What is 0xProject?

0x is an open protocol for trading any ERC-20 token on Ethereum in a peer to peer and decentralized environment. The main goal of the project is to power decentralized exchanges, therefore, the protocol involves the use of smart contracts though it does not run entirely on chain. You can think of 0x as a way to streamline token trading by combining off chain orders and Ethereum smart contracts. The founders of 0x, Will Warren and Amir Bandeali, identified early on that blockchain technology was going to disruptive force for trading assets seeing a future where anything could be tokenized and traded publicly.

0x: powering decentralized exchanges

ZRX Token Explained

How 0x (ZRX) works?

If you have ever used EtherDelta before then you should be familiar with the setup for 0x's decentralized trading: they use an off-chain ordering relay as a way to ensure trading is not slowed down by network bloat or high gas prices. Effectively only value transfers are executed on chain, meaning that only executed trades require a confirmed transaction on the network. Creating or cancelling orders do not require network confirmation as their order book is off chain, allowing users to reduce the amount of gas fees they need to pay for trading.

To achieve this 0x uses what they refer to as Relayers, who are responsible for hosting order books and broadcasting orders to the network. Acting as an exchange, Relayers bring liquidity to the network and facilitate the trading process. We have covered the technical side of trading on any 0x powered exchange in a previous article, which you can find here if you would like to learn more.

The main interest of using a decentralized exchange for trading comes with the growing concern over centralized exchange's lack of security as we see more and more exchanges being hacked or simply stealing their user's funds.

0x (ZRX) Token Details

Project name: 0x

0x Symbol: ZRX

ZRX Standard: ERC20

ERC20 Current Price: 0.00147183ETH (~0.17$)

0.00147183ETH (~0.17$) Market Cap: ~ $110,089,536

$110,089,536 All Time High: $2.53

$2.53 Total Supply: 1,000,000,000 ZRX

1,000,000,000 ZRX Circulating Supply: 604,421,968 ZRX

604,421,968 ZRX ROI since launch: +72.88%

+72.88% Website: https://0x.org/

Trade ZRX Now!

What is the ZRX token used for?

The main idea behind ZRX is for it to be a governance token, you hold the token to have a say in the protocol upgrades. Originally, the tokenomics behind ZRX was that Relayers and Dapps accessing liquidity via 0x protocol would take trading fees in ZRX and that these fees would be paid by users. It makes sense on paper how this setup can drive the demand for ZRX tokens, and as result, create more holders who will be interested in voting on protocol changes but in reality, the need for having ZRX tokens to trade on a DEX simply becomes a barrier for using said DEX. As a result you found a strange outcome of Relayers charging zero trading fees (to remove the need for ZRX tokens) and this lowered the interest in holding ZRX for any voting purposes.

The good news is that 0x v3 addresses this problem and changes up the ZRX tokenomics completely by introducing a staking mechanism and allowing trading fees to be taken in any token. More on that below.

New 0x v3: ZRX staking mechanism

0x v3: The Community Owned Liquidity API

0x v3 has been a long awaited protocol upgrade which is now live on the Ethereum mainnet, a major development milestone for 0x which will set them up to capitalize strongly as we see wider adoption of decentralized trading moving into 2020. The latest upgrade brought three key features to their ecosystem, which should all deepen the network's liquidity depth, make becoming a ZRX holder more attractive and encourage participating in governance voting.

Staking ZRX: Market makers are critical for the protocol's long-term growth as they bring in liquidity, the ZRX staking mechanism gives market makers on 0x monetary rewards for providing competitive liquidity. Any ZRX holder will be able to join a market maker's staking pool to receive a share of these liquidity rewards. The interest for the market maker to attract stakers to their pool is because it will increase their potential liquidity rewards payouts and increases their voting power for governance (as stakers delegate half of their voting power to the market maker).

Market makers are critical for the protocol's long-term growth as they bring in liquidity, the ZRX staking mechanism gives market makers on 0x monetary rewards for providing competitive liquidity. Any ZRX holder will be able to join a market maker's staking pool to receive a share of these liquidity rewards. The interest for the market maker to attract stakers to their pool is because it will increase their potential liquidity rewards payouts and increases their voting power for governance (as stakers delegate half of their voting power to the market maker). Liquidity Bridges: this is a very exciting upgrade for any DeFi developers building dapps that will benefit from accessing more liquidity - which let's be honest is pretty much any dapp especially if it has an open finance use case. As they will be able to source liquidity not only from 0x network itself but also from other DEXs such as Kyber, Oasis or UniSwap all from a single point of integration which is a new product called 0x API. This is much the same idea behind our Atomic Arbitrage feature: access liquidity in other DEXs to ensure orders are being filled to reach higher volumes which will in turn attract more users/traders to the platform.

this is a very exciting upgrade for any DeFi developers building dapps that will benefit from accessing more liquidity - which let's be honest is pretty much any dapp especially if it has an open finance use case. As they will be able to source liquidity not only from 0x network itself but also from other DEXs such as Kyber, Oasis or UniSwap all from a single point of integration which is a new product called 0x API. This is much the same idea behind our Atomic Arbitrage feature: access liquidity in other DEXs to ensure orders are being filled to reach higher volumes which will in turn attract more users/traders to the platform. Flexible Fees: previous versions of 0x restricted the Fee Recipient (the Relayer) to receiving fees in ZRX only. This was a very poor user experience adding even more steps to DEX trading, for example, Radar Relay (one of the biggest 0x DEX by volume) doesn't even have fees most likely due to this restriction. In v3, the fee can be paid in any Ethereum-based token such as stablecoins that most traders hold or the Relayer could simply take the trading fee in the token being traded.

ZRX Price Prediction 2020

If you have been following our blog, you will know that we have a bullish outset on the tech that is powering decentralized trading. You can read through our crypto reviews, price predictions 2020 for Kyber (KNC) and Bancor (BNT) below:

This is simply because we believe the trend of increased usage and adoption of DEXs will continue into 2020. For ZRX token, an increase in usage of 0x protocol means a higher demand for ZRX tokens for governance voting and for staking - both which can drive the price up.

0x Trade Volume (0xtracker.com)

As we can see trading volume has been increasing steadily throughout the year, and with the upgrades that came with v3 going live - I can see some explosive growth happening as we move into early 2020. My price prediction for ZRX token would be for it to increase by x2 and be trading in the price range $0.35 - $0.40 during 2020. The reasoning behind ZRX token not seeing the same price gains I have predicted for KNC or BNT is because the current Market Cap for 0x of $100M seems fair, whereas Kyber $42M or Bancor $13M looks very undervalued.

I also recommend you keep a close eye on the overall cryptocurrency markets and trading trends if you are holding ZRX tokens, because it is a token that is widely listed and very easy to buy with fiat. Notably, ZRX is listed on Coinbase as a token you can buy or sell directly with needing to use their Pro or Prime interfaces, and available to US-based users. Being widely accessible, if the crypto markets becomes very bullish during 2020, you could see ZRX's price jump up towards $2.53 (its all-time high).

Happy trading!

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Please note Token Profile Articles are not endorsements by Team Saturn, the goal is to make it easier for you to learn more about the asset. Always do your own research before entering a trade or investing in any crypto project.