0x’s native token, ZRX , has two primary functions:
- The native ZRX token can be used to pay relayers.
- The native ZRX token can be used to establish a form of governance of the 0x protocol that is decentralized.
The hard truth is that ZRX tokens are not necessary for the current functioning of the protocol. Do note that the 0x is open-source (like many projects), it would certainly be possible for a third party to fork the 0x source code,remove the ZRX token, and replace it with ETH. Whether or not this is likely is an important topic of discussion.
Denominating fees in ZRX places a slight friction on first-time users of the protocol, who must acquire ZRX tokens prior to trading on a 0x relayer. Radar Relay , in an attempt to address this friction, allows users to trade ETH for ZRX with no fees. Due to the growing network effects in the 0x ecosystem, I don’t believe that users would switch to an “unofficial” ZRX-free forked version of the software. A much more likely scenario is that relayers find other ways of circumventing this friction, for example by not charging transaction fees at all and rather monetizing through alternative channels (e.g. how Robinhood offers free stock trades but profits on offering leverage and other products) or serving as market makers on their relay and building their fees into the spread. Because relayers have far less overhead than centralized exchanges, we’re expecting 0x-based relayers to offer much lower fees.
As competition among relayers grows, fees may be driven down even further— possibly even to zero. This scenario, which we regard as highly likely, would cause a sustained decline in the price of ZRX tokens, assuming no speculative price action. However, the ZRX token may derive its value from its second utility—as a governance tool for the protocol. The issue of decentralized governance has been one of the most widely discussed in the cryptocurrency sphere as of late. Many projects, including Tezos , which raised $232M in its token sale, have made governance a core feature of their platforms. The current block size debate in the Bitcoin ecosystem has highlighted this concern. Vlad Zamfir of Ethereum and Fred Ehrsam (formerly of Coinbase) have publicly expressed opposing viewpoints on this issue.
Several different governance systems are being explored:
● Stake-based voting by token holders
● Masternode voting (like Dash )
● Stake-based voting for elected decision makers (like EOS and Tezos )
● Stake-based voting for anyone who locks up tokens for an extended period ( Dfinity )
● Pseudo-random voting by token holders who purchase voting “lottery tickets” (like Decred )
The 0x team has not yet outlined exactly how they plan to implement decentralized governance. This is prudent given that decentralized governance is still experimental. The 0x team has said that they will be actively following developments and researching their own methods. While we don’t know how governance will be implemented in 0x, the need for protocol governance is obvious in order to prevent forking and fracturing liquidity pools.
If 0x is successful, the protocol will likely become responsible for a large percentage of total transaction volume on the Ethereum network in the near term. As a comparison, EtherDelta is one of the most widely used DApps in the Ethereum ecosystem, regularly comprising a significant portion of transactions on the Ethereum network. The Ethereum protocol itself is still in active development, and will continue to undergo major changes over time. Some have been outlined by the core development team, while other unforeseen changes may emerge in the future. As these changes occur, the 0x protocol will need to evolve and change in response. 0x also has proposed major features, such as cross-chain atomic swaps, that will be built in the future. These features would greatly increase the utility of the 0x protocol, and users need a way to decide upon when and how to integrate these changes when they’re technically ready.
Nice article great read!
Decentralized Exchanges are the future of the 21 century digital currency. Project 0x stands to be a game changer when it comes to decentralized exchanges in the future. That’s because Project 0x is a permissionless protocol that allows for developers to build their own decentralized exchanges for the swapping of tokens. In this sense, it isn’t unreasonable to think ZRX is going to help DEXs proliferate. How will it work? “Relayers” will be responsible for hosting off-chain order books. These relayers will get paid in the ERC20 ZRX token. Also Decentralized exchanges will play a major role once they overcome problems with liquidity. I know every thing we saw in the markets all have "Downsides" but the important is we know where is the good to invest. Actually 0x (ZRX) is already well known in the markets and one of the Best Decentralized Exchanges for Cryptocurrency Trading. Might say that project like 0x(ZRX) is really worth to invest. They already hit up to $2.37 last January and it is not impossible to hit that again as the community of ZRX getting bigger especially this days.
But as far as i know Decentralized exchange is really complicated especially to the new users and they are also easy to hack because of lack of regulations.
That's what I know, if it's decentralized it is more secured and less of service attack. I don't know what is true now but recently 0x was listed on kucoin and maybe that would be a change and good news for 0x.
base on my perspective decentralized is much better but that doesn't that a project is a good if it's decentralized, most of the project that i invested with are decentralized and all of them failed and right now i only few funds left,for only one project and i see that 0x could retrieve my lost funds.
Thats right! 0x will be your salvation. The recent listing of them could pump it even in this bearish market. Everything will fall but 0x will not. 0x Protocol is preventing all those problems that decentralized exchange are facing.