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The current state of cryptocurrency exchanges isn’t great. They are centralized, open to attacks, and can be expensive to use. Even decentralized exchanges are facing high fees and other issues. 0x plans to solve the problems that both types of exchange face, with a focus on trading in the widespread Ethereum network. Plus, the team wants to offer this technology to other tokens as well.
What Is 0x & How Does It Work?
At its core, 0x is a foundation for building a decentralized, permissionless, and open exchange used for trading ERC-20 tokens. A big issue in the cryptocurrency industry (and most industries in general) is that many of the systems used are centralized. Exchanges are entirely open to hacks and other attacks, while a decentralized platform would be much safer for traders.
While it’s currently only for ERC-20 tokens, 0x is one of the first protocols trying to do something about this, stepping above Coinbase, Binance, and other major platforms.
Trading is done via an off-chain relay, which helps to keep the network clear and lowers gas prices that users must pay when trading Ethereum. With a normal decentralized exchange, trades, deposits, and withdrawals are made through smart contracts. While this is a step above a centralized exchange, which relies on third-parties to manage transactions, users are still required to pay a myriad of gas fees for each step.
The off-chain relay allows a user to send their order off to another user, a relayer, who then files it. The only trades made on-chain are value transfers. Relayers transmit orders via public or private networks, essentially doing the same thing an exchange does. However, the relayer can only document transactions. They cannot execute one.
For a trade to be executed, the recipient (the taker) must submit the signature of the trade maker, alongside their own into a smart contract. The relayer is paid in ZRX, 0x’s currency, for overseeing these transactions.
Finally, 0x can also be used for building decentralized applications. Applications can “plug-in” 0x as a protocol to take advantage of their coin systems, like a government, fund management, or the stability of the 0x token.
As mentioned, relayers are paid via ZRX for facilitating transactions. Otherwise, this token is used to maintain a sort of government on the network. Essentially, ZRX token works on a proof-of-stake system, meaning that holders can stake their coin to vote on the future of the entire network. This ensures that users who contribute most to the network get the most say, but ones that don’t contribute as much can still get their word in.
0x coin spent a lot of 2017 working to hire new members, host their ICO, launch a beta for their relay system, and release new updates on their network. Now that a lot of their initial work is done, 2018 is to be spent working on the governance system and updating the user interface. By quarter 2 of this year, the 0x team wants to have their governance white paper published and have some new features ready in beta.
With 11 on-site members and four advisors, the team behind 0x is about average for a cryptocurrency. The company was founded by two members: Will Warren and Amir Bandeali. Will studied mechanical engineering at UC San Diego but dropped out before getting his Ph.D. to focus on 0x and smart contract development. Amir studied finance at the University of Illinois and was a fixed income trader before starting 0x.
A lot of the team over at 0x are active on the subreddit, with most of them holding moderator positions. There are a ton of community members posting on it regularly, with their Twitter being used for blog posts and sharing other news.
ZRX is available for trade on Binance, Bittrex, HitBTC, and a variety of other exchanges. That said, with Coinbase recently announcing their support for ERC-20 tokens, we may see ZRX and other Ethereum tokens available on there soon.
Because it is an ERC-20 coin, ZRX can be easily stored in Meta Mask or MyEtherWallet, with hardware wallets like Trezor or the Ledger Nano S offering hardware support. That said, 2018 is poised to be the rise of decentralized exchanges so you may be heading to 0x’s exchange for the coin later this year.
What’s Next For Them
0x wants to be the ultimate platform for building exchanges. It’s decentralized and is aimed to fix all of the current issues that both types of exchange face. Off-chains allow the network to handle an incredible amount of traffic alongside saving users money. Community focus and a proof-of-stake governance system ensure users stay with the technology, and the entire system is entirely secure.
But, the success of 0x also relies on the success of Ethereum. With it being one of the biggest cryptocurrencies in the world, the chances of Ethereum surviving are high, but this still leaves 0x relying on something else. That said, we have to wait and see if the team can deliver on these promises. If they do, there is a chance for them to grow a huge following this year, and possibly be the leading name in the future of cryptocurrency exchanges.