SUMMARY

0x is an open-source, permissionless protocol for decentralized exchange of ERC-20 and ERC-721 tokens on the Ethereum Blockchain. With the 0x Protocol in place, token orders can be placed off-chain with only ownership transfer-settlement needing to be relayed to the Ethereum Network. As a layer two protocol, 0x allows significantly cheaper, more secure, and faster token transactions to take place with no middlemen or third party custodians, all while circumventing  fees and security risks associated with traditional exchange mechanisms. The 0x Infrastructure and Relayer Network provides a huge relief for the Ethereum Network. Before 0x, all price adjustments, listings, delistings, and any other modifications to a decentralized exchange (DEX) orderbook required fees and direct contact to the Ethereum network, resulting in serious congestion and slow transaction speeds. With 0x, order books can be altered and maintained off-chain on a continuous basis, resulting in faster and cheaper transactions.

The 0x team is at the epicenter of DEX development with a strong first-mover advantage. The latest success of 0x is highlighted by their Coinbase listing, which serves as a sort of “rubber stamp” within the crypto sphere. CEO and Co-founder Will Warren studied Robotics at University of California, San Diego. He also serves as a Technical Advisor for the BAT(Basic Attention Token) Network. CTO and Co-founder Amir Bandeali has an extensive background in trading and programming. Today, the team is comprised of 40 ¨distributed¨ members with a wide range of accredited backgrounds, with 12 employees in their engineering department according to LinkedIn.  

UTILITY AND INCENTIVE SCHEMES

The 0x token (ZRX) serves as the currency for transaction fees paid to the network. Relayers earn ZRX by hosting order books on their servers and connecting traders to counter-parties. ZRX also has utility as part of the governance structure. Owners of ZRX are able to participate in the governance of the network, with voting power being a function of ZRX holdings. As a truly decentralized network, 0x is governed explicitly by its users and supporters. ZRX plans to facilitate several use cases beyond hosting order books, such as non-fungible tokens, prediction markets, and decentralized loans. For example, ERC-721 is an Ethereum token standard that allows rare, and collectible items to be represented as tradeable, non-fungible, and smart contract enabled tokens. Video game developers who are tokenizing assets in their game can leverage the 0x Protocol to create marketplaces for their respective digital assets, so they can spend their resources on game development. 0x is at the forefront of solving the liquidity issue in decentralized exchanges, offering seamless adoption to individual users and developers alike while supplying an ever-growing pool of ERC-20 and ERC-721 tokens.

Tokenomics

The 0x ICO sold out in 24 hrs and 10 minutes. Currently, ZRX has a circulating supply of 583,934,416 ZRX with a total token cap of 1 billion. The remaining tokens are held by the company. 15% is held as an internal bonus fund, 15% as an external developer fund, and the founders stack contains 10% of the total supply with a vesting period: 2.5%  unlocked every year for 4 years. The initial listing price was ~0.111725 USD. Today, its market cap sits at 150 million USD.

CONSENSUS ALGORITHM & SCALABILITY

Currently, 0x relies on Ethereum´s proof-of-work consensus algorithm as it is an exchange protocol specifically designed to facilitate Ethereum token transfers. However, Relayers on 0x reduce congestion on the Ethereum blockchain by processing order books off-chain, allowing 0x to theoretically function without impediment during times when the Ethereum blockchain is experiencing slow transactions and high fees.  

SENTIMENT ANALYSIS

0x is an open-source protocol with a repository on Github for everyone to see. 0x has a strong community following as well, with 146k followers on Twitter, 1.5k on Discord, and 15.5k on Reddit. At the time of writing, there are several Dapps using or planning to use the 0x Protocol:

Aragon, Auctus, Augur, Balance, bZx, Blocknet, ChronoBank, Coinbase Wallet, CoinGecko, Emoon, Dharma, District0x, dYdX, EasyTrade, Gods Unchained, Hut34 Project, Lendroid, Maker, MelonPort, MyCrypto, OpenANX, Paradigm Protocol, Request Network, Set, Settle Finance

There are also several relayer services that are using or plan to use the 0x Protocol:

Amadeus, Bamboo Relay, Dextroid, ERC dEX, Ethfinex, IDT Exchange, Instex, Lake Project, LedgerDex, MobiDex, OpenRelay, Paradex, Radar Relay, Shark Relay, Starbit, The Ocean, Token Jar, Tokenlon, Weswap

Adoption analysis

0x is experiencing steady adoption growth throughout the Ethereum community. The team is extremely respected by the community, and are well known for their commitment to the Ethereum ecosystem as a whole.

The adoption of 0x depends heavily on the adoption of Ethereum-based tokens. It’s important to note that the 0x Protocol is an experimental technology built on top of another experimental technology (Ethereum). Equally important is the effectiveness and scalability of the platform. Users want low fees and fast transactions. If 0x can compete with traditional centralized exchanges on this front, long-term success is almost a guarantee.

Therefore, on top of developing the protocol itself, adoption depends on a growing numbers of Relayers to accommodate more users. Considering the current rate of technological improvements and growing use cases for ERC-20 and ERC-721 tokens, wide scale adoption of 0x looks very promising.

Current Status and Roadmap

0x has experienced significant growth since its inception and has achieved all the milestones on its original roadmap. The broad scope of the protocol allows it to be adopted and leveraged for multiple purposes, especially as the infrastructure for ERC-20 marketplaces. Daily transaction volume is still low, and ranges anywhere between $100,000 and $10,000,000. The number of trades per day hovers around 300, with the most traded tokens being WETH, DAI and MKR. 

Going into 2019, the core team’s objectives are to bring more liquidity to Relayers, continue to build out data infrastructure, and to grow DeFi (decentralized finance) as a whole by exposing users to the many fascinating projects on Ethereum. Like most cryptocurrency projects, they are also focusing on scalability. 0x will also grow as the use case for non-fungible tokens increases, which will spawn from blockchain-based video games.