GIVE IT TO THE MAN, MAN.
Sick of this BS Scottrade $7 per trade crap? Fortunately, crypto has made trading cheaper. The fees on Bittrex, Poloniex, and others are relatively low, but we know it can get better.
Most DEX’s are currently shit, unsophisticated, and not user-friendly. While we believe in the future of DEX’s, we are also keeping an eye on decentralized exchange protocols. These are not ‘central’ DEX’s, but instead protocols that simply make trades happen.
We wrote an article on Loopring before, which has a similar feel.
Today, we’re gonna look at a shitcoin called 0x.
Let’s dig in. *puts Whisky down* (Blue Label, w00t)
0x (ticker: ZRX)
Wtf is 0x?
As mentioned, 0x is a decentralized exchange protocol. They envision a shitton of ERC-20 tokens being created in the future and want to provide a seamless solution for users to exchange these tokens (mostly, lower-tier shitcoins tbh).
Brilliant minds must often come together to provide a mediocre solution for users to trade meaningless shit-tokens.
Anyways, this is actually cool shit.
As mentioned, this is a PROTOCOL….meaning 0x provides a standard for people to join together as a network and exchange tokens. They are an ‘open protocol for decentralized exchange’ (as said in their white paper, and exchange being a verb, not a noun, the actual act of exchanging shit). This is distinct from both a centralized exchange and a traditional DEX where all of your funds are in a wallet on the exchange’s servers or in shit smart contract that will probably get hacked.
Tweet at us if you’re confused (n00b).
So...how tf does it work?
There are two types of participants that make up the 0x network: relayers and traders.
Relayers run this shit. For a network like this to work, there must be liquidity. Relayers are basically nodes that facilitate requests between market participants (traders and existing liquidity) to match orders and essentially create their own little orderbook.
A centralized exchange has all of it’s own liquidity, operations and technology, while Relayers actually connect with different maker/takers + other exchanges (even centralized ones with order requests) to facilitate order matching.
Makers submit orders with specific exchange rates, desired token, and fees requested.
This is a bit more complicated, and you can skip this shite, but straight from their whitepaper, here is how an off-chain order and settlement works (yes, read their rules, so you can understand the map):
TL;DR - a simplified scenario of what happens in a transaction is this:
- Maker (say buyer) creates an order request to exchange Token A for Token B, AND gives the DEX contract permission to access their wallet that holds Token A
- The order is then broadcasted to the network and Relayers can add it to their ‘order book’
- Taker can see the order, and choose to accept it, if the order matches their sell request.
- Taker submits the signed DEX contract, permissioning them to sell Token B straight from their wallet, and receive Token A.
- DEX contract finally authenticates maker and takers signatures (verifies that the order didn’t expire...that the order requests agree with each other..basic shit)
Ta-da! An order is complete ‘off-chain’, and users funds don’t need to go into some central smart contract. Keep in mind that even Relayers do not ‘settle’ the transactions, TAKERS settle their own transactions. Otherwise, market participants would need to trust the Relayers.
So….Relayers simply broadcast orders and bring liquidity to the network. Orders that are satisfied from broadcasting are called broadcast orders. In contrast, there are Point-to-Point orders which is where a maker has a specific taker in mind.
Relayers are rewarded in ZRX, the native token, for facilitating orders and maintaining liquidity in the network.
The other users are the traders (makers/takers..basically buyers and sellers). That one was easy :)
Who tf is behind this shit?
No one notably famous on this team, but there are a bunch of PhD and PhD dropouts. Their head-honcho CEO is Will Warren, one of the PhD dropouts. He is apparently familiar with smart contracts, as seen on their website he does ‘smart contract R&D’. His traditional background seems to be more closely related to applied physics, with a mechanical engineering degree from UC San Diego. He’s also an advisor with the Basic Attention Token (BAT) project.
Ultimately, glad to see they are transparent.
Aaaannnd that wraps it up. Mid-tier shitcoin; they are a big up and comer right now. They do have competition in the space such as Loopring, or traditional DEX’s like Cryptobridge.
We do think that Loopring’s ring sharing set-up is equally as interesting and simpler, than 0x’s Relayer + maker/taker set up, but none the less, they are both attempting to create decentralized exchange protocols that provides for secure, off-chain order management.
Let’s see if they can deliver their shit. If not, they’ll fail and be yet another lower-tier shitcoin.
- Mike and Aaron