DID based DEX

[Vishwas1]

• https://github.com/TBD54566975/tbdex-whitepaper/blob/main/whitepaper.pdf

[Vishwas1]

• tbDEX is a protocol for discovering liquidity and exchanging assets (such as bitcoin, fiat money, or real world goods)
• The tbDEX protocol facilitates decentralized networks of exchange between assets
  • by providing a framework for establishing social trust,
  • utilizing decentralized identity (DID) and verifiable credentials (VCs) to establish the provenance of identity in the real world.

Problem

• gaining access to your first cryptocurrency generally involves going through acentralized exchange.
• Accessing decentralized financial services then requires multiple asset transfers and transaction fees each step of the way. Aside from gatekeepers and cost, the complexity and sheer unintelligibility of this process today is a prohibitive barrier to entry for most.
• . It is still prohibitively difficult for the average person, starting with traditional fiat-based payment instruments, to directly access on-ramps and off-ramps into and out of the decentralized financial system
• The tbDEX protocol is directed at this problem

tDex

The protocol provides a framework for creating on-ramps and off-ramps from systems of fiat to cryptocurrency, without the need for going through centralized exchanges.

• Building on top of Decentralized Identifiers (DID) [2], this specification lays out a trust model in which trust is governed through disparate verifiers of trust;
• his is ultimately in the control of individuals, implementers of cryptocurrency wallets, and/or delegates of trust established by either group.

Actors

1. Issuer: KYC provider
2. Wallet: providers encrypted storage for VCs, PFI discovery by crawling Identity Hubs, Receieving , offering and presenting VCs by taking consent of end users.
3. PFI: Participating Financial Institutions are entities that offer liquidity services. Each PFI will be identified via DIDs and VCs. PFIs can be, but are not limited to, fintech companies, regional banks, large institutional banks, or other financial institutions; PFIs have access to fiat payment systems and the ability to facilitate fiat payments in exchange for tokenized cryptocurrency assets or vice versa.

While PFIs may be subject to varying rules and regulations for fiat currency payments, depending on their specific jurisdiction, they likely need to collect certain personally identifiable information (PII) from the owners of wallets in order to meet regulatory requirements, such as satisfying anti-money laundering (AML) programs, countering terrorist financing, and not violating sanctions.

Protocol