0x's mission is to create "a tokenized world where all value can flow freely." The project’s DEX protocol provides the tools for developers to build decentralized exchanges for swapping ERC-20 tokens.
Visualize it like this: websites depend on HTTP (HyperText Transfer Protocol) to function and e-mail depends on the SMTP (Simple Mail Transfer Protocol) to function. Websites and e-mail applications (such as Gmail) rely on these infrastructure protocols. 0x is a protocol for developers to build decentralized exchanges instead of website or email applications.
The goal of decentralized exchanges (DEXs) is to give global access to people who want to trade tokens without depending on a central entity. Popular centralized exchanges such as Coinbase have custody over user assets and facilitate instant trades. DEXs, on the other hand, are non-custodial, meaning users have control of their assets and all transactions are conducted on-chain.
Zeroing in on ZRX
The token attached to the 0x protocol, ZRX, is the currency used to pay the fees on the decentralized exchanges built using the 0x protocol. Thus, the more DEXs created using 0x, the more demand there will be for ZRX.
Since its inception in 2016, 0x adoption has grown significantly, and the surrounding community of developers and investors has evolved into a diverse ecosystem. Highlights include:
- Establishing the 0x Ecosystem Acceleration Program to support community-driven projects, with millions of dollars awarded to date.
- Launching 0x Mesh, a new peer-to-peer network for sharing orders within the 0x ecosystem.
- The development of the 0x API - giving access to all DEX liquidity (Ox Mesh, Kyber, Uniswap, Oasis and more) through one API.
0x in 2020: Matcha, Zapper and Mega Growth
Last year’s metrics were impressive for 0x. In 2020 there was an incredible $8.18 billion of total volume transacted using the 0x protocol. This represents nearly a 3,000% YoY growth rate, which indicates the explosive growth of 0x and the rise of DeFi in general. Total trades were just under 1,000,000, and the number of different tokens traded was just under 2,000.
What about the specific applications built with the 0x protocol? Here's an analysis of a couple of key players that emerged in 2020:
- Matcha: A DEX that aggregates prices across liquidity using the 0x API to ensure users get the best prices for their trades. Matcha is described as the Robinhood of DeFi trading and recently passed $2 billion in volume traded.
- Zapper: An interface to manage all your DeFi assets and liabilities. The platform cleared $24 million in volume in its first 30 days, and has seen $1.3 billion invested through its platform since May 2020.
As you can see, the 0x ecosystem is diverse and snowballing. The numbers speak for themselves. The 0x project had a massive 2020 and looks set to continue this growth going into 2021 – it is the Chinese zodiac year of the ox after all! What challenges are the 0x team facing, and what is the roadmap for overcoming them and sustaining this impressive growth?
2021: Year of the 0x?
The main priority for the 0x protocol in 2021 is to transition from an engaged community to one with greater responsibility for governance and developments. Since 2017, the 0x project has built a highly decentralized ecosystem, and the plan has always been to hand over more responsibility in time to the community. While this is no small challenge, the 0x team has a two-part 2021 roadmap planned.
Firstly, they are planning to roll out an on-chain ecosystem fund. 0x labs will initially seed this community treasury to get the ball rolling, and ZRX holders will wholly manage the fund. The idea is that this fund will help incentivize an engaged and accountable community of developers.
Secondly, they want to establish more on-chain governance by transferring protocol governance to an on-chain binding vote system. This will mean that the 0x team will become 'just another team' in the ecosystem, and any other team can autonomously implement changes.
These developments in the 0x ecosystem will essentially add up to one thing in 2021: more power in the hands of ZRX token holders. Looking ahead to 2021, this growth will start to be put into the hands of ZRX token holders, empowering them to shape the future of 0x.
Given these bullish factors, 0x and the ZRX token could be one of the most effective and profitable ways to invest in DeFi this year. One of the easiest ways to do so is through Skrill, the e-payments platform that enables the purchase of ZRX via credit card, or on Binance. You can also purchase ZRX on exchanges such as Coinbase, and on DEXs like Uniswap.
Decentralized finance is tipped to go from strength to strength this year, as the total value locked into defi protocols surges and new users flock to the industry. Should this prediction come to pass, acquiring some ZRX and keeping a close eye on 0x project developments could prove a very shrewd move.