What is 0x (ZRX)?
ZRX is the native governance token for the 0x DeFi protocol. 0x acts as a network of decentralized exchanges (DEXs) and a liquidity aggregator for numerous blockchains, including Avalanche, Ethereum, and Polygon. It was built on the Ethereum (ETH) blockchain, and ZRX is an ERC-20 token.
The 0x protocol offers a range of standard DeFi services, including decentralized order books, and facilitates peer-to-peer on-chain transactions. The platform uses off-chain relayers to log transaction order books. 0x is also known for hosting the global liquidity search engine Matcha.
Who Founded 0x?
The 0x crypto protocol was co-founded by Will Warren and Amir Bandeali. Warren is the CEO of 0x who has previously worked on another cryptocurrency project, the Basic Attention Token (BAT). Bandeali was previously a professional trader. He previously acted as the CTO of 0x Labs. From September 2020, Bandeali is the Co-CEO.
The 0x Labs project began in 2016. Its goal was to make the process of trading ERC-20 assets fast, secure, and accessible to all blockchain users. The protocol implements a unique mechanic of logging the orders off-chain to counter some of the scalability and network load issues experienced by the Ethereum blockchain.
In August 2017, the team held an initial coin offering (ICO). During this event, half of all governance tokens were sold. The 0x price value earned during the ICO was estimated to be $24 million. The value can be compared to today's index in the graph above.
The token saw quick growth in the first few days following the ICO. The ZRX price more than doubled from $0.20 to nearly $0.50 by August 19th. 0x has been a volatile asset, with frequent fluctuations. Within the first year of its launch, the cryptocurrency recorded several significant peaks, with the highest 0x price recorded in January 2018 at $2.53.
How Does 0x Work?
The 0x token has a maximum supply of 1,000,000,000 ZRX. The maximum supply cannot be altered. This means that the asset is deflationary and the 0x price is expected to increase in the future as the supply becomes more scarce. 50% of the tokens were purchased by investors during the ICO.
The remaining 0x coins were allocated between the team, earring backers, and the developer fund. These assets are programmed to be slowly released over four years to ensure transparency and fair distribution.
0x was built on the Ethereum blockchain and supports the trading of ERC-20 tokens. There are three key DeFi services provided by 0x:
- 0x API
- 0x Mesh
- Matcha
0x API is the platform’s token swap. It takes data from multiple decentralized exchanges and aggregates liquidity using the queried sources. According to the protocol, this ensures that the traders have access to optimal market prices.
0x Mesh functions as an automatic order book for peer-to-peer token trades. While 0x provides the transaction data and resources, the protocol does not act as a middleman and all transactions are conducted directly between the traders.
Matcha is described as the protocol’s global search engine for liquidity and functions as the protocol’s aggregator. It connects a broad range of decentralized exchanges into an easy-to-navigate network to ensure that the traders have access to the most favorable prices.
The network uses a decentralized system of relayers to facilitate transactions. These relayers are located off-chain to reduce the amount of data recorded on the network. It’s possible to pay for the relayer services using the ZRX price point. The relayer nodes are also rewarded in 0x tokens for their contributions.
All traders on 0x behave as market makers and market takers. Market makers use their digital signatures to set up orders that are secured using hashing. The order is then sent out using relays for market takers to find and select. Once the order is filled out, the network verifies that all conditions are met and the token swap is officially logged.
The orders themselves are not stored on-chain to reduce the data load. Only the settlements are logged on the blockchain, while the transactions are conducted off-chain. It’s possible for a relayer to reject an order if the necessary conditions are not met. In this case, the transaction is not logged on-chain.
The facilitation of off-chain transactions helps improve the network speed. By reducing the amount of data that is registered on the blockchain, 0x can process more transactions without experiencing network congestion. Furthermore, the platform offers lower gas fees. However, the fees are not available at the ZRX price as it’s used for governance.
As of 2022, 0x also supports the sales and trading of ERC-721 non-fungible tokens (NFTs). The decision to add NFT support was made via a governance vote. To facilitate this, the protocol has added several new integrations, including:
- Atomic0 and Cryptodate – NFT marketplaces;
- CherryTrader – NFT swap;
- Reservoir – aggregated NFT liquidity provider.
0x is a decentralized autonomous organization (DAO). This means that any changes to the protocol can only occur if the 0x community agrees on them via a governance vote. The platform uses ZRX as its governance token.
The 0xDAO members can submit their own proposals for protocol changes and participate in the voting process. The voting power that a user has depends on how many tokens they hold. Therefore, the 0x price may affect the ability to hold more or fewer votes during governance decisions.
0x token holders can stake their assets in any of the available staking pools. Depending on the staked 0x price and its duration, users are eligible to earn rewards in ETH. The staked assets are delegated to the market makers while the stakeholders maintain the voting power of these tokens.
