Introduction to 0x (ZRX)

0x is an open protocol platform aiming for the decentralization of the exchange market. For that, 0x enables any user or app to set up decentralized trading of Ethereum-based tokens. Amir Bandeali and Will Warren were the founders of 0x, back in October 2016, already believing that all sort of assets (currencies, precious metals, stocks, and so on) would be traded on the blockchain as tokens.

0x also wants to get the exchange off-chain, cutting on exchange fees (gas) and reducing network congestion. Decentralized exchanges (orders, trades) are possible with the use of smart contracts, meaning that the users control they money the whole time, instead of being in the hands of a centralized exchange like Binance or Kucoin.

The decentralized exchanges that exist are safer, but they do have a problem with fees. As everything happens on chain, depositing, withdrawing, and trading costs a gas fee for the miners to process these transactions on the blockchain.

The purpose of 0x is precisely to make decentralized exchanges cheaper, by making orders off-chain. The only thing that would happen on-chain would be the transfer of value. As there is less blockchain activity, there are less fees.

To enable these off-chain transactions 0x introduces the relayer concept. The relayers are responsible for off-chain orders, so they are off-chain order books, doing the role of an exchange with the difference that they cannot perform the trade.

The smart contract on the decentralized exchange fulfills the order and completes the process, but the relayer receives a ZRX payment for the participation in the exchange. Anyone can submit and order, and anyone can fill an order, but orders for specific takers (private orders) are also possible.

Any developer can build exchange dApp using 0x, and the token, ZRX, is used to pay fees. 0x is, therefore, application agnostic as their smart contracts are open source, anyone developer can get that exchange function for their platform with 0x.

This is why we can consider 0x as a plug-in for other dApps, allowing interoperability and a shared infrastructure between dApps. 0x is already in use by District0x, Melonport, Augur, Aragon, Ethfinex, Status, Request Network, and others.

Putting together the best of decentralized and centralized exchanges, 0x offers low-cost operations and smart contracts security, facing the number of hacks centralized exchanges had. The challenges for 0x are the existing competition, namely Kyber, with the difference that they are an on-chain protocol.

Many projects are developing their own decentralized exchanges (Komodo, even Binance has announced it), so 0x has the advantage of being currently operation, but it’s threatened by the appearance of competition.

This is a brief introduction to 0x, but if you want to know more about the coin, what people are saying about it, technical details, jump right in any of the links we present below. They are well worth reading before investing!