What is 0x Protocol (ZRX)? And How Does it Work?

Decentralized exchanges have been around for quite some time. And developers have introduced several tools to provide the best experience to the users. However, most of these exchanges are primarily focused on digital assets.

0x Protocol is a new kind of protocol that doesn’t only support the exchange of digital assets but also enables developers to build markets for crypto assets that can be exchanged with several options including shares of stocks, bonds, and physical real estate. Thus, it eliminates the need to rely on traditional financial intermediaries.

What is 0x Protocol?

0x is an open standard protocol that uses state channels, automated market makers, and smart contracts to transfer a wide range of crypto assets across multiple exchanges. The platform collects data from a large number of exchanges. And thus, it provides the best deal to the users whenever they execute a transaction.

0x protocol has become an attractive choice for most Defi users because it provides the lowest fees with the best prices. Sometimes, the platform even completes the transaction through different exchanges to provide the best deal to the users. The users can start using innovative tools of this platform by simply connecting their crypto wallets.

The ZRX token holders can help with hosting and maintaining order books to earn rewards. A portion of the trading fees is transferred to these participants whenever a trader buys or sells an asset. The token holders also have voting rights to decide the platform’s future.

They can vote on the proposals to increase or decrease the trading fees. Similarly, they can vote on proposals presented for the platform’s growth.

0x Protocol Important Features

With a range of advanced features, the 0x protocol has shaken the Defi industry.

NFT Swap

The makers and takers take advantage of this feature to swap NFTs. The users can simply find the best NFT deals using this platform. 0x protocol is working on making this process more beneficial for the users.

Token Swap

Unlike other decentralized exchanges, 0x offers a wide range of trading pairs because it can connect to multiple exchanges through Matcha. Thus, it provides the best deals to traders. The maker needs to place an order by choosing the token type and token price. The maker is also required to set the expiration date while placing the order.

0x protocol then finds a suitable order through the Ethereum blockchain with the help of smart contracts.

Price Impact Protection

In a standard decentralized exchange, the price of the trading pair and the pool liquidity is affected when a user makes a trade. It can eventually cause losses if the liquidity providers couldn’t maintain liquidity in the pool. 0x protocol calculates the potential impact of each trade request through the Price Impact Protection.

The network notifies the users about the lack of liquidity if the impact is higher than the predetermined threshold. The best part is that the users can customize the threshold settings according to their preferences. Moreover, the platform notifies the users about the impact before executing the order.

0x Explorer

The users can check the details about the number of trades executed over time, the number of users, and the overall trading volume of the exchanges. The users can also find details about the leading apps used for trades and the leading top liquidity sources. The traders can use these metrics to strengthen their analysis.

Slippage Protection

The decentralized exchange users must be familiar with the fact that there’s usually a difference between the quoted price and the executed price. This difference occurs due to slippage. In most cases, the users are unaware of the slippage until the trade executes.

With 0x’s slippage protection, users can get an idea of the slippage for each transaction. Thus, the 0x protocol offers full transparency compared to other platforms.

0x Protocol Brief History

0x protocol was co-founded by Will Warren and Amir Bandeali in 2016. The platform was primarily designed to standardize Ethereum-based tokens. Over time, the team decided to introduce Ethereum tokens for gold, NFTs, fiat, and other traditional assets.

The team raised around $24 million worth of Ether tokens by selling their ZRX tokens through a public sale. The team then launched a series of equity rounds and ended up raising $109 million for the project. Blockchain Capital, Polychain Capital, and Pantera Capital are some of the leading firms that supported this project.

The company uses the advisory services of Joey Krug (the co-founder of Augur), Fred Ehrsam (the co-founder of Coinbase), and Linda Xie (the co-founder of Scalar Capital) to continuously improve the platform’s performance. 0x team continuously updates the investors about its upcoming endeavors through its official website and blog.

How Does 0x Protocol Works?

0x protocol enables users to trade Ethereum-based tokens while allowing them to create custom crypto assets. The platform consists of two types of users.

Makers – Makers provide liquidity to the platform. These users set custom orders that execute once a suitable order is placed by a Taker.

Takers – These are traders that take liquidity from the platform. Once a Taker places an order, the network matches it to a relevant order and the trade is executed instantly.

The makers send the trade details to the protocol’s relayers after the execution. The relayers then update the information on the 0x order books. The platform uses smart contracts to transfer tokens between makers and takers.

0x Protocol Tokenomics

ZRX is the native token of 0x Protocol that is used to pay transaction fees. The token also provides voting rights to the token holders. With a circulating supply of 847 million tokens, ZRX has a market cap of $207 million. It has a total supply of 1 billion tokens that will be released through the rewarding process over time. It ranks among the 200 best cryptocurrencies in terms of market cap.

Conclusion

In conclusion, 0x Protocol is an open standard protocol that allows for the exchange of a wide range of crypto assets across multiple exchanges. It offers several advanced features like NFT Swap, Token Swap, Price Impact Protection, Slippage Protection, and 0x Explorer.

The ZRX token holders can earn rewards by helping with hosting and maintaining order books. With its amazing features, ZRX has become an attractive choice for most Defi users because it provides the lowest fees with the best prices.

If you need more information about how 0x Protocol works, feel free to get in touch with us. We also invite you to subscribe to our weekly newsletter if you need regular updates about Bitcoin and the crypto market.