0x (ZRX)

Most recent update: [June 26, 2023]  

What is 0x? 

 0x is an Ethereum token that is used to power the 0x protocol. To this end, the protocol features its own token, ZRX, for governance and operation.  

Who is behind 0x? 

Founded in 2016 by Will Warren and Amir Bandeali, the two envisioned a platform where anything, from stocks to gold to even video game currencies, could be tokenized and be listed on an exchange.  

Prior to the project, Warren had worked in several research roles and was briefly the technical advisor to Basic Attention Token (BAT). Bandeali is an alumnus of the University of Illinois and was in several trading positions before co-founding 0x. Today, the team is composed of over 30 individuals, with engineers, researchers, and designers, who are constantly at work to update the platform and keep it running smoothly.  

Since its launch in 2017, several platforms have been built on 0x including Nuo, Matcha, Tokenlon, MetaMask, Augur, DeFi Saver, and more. 

Makers, Takers, and Relayers 

Within the 0x ecosystem there are two primary types of users that are needed to operate any 0x market: 

• Makers: Those that provide liquidity to the order book. Makers provide orders on the exchange that are not immediately traded, instead waiting for a match. When creating an order, makers indicate the details of the order, including the tokens they want to exchange and at what price. 

• If the maker of an order already knows their desired counterparty, they are able to send the order directly to them (via email, chat, or OTC). If the maker is unsure of a counterparty that can take on the trade, then the order can be submitted using 0x Mesh to an 0x relayer (more on relayers in a second), like the aforementioned Matcha or even with MetaMask.  

• Takers: Those take liquidity from the order book; takers place orders that are instantly matched with existing orders. Essentially, these are the users that fill the orders placed by the maker. 

Once the order has been placed and finalized, the 0x protocol’s settlement logic will verify the maker’s digital signature and that all conditions of the trade are satisfied. Then, the tokens are automatically swapped between the maker and taker directly to their wallets.  

To facilitate this process, the 0x protocol utilizes relayers, which are entities that help trades create, find, and fill 0x orders. Although similar in practice, these are not trusted middlemen and do not execute any trades; they simply maintain the off-chain order book. An example of this is the use case of Matcha, where the order is displayed in the search engine for anyone to fulfill.  

The ZRX token 

Rewards 

Like many other protocols, activity on the network can be rewarded with tokens. Market makers that stake ZRX tokens, for example, can receive a liquidity reward through a protocol fee that is applied in every 0x transaction. This fee is denominated in ETH and then deposited into a staking contract, which are then pooled over a fixed window of time (known as an epoch). Once this window closes, the pooled fees are distributed evenly as rewards to contributing market makers. Like governance, staking takes place on the 0x website. 

Supply 

Mirroring other digital assets, ZRX has a fixed supply that cannot be exceeded. This number is set to 1 billion ZRX. There are around three quarters of this supply in circulation, with a small percentage allocated for staking rewards.  

Interestingly, 0x has never disclosed the emission rate for new tokens, meaning that we don’t really know when the entire supply will be circulating. According to CoinMarketCap, it is estimated that this could happen sometime in the early 2020s.  

Security 

As an Ethereum-based protocol, it is backed by the hefty security of the Ethereum network’s tried and true proof-of-stake consensus mechanism. 0x is also goes through regular security audits, and companies like ConsenSys Diligence have found no vulnerabilities or back doors in the 0x protocol.  

Drawbacks 

With the amount of DEXs currently in the market, 0x faces intense competition in the industry. The protocol also does not interact with fiat, meaning users need to have ETH in order to utilize 0x. Although it has taken measures to counteract the ever-growing gas fees on the Ethereum network, any on-chain transactions are still beholden to the mercy of network activity. 

Due Diligence  

Prior to listing 0x on the VirgoCX Platform, VirgoCX performed due diligence on 0x and determined that 0x is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:  

• The creation, governance, and location of 0x and/or its primary development team; 

• The supply, demand, maturity and liquidity of 0x; and 
• Legal and regulatory risks associated with 0x.  

Statutory Rights under Securities Legislation 

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision. 

Further Reading 

To learn more about the intricacies of the 0x protocol in detail, you can take a look at these resources here: 

0x Deep Dive on CoinMarketCap: https://coinmarketcap.com/alexandria/article/what-is-ox 

0x on Gemini’s Cryptopedia: https://www.gemini.com/cryptopedia/what-is-0x-crypto-how-does-it-work 

0x on Investopedia: https://www.investopedia.com/news/what-0x/ 

0x on Kraken: https://www.kraken.com/en-gb/learn/what-is-0x-zrx 

0x on Bit2Me Academy: https://academy.bit2me.com/en/what-is-token-0x-zrx/