0x review: all you need to know about ZeroEx
The decentralized network and the Blockchain have made the life simpler and secure. Now, when it comes to cryptocurrency exchange, we can completely rely on the high-security protocol and the incredible Blockchain to complete our transaction in seconds after initiating it. But, it comes at a price. Cryptocurrency purchase and trade are becoming quite expensive as there are a number of charges and fees which gets added up when you are processing towards completing your transaction. 0x pronounced as “ ZeroEx ” is an open source platform which facilitates all those operations of a centralized network of Ethereum-based tokens and other digital assets. This basically implies that the platform eliminates all the risks of a centralized exchange and enables users to use their protocol at a “Zero” fee. But, there are still a lot of aspects to look on before judging its credibility and effectiveness. So let’s delve into this didactic 0x review.
What is 0x?
0x is an open protocol that endows a decentralized exchange for ERC20 tokens on the Ethereum Blockchain. Any organization or a developer can use it in Backend to manage a decentralized network. 0x enables a peer-to-peer based exchange service which is free from any security risks allowing users to trade effortlessly. This protocol is designed to help with the transactions of ERC20 tokens and to manage it in a secure, frictionless environment through the smart contracts offered by Ethereum. Developers can build their own customer decentralized applications (dapps) with a variety of features. A token is anything like digital assets, stocks, commodities and fiat currencies which can be transferred through the Blockchain. 0x is a smart, open and permissionless protocol which will make the decentralized network more efficient.
The difference between the Centralized exchange and decentralized exchange is that centralized EX is run by a single entity and is highly efficient. But, it is not as secure and reliable as the decentralized exchange. On the other hand, decentralized exchanges are not as fast and efficient as centralized EX. The 0x protocol works by providing an environment which offers a blend of all the strength of centralized and decentralized but avoids the weaknesses or drawbacks of both the exchange network.
0x team and development
0x was established to bridge the limitations between the centralized and decentralized exchanges by providing a combination and having a series of benefits over its predecessor. This Blockchain initiative was co-founded by Will Warren and Amir Bandeali in the last quarter of 2016. The CEO, Will Warren was a researcher of applied physics in Los Alamos National Laboratory after completing his bachelor in Mechanical engineering from University of California, San Diego. On the other hand, the CTO, Amir was a fixed income trader after studying finance from the University of Illinois, Urbana campaign. Other members at 0x include Blockchain engineers, experts, software engineers, product designers, graphics designer, business analysts, and strategists, etc. The alpha version of the protocol was launched in January 2017 on the platform test network. The journey so far has many ups and downs but the company never failed to attract customers and developers. In May 2017, the company won the Consensus Startup competition of 2017. On August, it had many security audits completed to be deployed on the Ethereum Blockchain along with its Beta version. In the same month, ZRX token was launched for developers and relayers giving rise to many innovations. In October, the company came up with the concept of introducing the protocol by showcasing how it works. This new protocol is catching many eyes with its sophisticated and ground-breaking approach. However, the website interface is uninviting and has to be improved for beginners. Nevertheless, this protocol is going to grab the attention of people and broaden the dimensions of cryptocurrency by bringing it into the mass market.
How 0x is different from decentralized exchanges?
The team of 0x protocol concentrates on the off chain ordering relay that helps to reduce gas price and Blockchain Bloating. Developers of investors who are familiar with a decentralized exchange like Ether Delta will know how beneficial off chain ordering is. Most of the decentralized exchanges use the concept of smart contracts which are powered by Ethereum Blockchain. This clearly means that the users have full control over the funds and the traders and the function takes place through the smart contracts. This is not the case with centralized exchanges like Coinbase, Binance. Also, for processing any orders and managing the funds on the Blockchain, the users need to modify their smart contracts by canceling, placing or filling the order. This process cost GAS which is an Ethereum fee paid for these transactions on the Blockchain. So in the case of decentralized orders, the users need to pay the Gas amount every time they want to deposit funds to execute any order. In short, as you want to deposit funds, place order or execute a trade, you need to pay the Gas fee. Decentralized exchanges (DEX) are good at almost everything including security applications but has this problem related to operations cost and accessibility. This is where 0x protocol finds its application.
How do 0x works?
The project is an initiative to modify and improve the DEX by employing the off chain ordering relays in addition to the on chain settlements. Basically, this allows users to broadcast their off chain order so that it can be filled by another user. So, you will not be expected to pay Gas for placing, filling or canceling orders. Value transfer will only be executed on-chain saving a lot of funds for the users. The transactions will run through the network only if a trade is executed, removing congesting, enhancing the speed and reducing gas fees. So, how this is accomplished?
For this, the 0x protocol makes use of what it calls as “Relayers”. Relayers are the tools used for broadcasting orders through private or public books by bringing in liquidity by acting as an exchange. A Relayer is just to present the order of the maker to the network and it is not used for executing a trade. For executing a trade the end-user has to fulfill the order by presenting the maker’s signature and the DEX smart contracts. So, for all these things to work out, the Relayer is paid a composition in the form of 0x native currency, ZRX for each and every order. Broadcast orders facilities anyone to send the order and anyone to intercept and fill the order. The 0x protocol also includes point to point Orders which create a medium between the two end-users through a variety of messaging source to send the order and fulfill it easily and efficiently. From these point to point orders, only the selected recipient can fill the order, dwindling away any risk of hijacks by third part malicious websites. From developer’s point of view, for Dapps, the code can be found on Github.
Why is 0x protocol revolutionary and beneficial?
Although 0x is close to decentralized exchange as compared to centralized exchange, it has a considerable difference and notable advantages. The centralized exchange like Coinbase, Binance is vulnerable to hack and fund loss as the Cryptocurrency are kept on the website while the decentralized EX was introduced to resolves the problem related to hacking where the users have control over their funds and they can control their wallet. But as the taker have to get a digital signature to authorize the order, decentralized is slower.
The 0x protocol addresses the main issue of slow, expensive and illiquid DEX where it can’t be operated with each other. 0x build a standard protocol dealing with the problem of paying on every transaction by its off chain order relaying on chain settlements. By applying this protocol to all the orders, the orders will return to the Blockchain after every settlement thereby speeding up the process and eliminating the excessive transaction fees. Although it does not charge for the usage of the protocol, there can be some fee incurred. This fee can be due to the Relayers which are nothing but the people who choose to create the decentralized exchange using the 0x protocol.
How to Buy 0x?
Here is a step by step process of buying 0x.
Step 1: First you have to create a wallet which can be done effortlessly and conveniently through MyEtherwallet. This wallet can store any coin including 0x on the Ethereum Blockchain. Go to myEtherwallet.com and enter an email ID and password to sign up.
Step 2: After wallet creation step, hover to the “Download Keystore file” and click on it to read and understand all the warnings and then click on continue.
Step 3: Now you will be provided with a private and unique wallet key. This is a private key which has to be kept safe. After this, click on “Save your address”.
Step 4: Now that the wallet is created, you will have to open the wallet by uploading the “keystore file” and entering your password.
Step 5: After doing that step, you will be able to see a combination of letter s and number which is your wallet address. Copy this address and proceed to the next step.
Step 6: Now, if you don’t have Ethereum, you will have to buy it and then exchange it for 0x using the same wallet address. Confirm it and then you will receive the 0x ZRX token to be used to pay the Relayers.
Where to Buy 0x?
Binance – Binance is a popular cryptocurrency exchange platform which lets you trade in multiple digital assets.
Cryptopia – A sleek user-friendly cryptocurrency exchange which will allow you to trade in 0x coins without any hassle.
What is 0x OTC?
As the protocol aims to compensate the Relayers, the company came up with a consumer-facing product called as 0x OTC which is built on the 0x protocol. This consumer related product aims to allows exchange Ethereum tokens over the network without a Relayer in between. The process is very simple and straightforward where you have to send the link and connect to the counterparty to create and send the order. However, you can always choose to send the order directly to the Relayer via Blockchain to use messaging app and paper, social media or email for sending it.
What are 0x ZRX tokens?
ZRX is the unique Ethereum protocol currency which is currently priced at 0.47 USD and has a market cap of around 247 million which comes to be around 30,800 Bitcoin and 423,000 ETH. It has a circulating supply of 518,074,664 ZRX with a fixed total supply of 1 billion. The ZRX token is how the users pay to the Relayers as their trading fee. Around 50 percent of the ZRX tokens were released on August 15, 2017, on its launch date, 15 percent going to the developers or token creator, 15 percent retained by the same company, 10 percent to the founding team and the remaining 10 percent going to early backers and advisors. Here is the functionality of ZRX token and how it is used.
- A decentralized form of governance
The ZRX holders will be allowed to vote for the changes or innovations on the 0x protocol. This is necessary because many Relayers want the same contracts as others to maximize liquidity. This decentralized form of governance will automate the upgrade of the contracts, make system consistent for the users and decrease the probability of upgrade forks.
- Relayer’s fee
Relayers are the off chain ordering results to match the orders of the sender and the receiver. The maker and the taker are matched with the help of Relayers who are compensated for their service using the ZRX tokens.
Additional features of the 0x protocol
The 0x protocol is application agnostic which means that the smart contracts are publically accessible. This allows the organization to build on 0x for providing additional functions to their token or platform by acting as a plug-in for Ethereum Blockchain powered dapps. There are many projects like Status, Augur, Blocknet, Request Network, district0x, etc. which are building on 0x. With the token registry system, you will be entitled to verify the token address of ERC20 and the exchange rates before start with a trade. In July 2017 ICO, around $665 million was raised and the ICO became the most popular and valuable token in the Ethereum platform.
As 0x protocol only works for ERC20 tokens, it will be difficult for the protocol to find any application after smart contracts overtake Ethereum. But, this innovative concept is surely a great idea for developers to include this protocol in their DEX. Also, the ZRX token is a good option for both flipping and long-term investment.