide address screening” capabilities. 

The community feedback on the changes generated a mixed response. On the one hand, some users reacted positively to the development, particularly the rapid response in addressing the issue. However, others accused THORSwap of folding under pressure from authorities.

Community Pushback

Chiming in on the matter, freedom advocate Chris Blec stated that “THORSwap has capitulated” under pressure, which will undoubtedly spell trouble for the other protocols on the THORChain network. 

Addressing thoughts on alternative responses by THORSwap, Blec added that shutting down is the only choice for “principled players” who subscribe to decentralized ideals, given a choice between closure and compliance with “tyrannical and immoral laws.”

Similarly, Coder MagooPhD joined in with the condemnation, blasting THORSwap by sarcastically pointing out the contradiction of a decentralized exchange working alongside a centralized surveillance firm.

On the Flipside

  • The net is closing on permissionless censorship-resistant transactions, detracting from cryptocurrency’s value proposition. 
  • THORSwap did not reveal the enforcement process following the flagging of an address/transaction, leaving users in limbo over what they signed up for.

Why This Matters

The THORSwap incident exemplifies the growing pains of an industry still finding its footing. Individuals have a right to transact without censorship and surveillance, but authorities are also responsible for preventing illicit activities. This raises important questions about the future of DeFi and its ability to deliver on its promise of financial freedom.

Learn more about THORSwap pausing token swaps here:
THORSwap Slams Emergency Brake as Regulators Come Knocking

Bitcoin remains on target for a post-halving boom. Read more here:
Bitcoin Still on Track for Halving Price Boom

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Samuel Wan

Samuel Wan is a finance professional turned crypto journalist, known for his insightful reporting on market trends, regulatory changes, and technological developments within the digital asset industry. His ability to simplify complex concepts and report the facts has made him a trusted source in the crypto community. Beyond his writing, Samuel is an active mountain biker and gamer.