0x is an open protocol that allows the use of a platform which involves Ethereum smart contracts enabling individuals to run a decentralized exchange. 0x is designed to offer a form of decentralized exchange as a part of the Ethereum blockchain.
Interestingly, the optimistic team behind this ingenious project are a great believer of the future with the projection that holders would require a trustworthy and efficient way to exchange tokens from Ethereum in thousands. In a nutshell, 0x is developed to be distinct from a centralized exchange and different from the decentralized system, yet sharing favourable features with both.
No Invention without an Inventor
No innovation without an inventor; in this case, we have two co-founders namely Wall Warren and Bandeali as the CEO and CTO respectively. No surprise both of them are prominent enthusiasts and active players in the smart contract research and development sector. After the CEO was done studying mechanical engineering at UC San Diego, he proceeded to conduct applied physics research at the Los Alamos National Laboratory. While the CTO, after studying finance at the University of Illinois, Urbana-Champaign, was a fixed income trader with DRW. Other experts of various specialization such as blockchain engineers, software engineers, graphic and product designers, end-to-end business strategists, and people with different skills can be found on the team
The advisors for this initiative work at conglomerates like Polychain Capital, Coinbase, and Pantera Capital. Notably, the 0x project is being funded by Fintech Blockchain Group, Pantera, Polychain Capital, Jen Advisors, and Blockchain Capital, showing a diverse range of interests.
What’s the Goal of 0x?
In 2016 when the co-founders were designing the 0x project, they were optimistic that with the likelihood of asset representation as part of Ethereum blockchain. With so much tokenization, there will be thousands of tokens, as assets would have everything from digital game items to stocks, gold and fiat currencies. These token users would be in desperate need of a trustless exchange. These visionary co-founders, after an assessment of the development of decentralized exchanges, saw a dire need for improvement. With the emergence of the 0x project, the hope of addressing the inefficiencies of the crypto exchanges is rekindled.
Centralized and Decentralized Exchanges
The centralized crypto exchanges are not so rare in the crypto sector. A centralized exchange, which is usually run by a single entity, in turn, offers a point of failure, as users deposit their funds with the exchange directly, this then makes the trading platform responsible for connecting the buying and selling orders in real time; a practical example of this is Coinbase. It is important to point out that the hacking or front-running conducted by the administrator which are usual occurrences are thorns in the flesh of centralized exchanges. Centralized exchanges also appear to have high-performance trading, advanced tools and are simple to use.
On the other hand, the decentralized exchanges were primarily developed to resolve susceptibility to theft issues as the exchange let users serve as custodians for their funds, in this case, users rely on digital signatures to directly authorize trading orders as opposed to sending their funds to a wallet controlled by an entity. It should not come as a surprise that the centralized exchanges are relatively faster than the decentralized ones which are usually slower.
Does 0x Improve on Decentralized Exchanges?
The question of whether or not the 0x Project improves the decentralized exchanges can be answered in the affirmative, as its differences are notable. The fact that most people rightly consider decentralized exchanges as expensive, slow, illiquid, and can’t be operated with each other are the issues 0x came to address. Customarily to operate an order book on the blockchain, each adjustment or new order goes through the blockchain, impliedly stating that everything is held to block times. As a result, network transaction fees is required at every interaction.
The 0x project has also addressed both issues through the development of a standard protocol with enabled application to all orders relayed off the blockchain. With the development of this protocol, instead of orders going back on the blockchain at every transaction, the orders go back on the blockchain when they are settled. Consequent upon this, the process is not only quickened but unbecoming transaction fees are eliminated.
0x OTC, a consumer-facing product that uses the 0x protocol was also built in addition to the 0x protocol; this would enable the exchange of Ethereum tokens between peers without necessarily requiring a relayer on the condition that they connect with counterparty directly. The usage is also as simple as sending a link to the counterparty to generate and send the order. The fact that the orders are sent via the blockchain would mean that various options are open to users to post their order, whether email, social media or any other desired mechanism.
What Are 0x (ZRX) Tokens?
The 0x Ethereum token, known as ZRX is another fascinating aspect of the 0x project, the tokens are basically used to pay relayers’ trading fees by users. Essentially, this token is a decentralized form of governance for the 0x protocol’s upgrade system. The advantage of being a holder of these tokens is that those who own ZRX have input in the protocol and improvements to make that is proportional to the amount held.
On August 15 last year, the 0x token was launched with a fixed supply of one billion ZRX. Have of the quantity were released during the launch while 0x retained about 15 percent as equal percent went to developer fund. Also, the founding team got 10 percent and the advisors, and early backers got 10 percent as well. The tokens that were bought at the launch were liquid immediately, but those tokens allocated to founders, advisors as well as staff members are expected to be released over the course of four years.
On a Conclusive Note
On a conclusive note, we can say that 0x is practically a feasible step for decentralized crypto exchanges but in a way, 0x has come to address a lot of irregularities associated with trade platforms. The fast growth of 0x is not debatable, owing to its versatility and the easy availability of the protocol. The quickened growth would further provide the basis for other similar exchange systems with the instrumentality of the Ethereum blockchain. As at press time, ZRX is trading at $0.916. 0x (ZRX) is now available in the regular Coinbase app and is the 6th digital token to be listed on Coinbase.