Continuing in my coins with a future review series, I have a write up on ZRX.
Next, we will be taking a look at ZRX, the 0x protocol. ZRX is a protocol layer upon which decentralized exchanges can be built on the Ethereum blockchain. I would almost describe the relationship as ZRX is to a decentralized exchange as Ethereum is to a dAPP. A bit more complicated than that, but for the sake of today’s research this is apt. Projects built upon 0x will pay fees to the relayer. You can read more about how the relayer service layer works in their technical documents on their website. ZRX will also be establishing a form of decentralized governance for token holders.
If you take a look at ZRX’s chart you will note some nice solid growth.. Naturally this raises the question of “Did I miss the train?” I don’t believe so. Why? Because we believe we are fast approaching the rise of decentralized exchanges, or the dEX. We have seen the last couple of months that the big exchanges simply cannot keep up with the demand of new users. With the increased users, we have seen a marked decrease in user experience on the exchanges. Bittrex, as one example, has been borderline unusable. We are also seeing a growing distrust of some of the bigger exchanges. Twitter has been rife with distaste for how Coinbase handled the “surprise” launch of Bitcoin Cash; with what seems like insider trading happening in the days and hours leading to the announcement. Coinbase also goes down during the most inopportune times during a sudden run up or down. Now today, we have the multiple charge issue. Twitter user Bitfinex’d and some other crypto tweeters have gone to great lengths to discredit Tether and exchanges that use tether; claiming this could be a black swan event waiting to happen. Kraken was recently down for several days leading to unsavory speculation. Conspiracy theories aside, we have seen in our short crypto history what happens when you trust a centralized exchange too much with the Mt Gox incident. All of these are catalysts for the need of decentralized exchanges. And lest we forget, crypto is a decentralized movement and this makes decentralized exchanges a logical next step in our ecosystem. Many dEX’s will utilize ZRX as their protocol. dEX’s are all in their early infancy. As we see them gain adoption, I expect we will see a pop in ZRX.
Another big advantage that ZRX has going for it is FOMO. The interesting thing about FOMO is that is not exclusive to us investors. Projects get FOMO as well. We are seeing more and more big players and projects working with or on ZRX. If you go to their website you will see a list that includes Aragon, Augur, Blocknet, District0x, Ethfinex, Request Network amongst others. More and more projects on the ETH layer will be looking to partner with ZRX.
When looking at any project, you should always take a look at the team. This team has a bunch of all stars. Something to note about this team that makes many people excited is that many are former Coinbase employees. There’s two ways to read this. The down to earth way to read it is: we have people who have been in the exchange space and know its inner workings very well, and have developed a decentralized exchange protocol after working for the biggest name in the US exchange game. The hopeful and speculative way to look at this is perhaps they can work their connections to get added to CB. I would neither bet on that being an imminent event nor discount it. It is something to think about but not a reason to invest by itself.
ZRX is not without it’s competitors. The strongest competitor is probably LRC/Loopring. Kyber Network and Bitshares are two big name decentralized exchanges that do not plan to use the 0x protocol and thus can be seen as competitors.
Please let me know what you think in the comment section. Questions, comments and a dialogue would be great. Cheers.