a new hook available in an open source directory for hooks Uniswap V4 is generating controversy within the crypto community. The hook allows you to verify that users know your customer (KYC) before they can operate in a pool.
Criticizing the hook, an X user (formerly Twitter) noted That the hook opens up the possibility of regulators whitelisting decentralized financial protocols:
"As I explained in all my posts last year: it starts with the โkyc optionโ for LPs. And then, finally, it moves to a โregulator whitelist approvedโ database hosted off-chain. And then non-kyc are labeled as illegal terrorist money โLaundry. Stop playing with the soy guys.โ
Basically, a hook is a tool that allows developers to customize code without altering the main structure of the program. In Uniswap V4, this hook will allow developers to use KYC verification within the decentralized finance protocol.
Financial institutions use KYC procedures to authenticate customer identities and assess associated risks. A primary objective of KYC is to detect money laundering and terrorist financing activities.
The KYC hook was implemented by a community developer in the Uniswap V4 directory as an opt-in functionality. KYC verification is done using a non-fungible token (NFT). According For another user
"You don't seem to understand how this works. #1 it's lp specific. Some projects may want to operate within the legal boundaries of the jurisdiction. #2 community developers can create hooks. You're trashing something that has done more than anyone for "true definition."
Governments around the world are taking a closer look at DeFi protocols and transactions. Recently, the group of the world's twenty largest economies, the G20, accepted a crypto regulatory roadmap proposed by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) by tightening crypto regulations.
Uniswap V4 introduces customizable hooks and is expected to be available in early 2024, with access limited to governance-approved entities.
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