What is 0x (ZRX) project, how does it work and is it a good investment?

What is 0x (ZRX)?

0x (ZRX) is a protocol on the Ethereum blockchain that facilitates seamless peer-to-peer asset exchanges. The team envisions a future where various assets can be tokenized on Ethereum. 

For instance, instead of the traditional complex process involving intermediaries like lawyers and escrow agents when selling a house, 0x offers a solution to tokenize the property and transfer ownership through a smart contract. This eliminates the need for costly intermediaries and speeds up the process, making real estate more liquid.

Anyone can create their own decentralized exchange (DEX) using the 0x Launch Kit and set fees for their services. 0x provides a standard messaging format for exchanges, similar to SWIFT for banks communicating about fiat currency transfers.

The team has also developed the 0x API, which aggregates liquidity across the network, allowing users to swap assets at the best price available.

How does 0x work?

0x enables the decentralized trading of tokens using smart contracts, which are open, free, and can be integrated into any decentralized application (dApp). Smart contracts are self-executing transactions that trigger when specific conditions are fulfilled.

Many decentralized exchanges rely on Ethereum smart contracts for their transactions, but these transactions occur directly on the blockchain. This means that each time an order is placed, modified, cancelled, or filled, a gas fee is required, leading to potentially high costs.

To address this, 0x proposes using an off-chain relay with on-chain settlement. Here, a user submits an order to a relayer, which acts as a network bulletin board. The relayer then broadcasts the order off-chain, allowing any user to fill it by submitting their cryptographic signature to the smart contract.

Additionally, 0x offers point-to-point orders, where a user submits an order that can only be filled by a specified party. In both types of orders, the assets remain under the user's control, and only the value transfer occurs on-chain. This approach significantly reduces both gas fees and network congestion.

Who founded 0x? (History of 0x)

Based in San Francisco, the 0x team comprises 32 core members with diverse backgrounds in finance and engineering. Will Warren and Amir Bandeali, who serve as CEO and CTO respectively, founded the 0x Protocol in 2016.

Will Warren, after completing his degree in Mechanical Engineering at UC San Diego, served as a Technical Advisor for Basic Attention Token (BAT) and achieved first place in the Consensus 2017 Proof-of-Work Pitch Competition.

Amir Bandeali, the co-founder, graduated with a degree in Finance from the University of Illinois and later worked as a trading specialist at Chopper Trading and DRW.

Additionally, 0x has five advisors, including Coinbase co-founder Fred Ehrsam and Pantera Capital co-CIO Joey Krug. The ZRX initial coin offering (ICO) occurred in August 2017, selling out in just 24 hours and raising $24 million USD in a single day.

What makes 0x unique?

0x's off-chain relayer technology enables decentralized exchanges (DEXs) to process transactions much more quickly and cost-effectively compared to exchanges that handle all trades on the blockchain.

However, 0x is not limited to supporting DEXs. Its protocol can also be utilized in over-the-counter (OTC) trading desks, digital marketplaces, portfolio management platforms, and as exchange functionality for decentralized finance (DeFi) products.

Moreover, 0x allows the transfer of a broader range of assets compared to most Ethereum-based decentralized exchanges. It supports both non-fungible tokens (ERC-721) and fungible tokens (ERC-20).

What contributes to the value of 0x?

ZRX is a utility token utilized to compensate relayers for managing an order book with trading fees. The 0x ecosystem experienced significant expansion in 2020, achieving a trading volume of $5.7 billion in January 2021 alone.

Additionally, ZRX holds value as a governance token, allowing all holders to participate in voting on protocol upgrades and developments, potentially increasing demand for the token. With a capped maximum supply, the scarcity of ZRX could impact its price and market capitalization.

What is the circulating supply of 0x (ZRX) tokens?

Currently, 0x (ZRX) has a circulating supply of 847,496,055 tokens out of a total maximum supply of 1,000,000,000 ZRX. During the 2017 ICO, 500 million ZRX tokens, which is 50% of the maximum supply, were sold to investors.

The team set a limit on the amount of ZRX tokens each participant could purchase to promote wider distribution. It was later discovered that the ZRX tokens were distributed among over 13,000 different Ethereum addresses, a crucial factor given ZRX's function as a governance token.

10% of the ZRX tokens were allocated to the founding team, another 10% to early backers and advisors, and the remaining 15% was divided between the 0x core development organization and an external project development fund.

Other technical data

The 0x API boasts impressive statistics, including 99.9% uptime, a 2% revert rate, and a 1.5-second response time. Moreover, it is engineered to provide more favorable adjusted prices compared to Uniswap, 1inch, Paraswap, and Dex Ag in 7 out of 10 instances.

How to use 0x?

Users have the option to trade ZRX tokens directly with a specific individual by sending a 0x order through instant message or email, which executes automatically upon acceptance by the other party. Alternatively, users can explore the marketplace of posted orders and select the one they prefer. All trades are securely and autonomously completed by the 0x Protocol.

The 0x API is capable of being integrated into wallets and decentralized finance (DeFi) applications to offer exchange functionality with competitive prices. Several projects, including Matcha, MetaMask, Zapper, and others, utilize the 0x API.

Market makers, automated market makers (AMMs), and other on-chain decentralized exchange protocols can provide liquidity for the 0x ecosystem through the 0x API. Current AMMs supplying liquidity include Uniswap, Curve, Balancer, and Crypto.com.

Various projects are leveraging the 0x protocol to access existing liquidity directly, with numerous teams already doing so. These projects span exchanges like 1inch, wallets like MetaMask, derivatives products such as Opyn, portfolio management platforms like DeFi Saver, NFT-based projects including Gods Unchained, and investment strategy products like Rari Capital.

How to choose a 0x wallet?

As an ERC-20 token, ZRX can be stored in any Ethereum-supporting wallet, with the choice typically depending on the number of tokens and intended use.

Hardware wallets like Ledger and Trezor offer the most secure storage option, with offline storage and backup. However, they may be more complex and costly, making them better suited for larger amounts of ZRX and experienced users.

Software wallets, available as smartphone or desktop apps, are free and easy to use. They can be custodial (managed by a service provider) or non-custodial (private keys stored on your device). While convenient, they are less secure than hardware wallets and may be more suitable for smaller amounts or novice users.

Online or web wallets are free and accessible from multiple devices via a web browser. They are considered less secure than hardware or software wallets, so choosing a reputable service with a strong security track record is crucial. Online wallets are best for smaller amounts or experienced traders.

Kriptomat offers a secure storage solution for ZRX, allowing easy storage and trading. With enterprise-grade security and user-friendly features, storing ZRX with Kriptomat provides peace of mind.

Buying, selling, or exchanging ZRX can be done quickly and securely on Kriptomat, making it a convenient storage solution for your ZRX coins.

0x staking

In 2019, 0x launched stake-based liquidity incentives to compensate market makers for offering liquidity. Market makers earn protocol fees in proportion to their ZRX stake. Those with inadequate ZRX holdings, as well as other ZRX holders, can also earn rewards by pooling their ZRX tokens in a staking pool for third-party delegators.

Wrapping up

0x is facilitating the emergence of a tokenized economy, enabling the seamless exchange of all forms of value, including traditionally illiquid assets like real estate. Operating on the Ethereum blockchain, the protocol powers frictionless peer-to-peer asset exchange. Anyone can leverage 0x to create a decentralized exchange, while the 0x API aggregates liquidity to facilitate token swaps at optimal rates.

By utilizing off-chain relayers, 0x minimizes congestion on Ethereum, enabling faster and more cost-effective trades. The ZRX token provides governance rights and rewards to relayers, and the introduction of staking enhances network economics.

In 2020, trading volume on 0x surged alongside the rapid expansion of its ecosystem. Over 50 DeFi projects now leverage or integrate with 0x. Despite competition, 0x enjoys a first-mover advantage due to its popularity during the ICO and its pioneering role in decentralized asset exchange.