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Several ERC 20 tokens have surfaced in the past twelve months. Thanks to the revolutionary features of the blockchain technology. It allows anyone to own and transfer assets over an open financial network without a third party.
Most ERC 20 tokens are built on the Ethereum blockchain to serve various purposes. Everyday, more of these digital assets find their way into the market. They get released through initial coin offerings (ICOs), the blockchain-backed crowdfunding initiative. So far, over $1.24 bln has been raised through this growing process this year.
These tokens have a standard contract ABI ( Application Binary Interface). The standard has become the de facto representation of their generality. It establishes a common set of rules for tokens issued on the Ethereum platform.
However, the shared similarity does not seems enough. Current trend shows that thousands of Ethereum tokens are likely to emerge in the future. There is also a view for the need to support all the assets working together. They need an exchange like the 0x project for them to interoperate.
0x is the token that will be used on the 0x project. The 0x project facilitates low friction peer-to-peer exchange of ERC 20 tokens on the blockchain. It allows anyone to use Ethereum smart contracts to operate a decentralized exchange.
The 0x project is an improvement to decentralized exchanges as we know them. Yes, decentralized exchanges are better than centralized exchanges for various reasons. They do not require funds to be deposited to a central party for trustless exchange of assets to be carried out. That is, users can transact trustlessly without a third party.
Centralized exchanges such as Bitfinex or Poloniex can be hacked or manipulated in other ways. They can also be shut down or subjected to government regulations. This is highly unlikely with decentralized exchanges. End users are guaranteed stronger security due to a lack of a central party. Rather, individual users cater for their assets' security. They do not have to rely on a single custodian.
The 0x project is a step ahead of the problems facing decentralized exchanges. They are expensive, slow, illiquid and not interoperable with each other. The 0x project is designed to function as a universal shared order book. It operates as a non-profit foundation. It is a basic building block for other protocols to drive decentralized applications (dApps).
Many dApps have created Ethereum smart contracts for peer-to-peer exchange in the last year. They expose users to numerous smart contracts of varying quality and security. The 0x's system of smart contracts presents itself useful as a shared infrastructure for many dApps builders. It enables users of dApps operating on its protocol to conduct transactions in various cryptocurrencies without leaving the app.
The 0x Project presents a speculative buying opportunity for investors. Its commercial model is low cost and has the ability to penetrate a large portion of the market. Its protocol is more valuable because different projects can be built on top of it. Its free tool will lower the entry barrier for new for-profit exchanges and their markets. Its applications and adoption in the market could be limitless.
The 0x token is meant to serve two purposes. It will solve the coordination problem and drive network effects around liquidity. This allows independent for-profit exchanges to compete for liquidity and customers.
Users of the 0x protocol are not to pay transaction fees as it reduces reliance on the blockchain. It doesnt charge fees of any type to use their protocol. Those who use the protocol to create decentralized exchanges, Relayers, can charge fees. 0x is used to pay trading fees to Relayers for their services.
0x is also used for decentralized governance over the protocols upgrade mechanism. The governance mechanism decreases the chance of upgrade forks and allows an automatic upgrade of the contracts. It ensures consistency across users and permits efficient upgrades to the protocol. ZRX gives users a say in how the protocol should be improved over time. The users' input is proportional to the amount of tokens owned.
The current exchange rate of ZRX is $0.23 with an all time high of around $0.53 (as of September 2017). A wider adoption in the use of the platform will see the price rise due to an increase in its value. It will be due to a demand for its use rather than its being an investment tool. Its use on the protocol would yield more profits than expected from ZRX tokens as an investment. As exchanges built on this protocol multiply, so will the demand for the ZRX token and the price.
Launched in August 2017, there is a fixed supply of one billion ZRX. 50% of the tokens were released at launch. The 0x team retained 15% while another 15% goes to the developer fund. 10% each goes to the founding team and the advisors/early backers. ZRX can be stored in any ETH wallet address as it is an ERC 20 token.
Exchanges like Coinbase can be used to buy ETH with credit or debit cards. For cash purchases, transfers from bank accounts can take four to five days to get ETH. The bought ETH could be sent to a deposit address of one of the exchanges like Poloniex to purchase ZRX. The purchased ZRX could stored on any ERC 20 token-compliant wallet like Mytherwallet.
To turn 0x to cash will simply be by converting it to another token. Better still, users can sell 0x in exchange for ETH. The converted token could be withdrawn into cash in two ways. It could be through ATMs by using crypto-based debit cards such as TenX or Monaco. Users can also make USD or EUR transfers on exchanges that enable direct links to bank accounts. A number of major exchanges trade 0x at the moment. They include Poloniex, HitBTC, Binance and Liqui.
0x cannot be mined. It has a fixed total supply - a maximum of one billion tokens - and there is no continuous issuance model. Relayers who facilitate trading over the 0x platform earn transaction fees in ZRX. They profit from hosting off-chain order-books and matching makers and takers who trade ER C20 tokens. The more the trades generated, the more transaction fees earned.
Price charts continue to show how tokens continue to appreciate and trading volume increases. 0x's transaction throughput is directly tied to that of the Ethereum blockchain. This will help to ensure it meets demands for growing transactions loads.