0x (ZRX) is a decentralized, open-source protocol that facilitates the trustless exchange of Ethereum assets that use the ERC20 token standard. It is the first open protocol for exchange on the Ethereum blockchain, and it is seeking to end the “exchange industry’s rent seeking oligopoly.”
0x’s founders believe the rapid creation of decentralized applications (dApps) on the Ethereum blockchain has caused a lack of best practices. The blockchain is filled with smart contracts of varying quality and security. Smart contracts that have the same functionality can have wildly different configurations and learning curves, which puts unnecessary strain on the network. 0x, which stands for “zero exchange,” solves this problem by providing standardized building blocks for the trustless, low-friction exchange of Ethereum-based assets.
Developers called “relayers” can use the protocol to build exchange applications that relay trade orders of tokenized digital assets and goods off-chain, but settle them on-chain, significantly reducing gas costs and eliminating blockchain bloat. A pre-alpha version of the protocol was released in the final quarter of 2016 for testing, and the project went live on August 15, 2017 after the crowdsale of its native token, ZRX.
0x Pricing, Market Cap and Volume
ZRX has a fixed volume of one billion tokens. It can’t be mined and there is no continuous issuance model. It was launched without a pre-sale and is distributed as follows:
- 50% of the available supply was sold during the token launch.
- 15% is retained by the 0x core development team to cover operational costs for the next five years.
- 15% is in the developer fund and will be used to pay for development projects, hackathon prizes, strategic partnerships, and community development activities.
- 10% has been allocated to the founding team and will vest over a traditional four-year vesting schedule.
- 10% went to early backers and advisors who provided resources, capital, and guidance that allowed the 0x team to build a fully functional product before the token launch.
*100% of all funds raised during the launch will be used to pay for the development of software, tools, and infrastructure that support the 0x protocol and its surrounding ecosystem.
The value of ZRX has remained surprisingly high for a crypto asset that has almost 500 million tokens in circulation. It started at around $0.11 USD and managed to reach over $1 USD in January 2018 with a market capitalization of more than $1 billion USD. ZRX shows a lot of promise for a digital asset with such a high volume.
0x’s Protocol Token Functions
Paying trading fees – 0x is open source and free to use, but relayers are allowed to charge fees for hosting and maintaining off-chain order books. Users who make trade orders must use ZRX to pay relayer transaction fees.
Decentralized governance – ZRX will give holders the power to vote on the development of the 0x protocol once a governance structure is implemented.
How 0x Works
0x supports all digital assets on the Ethereum blockchain that use the ERC20 token standard. The developers believe almost all the digital assets and goods on the Ethereum blockchain will be tokenized in the near future, so 0x wants to improve decentralized exchanges by making them less expensive, faster, liquid, and inter-operable. It addresses the inefficiencies of individual, centralized exchanges by providing a standard API that can apply to all orders relayed off the blockchain.
In addition to facilitating the trustless exchange of Ethereum assets, 0x can also be used as the infrastructure for a variety of user-facing applications. It introduces a process called “token abstraction” to hide the way smart contracts interact with dApp tokens and the blockchain. This gives app builders the ability to let their users conduct transactions in other cryptocurrencies that use the protocol without exiting their apps, like how the Facebook Messenger lets users hire an Uber without exiting the app.
A good example of a user application that utilizes the protocol is the 0x Portal, a free tool built on top of 0x that allows users to buy and sell Ethereum-based tokens on a purely peer-to-peer basis without using a relayer.
0x (ZRX) vs. Other Cryptocurrencies
As a protocol that enables the exchange of digital assets on Ethereum, 0x has a unique feature set. A few features unique to 0x which make it stand out from toher cryptos include:
Trustless exchange – Users can utilize the 0x protocol to build trustless exchanges on the Ethereum blockchain that are decentralized and have no single point of failure. Every order is settled off-chain and without counterparty risk.
Shared liquidity – Relayers share a standard API and can easily aggregate liquidity pools. The liquidity of assets on an exchange will compound as more relayers use the protocol.
Open source and free – The 0x protocol is open source and free to use. Users can pay a relayer ZRX to gain access to their liquidity pool or trade directly with another party for free using the 0x Portal.
Building block for dApps – App builders can plug the 0x protocol into decentralized apps and smart contracts that require exchange functionality.
Buying, Selling and Storing 0x
ZRX can be acquired from various relayers which are decntralized in nature. These include IDT Exchange, ERC dExchange, Paradex, Ethfinex, OpenRelay, Radar Relay, Dextroid, Amadeus, The 0cean, Decent Ex, and DDEX.
It can also be traded on Binance (ZRX/ETH), Poloniex (ZRX/ETH), Huobi (ZRX/BTC), HitBTC (ZRX/BTC/USD/ETH), Liqui (ZRX/BTC/ETH) and Gate.io (ZRX/ETH/USDT). Since ZRX is an Ethereum-based token, it can be stored in wallets that support ERC20 tokens, such as MyEtherWallet, Mist, and MetaMask. ZRX can also be stored on hardware wallets like Ledger Nano S and Trezor.
Liquidity of 0x
0x received investment funding from many notable names in the crypto industry such as Blockchain Capital, Polychain Capital, Pantera Capital, and the Chinese investment firms FBG Capital and Jen Advisors. Early investors and advisors also include: Joey Krug, co-founder of Augur; Fred Ehrsam, co-founder of Coinbase; and Linda Xie, a product manager at Coinbase.
Having so many well-known investors support the project helped 0x make a big splash right from the start. There is a lot of trading activity involving ZRX on major exchanges, which means the tokens have good market liquidity.