What is 0x?

0x is an open-source, decentralised blockchain intended to create a tokenised world in which all values may flow freely. The protocol enables the creation of decentralised exchanges (DEXs) and allows users to trade different Ethereum-based tokens and share liquidity using a trustless exchange via common smart contracts over a shared infrastructure. It can be combined with other protocols to improve decentralised applications.

Its technology combines two strategies—state channels and Automated Market Makers (AMMs). State channels take transactions offline, thereby reducing costs that are incurred if the transactions take place on Ethereum’s network, while AMMs introduce a third party to facilitate trades if the price of a crypto asset reaches a certain threshold.

The blockchain’s token, ZRX, is used for governance, where holders have influence on governance proposals (proportional to their holdings), giving them the authority to provide input as to how the protocol should be developed over time. 0x has capped the ZRX supply at 1 billion tokens.

A brief history of 0x

Will Warren and Amir Bandeali established 0x in late 2016. Warren, the platform's co-CEO, and Bandeali, formerly the company’s CTO but now also co-CEO, continue to service the platform. It was launched after a successful initial coin offering (ICO) in 2017, during which it raised a total of $US24 million with backing from prominent investment firms, including Polychain Capital, Pantera Capital, and FBG Capital.

The ZRX token, like many other digital assets, has a defined maximum supply that will never be exceeded. It is limited to 1 billion ZRX. Unlike many protocols, 0x has never publicly explained the emission rate for new ZRX tokens. Half of the total ZRX token supply was sold to investors in the 2017 ICO; 15% each was reserved for the 0x core development organisation and external project development fund, while 10% was reserved for the founding team; the remaining 10% was retained for early backers and advisors. Currently, over three-quarters of the maximum supply is in circulation, with just a small fraction reserved for staking rewards.

0x has also produced a number of services, including 0x Instant, which offers a simple crypto purchasing experience for any application or website. The 0x Launch Kit includes everything needed to get started with an exchange or marketplace.

How 0x works

0x is a permissionless protocol that facilitates trading of Ethereum-based tokens including ERC-20 and ERC-721, using relayers to manage order books through off-chain messaging. Relayers utilise the 0x protocol to construct a DEX and host off-blockchain order books, which enables the system to find the best possible price for each trading pair. It integrates liquidity throughout the whole market as part of this approach. Although they do not directly own assets, relayers are compensated for their help, and they can set their own fees for their services.

Using its sophisticated application programming interface (API), the 0x protocol scans all available DEXs — such as Kyber, Uniswap, MakerDAO's Oasis — and users may acquire prices through these off-chain DEX networks, giving consumers a smooth trading experience. 0x uses bridge contracts to access the liquidity pools of both on-chain DEX networks.

In version 3, 0x introduced a new staking mechanism that allows market makers to participate in governance and earn ETH rewards for providing liquidity to the network. ZRX holders can also earn rewards by delegating their tokens to market-making pools.

The network also offers the 0x Launch Kit as part of its effort to ease DEX launches. This over-the-counter (OTC) service is a peer-to-peer (P2P) exchange protocol for DeFi tokens. It contributes to the security of these transactions with a direct connection between both parties. Transactions are settled on the blockchain through the off-chain messaging service, with faster processing and reduced costs.

What is 0x used for?

The ZRX coin has two main functions within the 0x protocol — governance and payments. The coin is used to pay trading fees to relayers for their book-making services and also allows for owners to have influence over the protocol in proportion to their holdings.

The network accommodates both fungible and non-fungible tokens (NFTs), which are used to represent specific assets, from automobiles to real estate to Avatars in a video game.