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What Is 0x (ZRX)? - An Introductory Guide

 

By Damian David Mar 24, 2023

 

 

0x is a modular open source ERC-20 standard peer-to-peer decentralized exchange with smart contracts that also serves as a foundational base for developers to build a decentralized exchange that can subsequently inherit 0x interoperable cross-chain security, resources, and liquidity pools.

 

0x Core functionalities can be described as building blocks providing high decentralized exchange flexibility and interoperability. It enables the seamless peer-to-peer exchange of Ethereum-based tokenized assets of any variable. 0x open source API can be tapped by both off-chain and on-chain sources.

 

Ox was developed by 0x Labs and launched on July 14, 2017. This was 5 months after the initial release of its first whitepaper on February 21, 2017, which was authored by Will Warren and Amir Bandeali. A month later after the launch of 0x, "ZRX" the native token of the 0x protocol was launched following a successful initial coin offering (ICO) that raised $24 million via the 500 million ZRX tokens sold in just 24 hours.

 

 

How Does 0x Work?

 

Unlike other decentralized exchanges that take orders and subsequently settle them on-chain, 0x stores its trade orders off-chain and only utilizes its on-chain functionality to execute the trade. Thus, 0x as a decentralized exchange for all ERC20 tokenized assets works by being modular via a hybrid smart contract functionality formula that separates transactions on the Ethereum blockchain into two phases that will subsequently make it easier and faster to execute and most importantly, make it cost-effective.

 

These two phases are the "off-chain order relay with the on-chain settlement". It basically makes Ethereum standard transactions faster by taking it off the Ethereum chain (off-chain), processing it, and returning it back to the Ethereum chain for settlement or execution. Now this technique is possible because of two types of people the 0x protocol tagged as "Makers" and "Takers"

 

Makers are the people that make the orders off-chain, these orders are usually very specific in nature as they include their desired exchange token, their desired exchange rates, and an expiration time of the order. When this order is cryptographically committed to the Maker via the signing and hashing of the order, the Maker broadcasts it via the 0x protocol's 0x Mesh to an 0x relayer, such as Matcha or MetaMask, and waits for a Taker to respond to it.

 

Takers are the people that respond to the order and subsequently fill it in. When a Taker intercepts a Maker's order, they first submit the order with the token amount required to the 0x protocol on-chain smart contract. This smart contract subsequently verifies the Makers signature and ascertains that all the conditions for the trade are met before there is an automatic execution of the trade which typically involves swapping the tokenized assets automatically to the Makers and Takers wallet respectively.

 

What Is 0x Mesh?

 

0x Mesh is a decentralized autonomous organization (DAO) in the 0x protocol that is made up of different nodes or users who are non-hierarchical in nature and are collectively working seamlessly to provide services that'll make the 0x protocol perform better in all aspects. 0x Relayers are part of the 0x Mesh.

 

What Is 0x Relayer?

 

0x Relayers are the people who update and keep off-chain order books on the 0x decentralized exchange and help link a Maker to the most suited Taker for a small transactional fee. It is important to note that they're not intermediaries or middlemen, rather they're just an option for a Maker to find the most suitable Taker to fill his or her order.

 

 

What Is Matcha?

 

Matcha is a trading platform and decentralized exchange (DEX) aggregator created by 0x Labs and powered by the 0x protocol. It functions similarly to 1inch Network as it aggregates trading rates from multiple liquidity sources and exchanges to optimize your trading experience.

 

What Can You Build With 0x?

 

Decentralized Exchanges: An automated market maker (AMM) powered decentralized exchange can be built on 0x. Building a decentralized exchange with 0x will further serve as a gateway to 0x protocol's best tools and utilitarian and even an interoperable interaction with other dApps.

 

Non-custodial Wallets: A non-custodial digital cryptocurrency wallet with cross-chain and multi-trading functionalities can be built on 0x. This wallet will satisfy every cryptocurrency wallet functionality and will also serve as a gateway to 0x protocol resources.

 

Trade Options and Derivatives: DeFi protocols that are powered by liquidity pools and a decentralized exchange can be built on 0x. Services like Trade options, derivatives, lending & borrowing, yield farming, staking, etc can be enabled with the 0x developers' tools.

 

Portfolio Managers: Platforms that can aggregate your assets across multiple blockchains and give you up-to-date metric data about them can be built on 0x. These platforms are generally called portfolio managers and building them on 0x will be an edge because 0x is a home to other dApps and will aid in faster data aggregation on those dApps.

 

Games with in-game currencies or items: For platforms that might not need the decentralized exchange functionality specifically, 0x will allow for partial integration in your application or project. A perfect example of this is games that need an in-game crypto economy and will require DEX functionality for that.

 

What Is ZRX?

 

ZRX Is the ERC20 standard native token of the 0x protocol made to give holders rights to ownership and decision-making in the 0x protocol. ZRX can be used by liquidity providers and market makers to earn rewards and all ZRX holders have a share of all the transactional fees generated on the 0x protocol.

 

One ZRX token is valued at $0.2268 according to CoinMarketCap as of March 2023. ZRX has a total supply of 1,000,000,000 tokens and a circulating supply of 847,496,055 ZRX tokens. You can buy ZRX on Binance, OKX, Bybit, and Bitrue.

 

Is 0x Safe?

 

Yes, 0x is safe. 0x protocol and token economics were deployed on the Ethereum blockchain network and currently share the classical security measures of the Ethereum blockchain. 

 

0x has also been audited by ConsenSys Diligence and several others. A flaw in the v2.0 smart contract of the 0x protocol was also recently corrected as 0x continues to make its protocol safe and less vulnerable to attacks.

 

Why Choose 0x?

 

Because not only does 0x serve as a decentralized exchange for all variants of the Ethereum blockchain tokenized assets, but it also provides open-source codes for developers to copy and build with or on. The 0x protocol is maximized to host a bazaar of dApps and other decentralized exchanges whilst providing tools that'll enable profitable interaction and resource sharing between all of its integrated dApps and protocols. In the future, 0x aims to be a multi-chain and incorporate non-Ethereum standard blockchains and assets.