0x

0x is an open protocol facilitating peer to peer exchange of ERC20 compatible assets. 0x uses off-chain order books to reduce friction costs for market makers and ensure that the blockchain is only used for trade settlement. “Relayers” are incentivized to host and maintain these off-chain order books by charging transaction fees on trading activity, while using 0x to execute trades programmatically directly within smart contract code. 0x has a protocol token (ZRX) that is used by market participants to pay transaction fees to Relayers, as well as for decentralized governance. Participants will be able to stake ZRX and vote on updates to improve and replace its smart contracts over time. 0x was founded in 2016 in San Francisco by a globally distributed team.

Overview

0x is an open protocol for decentralized exchange on the Ethereum blockchain. Acting as a base level protocol upon which developers can build decentralized applications, 0x represents an attempt to improve upon today’s fragmented landscape of proprietary and application-specific smart contract implementations that may currently limit the ability for decentralized exchanges to realize the full potential impact of network effects. In its simplest form, the 0x protocol is a hybrid implementation that utilizes off-chain order relay with on-chain settlement. This approach reduces friction costs for market makers as they are able to signal intent off-chain and transact on-chain only when value is being transferred.

Transactions can be executed point-to-point or through Relayer-maintained order books. The point-to-point schema allows two parties to exchange tokens directly using their preferred medium of communication and without the need for an order book. This bilateral approach allows the maker (the trader that is adding liquidity) to specify a specific taker (the trader that is removing liquidity) that renders the order useless to outside parties (a more detailed explanation can be found here). To foster a liquid market, 0x has modified the order process to allow for broadcast orders, introduced a Relayer-maintained order book construct, and added a fee layer to the point-to-point mechanism. Specifically, the taker address parameter has been eliminated, which allows orders to be filled by anyone who ‘intercepts’ the order.

0x protocol tokens are primarily used to pay Relayer fees. However, the token is also used to effectuate decentralized governance. The decentralized update mechanism allows for the continuous integration of protocol improvements without disrupting end users.