Creating an app or product to fulfil the demand is one thing, predicting the demand and building the product ahead of time is the real BOSS move, this is exactly what 0x protocol did. Powered by ZRX Coin, it looked into the future of trading and predicted the rise of decentralized exchange way ahead of time in 2016 when smart contracts were relatively unknown to developers.
Fast forward to this year, 0x has established itself as a trustworthy protocol in the crypto market by onboarding a wider range of clients that deals in token swapping like DAPPradar. Although the project has seen good adoption, it is yet to make a mark similar to other DEXes like Pancakeswap crypto
Moreover, the rise in competition has questioned its relevance for long term survival. Taking all questions into consideration and putting doubts to rest. Let’s jump right in and decode the potential of 0x –
What is 0x Protocol?
0x is an open protocol that facilitates peer to peer exchange of Ethereum based tokens, started with ERC20 tokens and further expanded to ERC721 & ERC1155 token standard. The protocol incorporates the exchange functionality that can be integrated (using an API) into any DAPP or a developer’s project that require token swap. DAPP built on top of the protocol can access public liquidity pools or create their own liquidity pools and charge transaction fees on the swaps.
The protocol was built in 2016 by Amir Bandeali and Will Warren who were the early adopters of blockchain technology and believed in the future where every known asset will be tokenized and traded on the decentralized exchange.
Ethereum blockchain was the only known player at that time, so the team gave all its attention to ERC20 tokens and built 0x that supported exchange of all tokens built on Ethereum.
Since every known asset will be tokenized in the future (acc. to the team), creating an exchange which is decentralized and transparent is critical to support the decentralized economy. Hence the need for open protocol with shared public pools.
0x has a mission to create a tokenized world where all values can follow freely
What is ZRX Coin?
ZRX coin is the native token and the currency of 0x Protocol. It is an ERC20 token which is used to serve various purposes for the protocol. The key features include governance, staking and rewarding relayers for hosting the order book and managing trades, it will be discussed next in the post.
Like Uniswap (UNI token), ZRX token holders can participate in the key governance decisions by voting in favour or against the proposal. The token holders can also stake ZRX on its portal to earn staking rewards in ETH.
Users have to stake their tokens in order to participate in governance decisions and are allowed to delegate their tokens to other validators while still earning a portion of the block reward.
Total supply of ZRX tokens is capped at 1 billion
How does 0x Protocol work?
What separates 0x Protocol from any other DEX is its ability to process transactions with low latency, offering lower transaction fees with the help of its off-chain operations taken care by relayer. Before understanding relayer and how 0x work, we need to understand Makers and Takers (two types of 0x users).
Makers place orders on the exchange and wait for it to be matched. Makers bring liquidity to the order book.
As the name suggests, takers take the liquidity off the order book. Takers place orders that are matched on the go with the existing orders.
Here’s how Makers and Takers work in a step-by-step representation –
For a smoother order matching and settlement, we need a public location where Makers and Takers can post order which can be aggregated into an order book. This is where 0x Relayer comes into the picture.
Relayers are entities that host and maintain order books. Relayers broadcast the orders placed in the order books by the Maker and subsequently broadcast the order placed by the Takers. In short, it acts as a medium that signals the demands of both parties and help them match the orders without executing trades.
Trades are executed by the Takers, not by the Relayers.
Relayers host and maintain off-chain order book and are compensated with transaction fees as reward for their service. Here’s how the protocol works in presence of Relayer –
0x make asset swap faster & cheaper
Difference between 0x and Traditional exchange?
Traditional exchange uses a matching engine to fill market orders on behalf of their users and users have to trust that the exchange will provide them with the best possible price. This is further assured with the belief that the regulatory authority is keeping a check on the accountability of these players if the matching engine misbehaves or malfunctions.
0x on the other hand is trustless. Relayers do not have the ability to execute trade but to broadcast and match orders. It is Takers that must independently decide to sign and send the transaction to the blockchain, giving complete control to the traders.
Built by 0x Labs, Matcha is an aggregator of decentralized exchange that help users find the best prices for token swap.
0x Mesh is a new peer to peer network for sharing orders (Makers & Takers). It is an alternative to the Relayers.
API access DEX liquidity and help swap tokens at the best price.
0x Extensions adds new layer of trading to the protocol. The team has developed three extension contracts i.e Forwarded contract, Dutch Auction contract and Whitelist contract that enables projects to offer new form of crypto trading to the users. (Part of V2 upgrade)
ZRX Coin ICO:
Ox team held ICO of ZRX coin back in 2017, selling 500 million tokens at a price of $0.07 per token within a span of 24 hours. Registered buyers were only allowed to participate in the ICO with a cap limit of 6.77 ETH ($2000 approx.)
0x Protocol Benefits:
Lower Transaction Fee:
Since the Relayers help broadcast and match the orders off-chain, there’s no need to pay the fee every time Maker or Taker place a trade. Only the settlement takes place on the Ethereum blockchain.
Multi Token Support:
0x started with ERC20 tokens. Thanks to the upgrade, it supports ERC721 and ERC1155 tokens that will encourage Makers and Takers trade digital assets i.e NFTs using the protocol. Hence, rise in overall trading volume.
0x is a liquidity aggregator that uses its API to access the liquidity of DEXes to present the best price for token swap. 1Inch is another known DEX aggregator in this space.
0x supports multiple extension contracts i.e Forwarded contract, Dutch Auction contract and Whitelist contract. These contracts offers new form of crypto trading to the users like Dutch Auction which lowers the bid everytime there aren’t enough bidders for the token. This sort of contract is used for new and rare assets.
0x Protocol Drawbacks:
0x had the first-mover advantage to become the top seed in the DeFi space. Unfortunately, there are better projects that have garnered a lot of interest from the users, overshadowing 0x Protocol.
Lack of Marketing:
The foundation of the project is strong. However, lack of marketing is deteriorating its stand in the crypto community. When was the last time you heard about 0x or ZRX coin?
No Liquidity Pool:
The fact that it has Relayers and it aggregates liquidity from other DEXes, makes it less attractive when it comes to rewards. One of its competitors i.e 1INCH (DEX aggregator) has its own liquidity pool but its aggregator Matcha doesn’t have any. With no rewards around, the interest in the protocol may dissipate.
Staking helps the blockchain or the protocol build a strong consensus mechanism and a strong community of users who put their trust into the system and earn huge gains in return with multiple benefits. 0x has failed to market its staking and has unclear plans when it comes to staking rewards.
ZRX Coin Price:
Please check the latest ZRX Coin price, shared below –
ZRX Coin Price Prediction:
The historical price of ZRX Coin is a complete zig-zag. The coin had an impressive start in 2017 when it hit over $0.50 in the initial week before falling back to $0.10. The next year it broke all records and hit $2.00 per token and later fell back to $0.70 and traded in the range between $0.20 to $0.40 for almost a year.
2021 brought the coin back to life when it again hit $2.00 (approx.) in the bull run before falling on its face back to $0.50. The hopes were high in the bull run of 2021 but it didn’t meet the expectations. At the time of writing, ZRX is trading around $0.70 and has no sign of an uptrend.
The technical chart is abrupt and sideways, keeping the traders away from trading the token. It’s very difficult to forecast the price action looking at the charts but fundamentally speaking, there isn’t much strength in the coin, at least at this point in time.
Best case, it will regain its previous high around $2.00 mark, but that too is a far fetched figure at the moment. Worst case, it will stay in the key area between $0.20 -$0.40.
Where to Buy ZRX Coin?
ZRX coin is available on all the leading exchanges like Binance, Coinbase, OkEx and Poloniex. Apart from the centralized exchange, ZRX can also be bought from popular DEXes like Uniswap & Sushiswap.
Should you Invest in ZRX Coin?
0x was an early bird in the DeFi space. It was probably the first project to introduce peer to peer trading of ERC20 tokens without third party interference or approval. The project has gone through multiple updates and expanded its offering from trading ERC20 tokens to ERC721 & ERC1155 NFT tokens.
Although the project is legitimate and has good potential, it somehow is lost among the competitors. Accompanied with a poor rewarding system, it has negligible stakers when compared to top DEXes like Uniswap and Curve finance.
The price isn’t attractive and the bull run of 2021 was again a disappointing show. Given the current market conditions and the competition, I will certainly look for coins that can give me better returns compared to ZRX like Fantom FTM coin or a metaverse token like Solice crypto.
This completes my review of 0x Protocol (ZRX Coin). In the next post, I will put some light on NEAR Protocol and AMP Coin. If you’re a fan of blockchain technology then please do share it on your social handles and educate everyone around you. Do remember to subscribe to my YouTube channel for more informative content, released every week.
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
An MBA in Marketing. Paras have a decade long experience in the corporate world. He is done with office politics and corporate life, therefore decided to move on and jumped on building Katoch Tubes. He is a crypto fanatic and has the vision to bring cryptocurrency knowledge to every household in the simplest form possible using the power of internet. His area of expertise includes online marketplace, cryptocurrency and content strategy. Reach out to him on Twitter & YouTube.