0x

What is 0x (ZRX)?

0x is an open-source, decentralized exchange infrastructure protocol that allows the exchange of tokenized assets on multiple blockchains.

Put simply, 0x is a set of smart contracts that form a protocol allowing users to exchange blockchain-based assets. This protocol is an open standard, allowing dApp developers to incorporate it into their projects.

Along with these smart contracts, 0x also offers developer tools and open access to a shared liquidity pool. As a result, developers have full freedom to integrate 0x and can do so at the smart contract or application layer.

While 0x began with Ethereum, it now serves several blockchains, including Avalanche, Binance Smart Chain, Celo, Fantom, Optimism, and Polygon.

Who are the Founders of 0x?

Ox, under the stewardship of 0x Labs, was founded in 2017. The company’s co-founders, Will Warren and Amir Bandeali, began working on the protocol in October 2016.

Warren was a technical advisor to the Basic Attention Token team and held several research roles before founding 0x and taking up the role of 0x Labs CEO. The company’s CTO, Bandeali, is an experienced trader and has a BSc in Finance from the University of Illinois.

How Does 0x Work?

The 0x Protocol lies at the very heart of 0x. It is a set of audited smart contracts deployed on multiple EVM (Ethereum Virtual Machine) compatible blockchains. They allow the trading of not just fungible ERC-20 tokens but also ERC-721 non-fungible tokens (NFTs) and ERC-1155 asset bundles.

Within the 0x ecosystem, there are two sides to a trade. These are the makers, or supply side actors, and the takers, who provide the demand.

Makers provide liquidity into the system, and 0x aggregates this liquidity from sources, including on-chain providers such as decentralized exchanges and automated market maker protocols. Off-chain liquidity, such as professional market makers and 0x’s own Open Orderbook network, is also aggregated.

Takers, meanwhile, consume the liquidity provided by 0x’s makers. Takers can include projects like MetaMask, Coinbase, and dYdX. All sorts of projects can be Takers in 0x, from exchanges and wallets to portfolio managers, prediction markets, data portals, and even games that use in-game currencies or items.

The entire process of trading on 0x boils down to six steps:

A Maker creates an 0x order in the form of a JSON object indicating what kind of asset the Maker is committed to trading.

The order is hashed, and the Maker signs the order to cryptographically commit to the order they authored.

The order is shared with counterparties directly or via an open platform such as Orderbook.

0x API aggregates liquidity across all sources to provide Takers with the best possible price. Orders are stored off-chain, and trade settlement occurs on-chain.

The Taker fills the 0x order by submitting the order and amount they will fill it for to the blockchain.

The 0x Protocol’s settlement logic verifies the Maker’s signature and that all trade conditions are satisfied. If so, the assets are atomically swapped between Maker and Taker. If not, the trade is reverted.

What Makes 0x Unique?

0x is an open-source project that allows developers to use it as a module within their product or project. This makes it a vital building block in the advancement of the industry as a whole, saving other developers the resources it would otherwise take to develop bespoke solutions for what is often a critical part of their projects.

Developers can tap into 0x via the 0x API. The 0x API has two major endpoints, referred to as /swap and /orderbook.

The /swap endpoint lets users fetch available quotes across the supply of liquidity. The API aggregates liquidity via on-chain and off-chain sources. Then, it uses smart order routing to split up a transaction across DEX networks to fill orders with the lowest slippage and costs possible.

Meanwhile, the /orderbook endpoint lets applications and users access 0x’s open Orderbook and post public limit orders that are available immediately.

How is the 0x Network Secured?

Since 0x comes in the form of a set of smart contracts, one of the most critical factors is that those same smart contracts work as intended and are bug-free. To this end, 0x open sources these smart contracts while also running extensive tests and audits internally.

The 0x Exchange contract, as the main entry point to the 0x protocol, is also audited externally by Trail of Bits and Consensys Diligence. The Forwarder contract isn’t subject to external audits, but its attack surface is minimized because no approval of user funds is needed.

Even the most perfectly coded smart contracts would come to nothing if the underlying blockchains weren’t secure. For example, 0x operates on a number of blockchains, including Ethereum and two of its layer 2s, Celo, Binance Smart Chain, Avalanche, and Fantom.

Most of these blockchains employ variations of proof-of-stake (PoS), where validators have to bond a certain amount of the blockchain’s coins to the protocol and reap economic rewards for block creation.

What is the Use of ZRX?

ZRX is the native utility token of the 0x protocol, playing a vital role in governance and for staking in liquidity pools and to certain market makers.

Who Controls 0x?

0x is on a path of progressive decentralization, shifting control from its founding core team to the community by holding the ZRX token. This community is called the “0x Community DAO” (Decentralized Autonomous Organization).

Every ZRX token holder can play a role in governance, irrespective of the actual quantity of tokens held. This can come in the form of weighing in on ZeroEx Improvement Proposals (ZEIPs), sharing ideas on how to utilize DAO Treasury Funds, and on-chain voting.

While voting is currently carried out on-chain for core contracts, the protocol is expected to move toward a trustless voting-based deployment process in the 2022-2025 timeframe, with the release pipeline also being community-led.

The DAO treasury was established in the spring of 2021 with seed funding from 0x Labs, but Polygon and Celo have since made contributions.

How Much ZRX is In Circulation?

The ZRX token has a total fixed supply of 1 billion. Out of that, over 840 million ZRX tokens are already in circulation. While full dilution appears to be relatively close, 0x has never publicly disclosed the emission rate for the ZRX token.

In 2017, 0x Labs CEO Will Warren disclosed that early investors and the founding team would collect 10% of each of the total ZRX supply. A further 15% was retained by 0x, with an equal amount going into a developer fund.

The remaining 50% of the ZRX supply was sold off at the project’s 2017 ICO, with a total purchase cap set at $24 million.

How Do You Buy ZRX?

You can buy ZRX from various cryptocurrency exchanges, both centralized and decentralized. Top CEX platforms like Binance, Coinbase, and Kraken allow trading in ZRX, while you have many options for DEX platforms since 0x is available on Ethereum.

How Do You Store ZRX?

You can store ZRX on a crypto exchange if you intend to trade it quickly, but there are several disadvantages. Foremost among these is the fact that you can’t use your ZRX in protocol governance from a CEX account.

However, the disgraced CEO of FTX, Sam Bankman-Fried, also admitted in a Twitter Spaces conversation in December 2022 that the centralized exchange had sold customers crypto coins that didn’t actually exist. While this practice isn’t new since it is commonplace in TradFi, à la naked shorting of stocks by market makers, it is alien to cryptocurrency since it takes a major hack or attack to counterfeit coins on-chain. Therefore, storing crypto assets using your own wallet becomes akin to engaging the Direct Registration System (DRS) for stocks. It protects you by ensuring you have real tokens in a real on-chain address of your own. Best of all, ZRX is an Ethereum-based token, so all you’ll need is an Ethereum-compatible wallet to store your tokens safely. Since they’re in your custody, you can also use them to vote by connecting your wallet to 0x’s governance portal.

0x Energy Consumption

0x is a set of blockchain-based smart contracts and doesn’t run its own blockchain. Instead, it is often compared to “blockchain lego” since it provides a building block that can be used in the development of all kinds of decentralized applications.

While 0x certainly does increase the energy consumed by various blockchains since it results in more transactions, that comes with several caveats. For one, all of these blockchain networks are proof-of-stake and, therefore, very efficient in terms of power use.

Secondly, the plumbing of the traditional finance system that 0x replaces could be argued to consume a lot more energy. This factor stands for itself, even if 0x (and blockchain in general) being able to settle transactions instantly, immutably, and transparently is relegated to the status of the “elephant in the room.”

Is ZRX a Good Investment?

0x has become a staple of the blockchain industry already, despite the usage of its technology being as yet limited to the tip of the proverbial iceberg.

The utility that 0x brings to the blockchain still hasn’t been fully explored, and yet the protocol continues to move forward. Now in its fourth iteration, continuous improvement seems to be the watchword of the 0x team, while continuing to attain a more decentralized form.

This trajectory may well decide the path of the ZRX token. If 0x can continue to build its ecosystem and become a vital cog in the blockchain wheel, then it’s hard to argue against the possibility that investors might pay a premium for a seat at the table.