Many crypto users value the use of decentralized exchanges (DEXs) for carrying out trades without needing to turn over their private keys to custodial wallets. The common problem, however, is they encounter issues concerning available liquidity, often resulting in transaction delays and slippage.
This is just one of the problems associated with DEXs that 0x Labs aimed to address when they developed the 0x protocol on Ethereum. The idea was for ERC-20 token owners to be able to engage in “low-friction” peer-to-peer (P2P) exchanges using a decentralized global order book that can provide aggregated liquidity from many sources all at once.
0x is also able to do this without the need for custodial wallets or intermediaries, while reducing slippage. Currently, many of the world’s leading DEXs are part of the 0x network including Uniswap, Oasis, Mooniswap, Curve, and Bancor, while many decentralized finance (DeFi) apps are also integrated with 0x such as Matcha, DefiLlama, Metamask and Coinbase.
Aside from that, 0x also serves as an open-source platform for developers to build DeFi applications. In fact, 0x states its mission to be that of ‘building a tokenized world where all value can flow freely’ and envisions its platform as ideal for creating blockchain-based marketplaces in the future for all kinds of assets such commodities, real estate, stocks, or bonds.
How does 0x work?
The 0x protocol has a ‘networked liquidity’ feature. Any liquidity projects that are integrated with 0x are aggregated to form a shared liquidity pool to make P2P transactions easier and more convenient.
What sets 0x apart from other DEXs is its unique settlement structure. Unlike other exchanges that operate completely on-chain, 0x keeps its order books off-chain until they are ready to be processed, resulting in faster transactions and lower gas fees.
Off-chain order books are maintained by “relayers” and are tasked with matching buy and sell orders, which are then automatically processed by the protocol’s smart contracts. Anyone with sufficient hardware can set up an 0x relayer similar to how other networks make use of mining or staking nodes for supporting the network and earning passive income.
What is ZRX token used for?
0x has its own native utility token called ZRX. It has the following use cases on the 0x platform:
- ZRX is used to pay for the fees charged by the network’s relayers.
- ZRX also functions as a governance token that allows users to vote on proposals concerning the progress and improvement of the system.
- ZRX tokens can also be used for staking pools to earn rewards and farm yields.
ZRX has a maximum supply of 1 billion with 847 million tokens or 85% currently in circulation. ZRX hit an all-time high market price of $2.50 per token in January of 2018.
When the token first launched, 50% of the supply was allocated as government tokens for public purchase. Fifteen percent were retained by 0x Org, the team behind the ZRX token with another 15% dedicated to an external development fund. Meanwhile, 10% was allocated to developers and another 10% to the founding team.
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