0x

0x Protocol (ZRX)

0x is a protocol that facilitates the peer-to-peer exchange of assets on the Ethereum blockchain. It is designed to provide an open standard and common building blocks for any developer who needs exchange functionality. The protocol enables the decentralized exchange of a wide range of Ethereum-based tokens.

History of 0x

0x was founded in 2016 by Will Warren and Amir Bandeali. The project was launched with the goal of creating a decentralized exchange protocol that could serve as a common standard for interoperability among decentralized applications (dApps) on Ethereum. The initial coin offering (ICO) for 0x took place in August 2017, successfully raising $24 million in ETH from investors.

Development milestones

Since its inception, the 0x protocol has undergone significant updates and improvements. The introduction of 0x Protocol v2.0 in 2018 marked a major milestone, introducing new features such as improved order matching and greater flexibility for developers. In December 2019, 0x Protocol v3.0 was released, bringing further enhancements including liquidity aggregation and staking mechanisms to incentivize market makers.

How 0x works

0x functions as a decentralized exchange protocol that operates on the Ethereum blockchain. It utilizes a combination of smart contracts and off-chain order books to enable the trading of Ethereum-based assets.

Off-chain order relay

In the 0x protocol, orders are generated off-chain, which reduces the cost and inefficiency associated with on-chain transactions. Relayers are used to host order books and broadcast orders to the network. This off-chain order relay system allows for a more scalable and efficient trading experience.

Smart contracts

The 0x protocol employs smart contracts to execute trades on the Ethereum blockchain. Once a match is found between buy and sell orders, the smart contract settles the trade on-chain. This ensures that trades are executed in a trustless and secure manner, as the smart contract enforces the terms of the trade without the need for intermediaries.

Token standards

0x supports a range of Ethereum-based token standards including ERC-20 and ERC-721. This flexibility allows users to trade various types of digital assets, from fungible tokens to unique non-fungible tokens (NFTs).

Applications and ecosystem

The 0x protocol serves as a foundational layer for a wide array of decentralized applications and services. Many decentralized exchanges (DEXs) and dApps leverage the 0x protocol to facilitate the trading of tokens.

Relayers

Relayers are a crucial component of the 0x ecosystem. They operate as decentralized exchanges built on top of the 0x protocol, providing liquidity and hosting order books. Notable examples of relayers include Radar Relay and Paradex, which allow users to trade Ethereum-based tokens directly from their wallets.

Staking and governance

In addition to facilitating exchanges, 0x has implemented a staking mechanism to incentivize liquidity providers. By staking the native ZRX token, market makers can earn rewards in return for providing liquidity to the network. Furthermore, ZRX token holders have the ability to participate in protocol governance, allowing them to vote on proposals and influence the future development of the protocol.