0x is a decentralized exchanging platform that features off-chain ordering books with on-chain settlements/transactions on the Ethereum network.
The 0x exchange is a collection of ordering books that 0x users establish themselves. With 0x, anyone can set up an exchange node by running the 0x protocol and opening up an ordering book on the node.
As its website says, “0x is an open, permissionless protocol allowing for ERC20 tokens to be traded on the Ethereum blockchain” and will be used for “powering decentralized exchange.”
How does 0x work?
Most decentralized exchanges function using smart contracts powered by the Ethereum blockchain. This means that all order functions and trades take place within these smart contracts, and users are always in control of their funds, rather than trusting them to a third party like they would with a centralized exchange.
It also means that traders must execute transactions on the blockchain every time they want to manage their funds, whether that be for depositing funds into an exchange’s smart contract or placing, canceling, or filling an order.
As you can see, between depositing, placing an order, executing a trade, and withdrawing, gas fees can add up quickly. Decentralized exchanges are great for their security benefits, but they lag behind their decentralized counterparts in both user operation costs and accessibility for this very reason.
The 0x protocol wants to improve decentralized exchanges by utilizing off-chain ordering relays in conjunction with on-chain settlements. Essentially, this allows users to broadcast an order off-chain to be filled by another user.
So will 0x be free?
Yes! 0x is free, but, if someone chooses to create a decentralized exchange with the protocol, they can charge fees. But they are trying to reduce the reliance on the blockchain. While it offers you trustless exchange, shared liquidity, open source, simple and neat platform, any kind of charges would be nothing.
The 0x Team
Co-founders of this protocol are Will Warren and Amir Bandeali, the CEO and the CTO. Along with them, this project is made of blockchain engineers, software engineers, graphic designers, strategists, and so on.
The 0x protocol is funded by Pantera, Jen Advisors, Blockchain Capital, and Fintech Blockchain Group, which describes a wide-range of interests in this project.
What is 0x OTC?
In addition to the 0x protocol, the team also created 0x OTC, a consumer facing product that uses the 0x protocol. The 0x OTC allows peers to exchange Ethereum tokens without requiring a Relayer, provided they connect with the counterparty directly. It is live and simple to use. Send a link to your counterparty to generate and send your order. You can send the order however you want because it is relayed via the blockchain. This way, you can use pencil and paper, email, social media, or any other method of sending the order.
What is 0x Tokens?
Another aspect of the 0x Project is the unique 0x Ethereum token, known as ZRX. This token is how users pay Relayers’ trading fees. It is also a decentralized form of governance for the 0x protocol’s upgrade system. Essentially, those who own ZRX have input in the protocol and improvements to make that is proportional to the amount owned.
There is a fixed supply of one billion ZRX, and the token launch was recent, on August 15, 2017. 50 percent of the tokens were released during the launch with 15 percent retained by 0x, 15 percent going to the developer fund, 10 percent going to the founding team, and 10 percent going to the advisors and early backers. The tokens allocated for founders and advisors as well as staff members will be released over the course of four years, while those bought during the launch event were liquid immediately.
Given the maelstrom of hacks that have swept funds from centralized exchanges over 2017, the cryptocurrency community needs decentralized exchanges. As crypto gains prominence and more money enters the market, so too will opportunities increase for malicious actors to profit from vulnerable investors. Decentralized exchanges offer a panacea to such a community ailment, and perhaps 0x’s novel design will do its part to usher in a new era of secure, decentralized trading.
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