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What’s the deal with Bisq v1 vs v2? Why are there two versions?

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Bisq2 is still in development, Bisq 1 is legacy which I think they keep around because it has a multisig escrow-based trades which isn't implemented in 2 yet.

That's my guess for the main reason. People still use 1 for that, especially for bigger amounts and maybe for the contacts they know by user id, account age etc.

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hasn’t v2 been in development for ages now?

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Indeed. They probably could use more devs

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