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103. 0x (Published: 12th Jun, 2018)

Overview
Generally, 0x provides an open & permissionless protocol to allow Ethereum-based tokens to be traded through Relayers (exchanges in 0x parlance), which provide users advantages in centralized exchanges (responsive & liquid) without losing control of the their private keys (Wallet-to-Wallet Trading). This innovation is mostly driven by two factors, 0x and Relayers. 0x focuses on delivering the infrastructures (smart contract + API + governance), while various relayers focus on connecting users through a shared liquidity pool, who have to comply with regulations among different regions.

Trading Workflow (DDEX as example)
0x separates the trading layer away from the blockchain compared to the traditional DEX (Etherdelta & IDEX),by hosting the trading market on the Relayers. Only when a deal is closed to settle the final exchange of tokens will the transactions happen on the blockchain. This brand-new design has made the trading on Relayers rather responsive, and very close to the experience on the centralized exchanges, while keeping the users’ fund firmly in their own control. The process below shows the basic workflow of trading on one of the largest Relayers:

Unlock MetamaskLedger Nano S → Wrap ETH into WETH → Enable proxy to trade a token (e.g BAT) → Make a Buy-Order for BAT from an order → Order Maker sends BAT to Relayer → Relayer sends WETH to Order Maker → Send WETH(with ZRX-equivalent amount) to Relayer → Get BAT from Relayer.

It should be noted that there is no need to stake ZRX in account to trade since WETH is currently(as of June 11, 2018) used to pay the transaction fee, and all of the above actions are conducted in a single transaction.

0x
The 0x project team has built the general structure of the protocol which is currently governed by the 0x core team, and will be eventually governed by voting via ZRX token. The protocol consists of four main layers: 0x.js helps to interact with the 0x smart contract; 0x-Smart-Contract helps to integrate some relayer’s functions directly into Dapp; Standard Relayer API helps to build the design and communication standard for developing relayers; 0x Connect helps to share the liquidity pool among the relayers that are complied with Standard Relayer API. The 0x core team has been constantly updating the product and are widely recognized by the community.

Relayers (Exchanges in 0x parlance)
Relayers are mainly responsible to host the trades on the market, which are close to any centralized exchange (e.g Binance) except for NOT holding the users’ funds. Here are some trading details of two largest Relayers that are functioning like Binance:

DDEX:

Radar Relay:

However, there are some Relayers focus on developing Relayer API like OpenRelay; some focus on extending 0x protocol with margin trading like dY/dX. In fact, a relayer could be more than the current exchanges a lot, it can be used to trade or hold auctions on Non-Fungible Tokens like Cryptokitties; it can be integrated into Dapp Games as in-app token exchange tether

 

Market Making
As a brand new market, almost every Relayer is welcoming and rewardingMarket Making(MM) behavior.
Miner could have some advantages on MM, since deals are settled on the blockchain, the most precise market information is logged in block time rather than user time, which might give the miners who have more computation power closer look at the actual market price of a token (i.e. if the expire time is too close, the order may not be included in either current block or next block but has been viewed by the miners). So in general, miners could have a “Truer” look of the whole market. Need further research.

 

0x Meets NFT(Non-Fungible Token)
With the coming release of 0x protocol 2.0 in late July 2018, 0x protocol could be used to trade Non-Fungible Token (in standard of ERC721ERC998). Although the details are yet revealed, it’s possible that ZRX could be used as the exchange intermediate between different Non-Fungible Collectibles (Just like BTC to the other coins).

 

Possible Tools for Market Making on Relayer
Massive: CommandLine tool for publishing 0x orders through OpenRelay
SandBox Editor: Online IDE for Web Dev

 

Interesting Posts
18 Ideas for 0x Relayer in 2018
Regulated P2P DEX (Whitelisted Addresses in Compliant Exchanges)
Strategies to Make your ICO more Decentralized

 

Reference Websites
Relayer Bi-Weekly Update Report <Most Updated & Integrated Reference>
Etherscan-like 0x Tracker
0x Official Blog
0x Technical Wiki
0x Whitepaper
0x Official Group
0x Developer Forum (Monthly Hangout Meeting) <Next: June 25, 2018>

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