0x Protocol: Ethereum's Open-Source Infrastructure Shaping DeFi

Leveraging Ethereum's infrastructure, 0x offers an open-source software framework for decentralizing finance (DeFi). By tokenizing real-world assets, 0x eliminates intermediaries and enables the creation of decentralized exchanges (DEXs) on Ethereum. These DEXs utilize hybrid off-chain/on-chain settlement protocols, reducing gas fees and providing cost efficiency.

Ethereum's Open-Source Infrastructure for DeFi: 0x Protocol

In the rapidly evolving world of decentralized finance (DeFi), Ethereum stands tall as the foundation upon which a multitude of innovative platforms and protocols thrive. Among them, 0x, a peer-to-peer software framework built on Ethereum's robust infrastructure, plays a crucial role in transforming traditional financial systems into their decentralized counterparts.

Tokenizing Real-World Assets with 0x

0x's mission is to bridge the gap between traditional finance and DeFi by enabling the tokenization of real-world assets. This transformative capability allows for the representation of physical assets, such as company shares, bonds, and real estate, as digital tokens on the Ethereum blockchain.

Decentralized Exchanges: The Heart of 0x

At the core of 0x's ecosystem lie decentralized exchanges (DEXs), platforms where tokenized assets can be seamlessly traded without the need for intermediaries. 0x provides developers with a comprehensive toolkit, including the 0x Launch Kit, empowering them to create and customize their own DEXs.

The Building Blocks of Crypto Markets

0x's versatility extends beyond tokenization and DEXs. It encompasses a wide range of components that serve as the building blocks for crypto markets:

• Over-the-counter (OTC) trading desks
• Etsy-like marketplaces for digital assets
• Arbitrage trading bots
• Decentralized exchanges for swapping digital assets

Comprehensive Smart Contract Standards

0x supports a comprehensive range of smart contract standards, catering to various asset types:

• ERC-20: Regular tokens
• ERC-721: Non-fungible tokens (NFTs)
• ERC-1155: Semi-fungible tokens

Unleashing Liquidity through APIs

One of 0x's key advantages lies in its Application Programming Interface (API), which empowers developers to seamlessly integrate 0x's services into their existing decentralized applications (dApps). This API unlocks the potential for enhancing liquidity pools in lending and DEX dApps by aggregating liquidity from both on-chain and off-chain networks.

Multi-Chain Expansion

In addition to its Ethereum roots, 0x has expanded its API liquidity aggregator, known as Matcha, to various other blockchains, including Avalanche (AVAX), Fantom (FTM), Celo (CELO), Binance Smart Chain (BSC), Polygon (MATIC), and Optimism.

Origins of 0x

0x was founded in 2016 by Will Warren and Amir Bandeali. Warren, a mechanical engineering graduate from UC San Diego, boasts a distinguished career as a technical advisor to Basic Attention Token (BAT) and the winner of the Consensus 2017 Proof of Work Pitch Competition. Bandeali, a finance graduate from the University of Illinois at Urbana-Champaign, served as ZeroEx co-CEO and CTO prior to co-founding 0x. Their collaboration led to the successful initial coin offering (ICO) of 0X in July 2017, raising $24M through the sale of ZRX tokens.

Funding and Partnerships

0x has attracted significant funding over the years, totaling $109M across nine funding rounds. Notable investors include Polychain Capital, Pantera Capital, and Blockchain Capital. Coinbase co-founder Fred Ehrsam also serves as an advisor to 0x.

Understanding DEXs: The Foundation of 0x

0x protocol plays a dual role in the DeFi ecosystem: tokenizing off-chain assets and facilitating their trading. To grasp the intricacies of 0x protocol, it is essential to delve into the workings of decentralized exchanges.

DEXs differ from centralized exchanges like NYSE or Binance by eliminating the need for centrally owned market makers to provide liquidity. These market makers typically ensure fast and efficient trading by covering ask/bid spreads on both sides of the transaction.

In contrast, DEXs leverage smart contracts and rely on users to provide liquidity. For instance, Uniswap DEX employs smart contracts to pool tokens from liquidity providers. Traders seeking to exchange tokens access these liquidity pools, providing a small commission to the liquidity providers.

The liquidity of DEXs hinges on the number of liquidity providers and their focus on specific token pair pools (e.g., ETH/USDC). This approach can pose challenges when trading less popular tokens or during periods of high demand.

0x Protocol: A Hybrid Approach

0x protocol adopts a hybrid off-chain/on-chain settlement system. Unlike traditional DEXs that operate exclusively on-chain, 0x can tap into liquidity beyond on-chain networks. This is achieved by storing trading orders off-chain while executing trade settlements on-chain.

This hybrid system translates into cost-efficient gas fees for 0x users. The process involves two primary actors within the 0x protocol:

• Makers: Provide liquidity by creating 0x orders in the order book, specifying the tokens involved and their exchange price. They then await a taker to match their order.
• Takers: Siphon liquidity from the order book by placing orders that are instantly matched.

0x Relayer: The Orchestrator of Trades

If a maker is familiar with a specific taker, they can transmit the order directly to them using over-the-counter (OTC) trading desks or messaging apps. However, in most cases, makers do not have prior knowledge of takers.

This is where the 0x relayer steps in. Orders are initially submitted to the 0x relayer via 0x Mesh, a peer-to-peer (P2P) network specifically designed for sharing orders in the 0x messaging format. Matcha, the 0x relayer, facilitates the creation and matching of orders.

Instead of relying on centralized intermediaries, the 0x relayer maintains the off-chain order book, including the collection of transaction fees. Upon relaying an order to a blockchain, the 0x settlement protocol verifies the maker's signature and executes the token swap. It is crucial to note that relayers do not hold tokens in custody at any point.

ZRX Tokenomics: The Utility and Governance Token

如同所有原生的协议令牌，ZRX令牌是 0x 的实用和治理令牌。ZRX 代币持有人可以使用他们的代币投票来为 0x 改进提案 (ZEIP) 投票，就像 ETH 代币持有人为以太坊改进提案 (EIP) 做的那样。

在 0x 的情况下，此 ZRX 投票权由于其混合特性而甚至扩展到链下提案。

投票权重

每个 ZRX 令牌算作一票，因此投票权重按比例分配。

ZRX 质押

做市商可以质押他们的 ZRX 代币以获得在每次 0x 交易中提供流动性的奖励。这些费用以 ETH 为单位并自动汇集到智能合约中进行质押。虽然 ZRX 代币被锁定在一个固定的时间段（称为历元）中，但做市商可以在每个历元结束后退还智能合约。

至于 0x 质押奖励，它们会不断变化，取决于交易量和设定的协议费用。质押和投票均在 0x 网站上进行。ZRX 代币持有人也可以将其资金存入 0x DAO 国库。

这些资金不仅用于建立伙伴关系以巩固 0x 生态系统，而且 ZRX 代币持有人本身也可以提交资金赠款。

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