A decentralized exchange infrastructure is called 0x. Users can trade cryptocurrency tokens on many blockchains with it, and it looks for the best price on each transaction by comparing exchanges. Its native cryptocurrency, ZRX, is a utility token allowing token holders to vote for proposed projects.
The 0x team has drawn several significant investors, such as NFT marketplace OpenSea and cryptocurrency exchange Coinbase Global, both of which invested in the project in April 2022. In this guide, we will delve deeper into the 0x protocol’s operation.
Is There Anything Unique about 0x?
It integrates into the extensive and expanding network of decentralized cryptocurrency exchanges that underpin the decentralized finance sector. Peer-to-peer cryptocurrency trading is available on several exchanges, most of which use smart contracts to determine pricing. They’re also accessible to anybody. To use them, you must connect a cryptocurrency wallet. No registration or personal data is needed.
There are several decentralized exchanges available, and pricing could differ, which presents a challenge for cryptocurrency traders. It would be hard to manually compare pricing at all of them to make sure you’re getting the greatest bargain.
Thankfully, it takes care of that for you. It’s an aggregator of liquidity that evaluates and contrasts prices across all the main decentralized exchanges. You can enter your intended deal on Matcha’s cryptocurrency trading platform, and Matcha will retrieve the best price on the market.
Anybody can use 0x or its code because it is an open-source project. This covers private users, crypto exchanges, and programmers who may utilize it to create new applications.
Where Did It Originate?
Working on 0x since 2016, Will Warren and Amir Bandeali released their white paper on February 22, 2017. They sold 500 million ZRX tokens, or half of the entire supply, through an initial coin offering (ICO) on August 15, 2017. ICO raised $24 million and sold out in a day.
Since then, the 0x team has grown, but Warren and Bandeali are still involved with the project. Bandeali is the CTO, and Warren serves as the CEO. On June 22, 2020, the team established 0x Labs to develop a strong business on top of 0x.
How Does It Function?
Peer-to-peer cryptocurrency token trading is facilitated via the 0x protocol, a collection of smart contracts intended for trading Ethereum blockchain-based tokens. These could be bundles of various asset kinds, non-fungible tokens (NFTs), or fungible tokens—your typical crypto tokens.
The 0x ecosystem consists of two parties: makers and takers. By offering a crypto asset, the producers create liquidity in the 0x system. The people who consent to the exchange and take liquidity are takers.
The trading procedure operates as follows:
- A maker submits an order specifying what they are willing to exchange and what they desire.
- Counterparties are informed about the order.
- To find the best order price for the taker, 0x searches prices from all its suppliers.
- The taker consents to the command.
- After confirming that the requirements have been met, 0x switches the assets owned by the maker and the taker.
- 0x uses relayers that manage off-chain order books. These relayers manage communication between order books to facilitate transaction completion on 0x.
Establishing Partnerships
The well-liked project 0x has amassed a sizable partner list. Its parent company, 0x Labs, raised $70 million in capital in April 2022 from various backers, including actor Jared Leto, Coinbase, and OpenSea.
Its affiliation with Coinbase is especially significant. Coinbase utilizes 0x’s protocol for its NFT marketplace and invests in 0x. Since Coinbase is one of the leading cryptocurrency exchanges, working with 0x is advantageous for both sides.
Numerous projects utilize the 0x ecosystem, such as NFT games, cryptocurrency wallets, and decentralized exchanges.
Specific Risks
Although 0x offers a valuable service, many more liquidity aggregators are available. With the growing popularity of DeFi, several competing protocols have emerged that provide a similar service; one of the most well-liked of them is 1INCH.
One potential investor’s concern with 0x is the restricted applications of ZRX coins. Right now, ZRX is mainly used as a governance token. On 0x Improvement Proposals (ZEIPs), ZRX token holders can vote, with one ZRX token equal to one vote.
Staking cryptocurrency is a well-liked method for investors to generate passive income. One significant negative is that it isn’t compatible with 0x. And there needs to be a word on when or if it will be returned.
Is It Wise to Invest on It?
If you’re optimistic about DeFi, consider investing in 0x. It’s also an excellent choice if you’re searching for initiatives with more room for expansion than those led by the market giants.
0x is a very helpful tool for investors who use decentralized exchanges. It effectively searches alternatives and is user-friendly, allowing you to receive the best deal possible on your trades. Another significant factor in its favor is the sheer quantity of projects that utilize 0x. Its ecosystem has several well-known entities, such as decentralized and centralized exchanges.
