Blockchain Investor Analysis

Ox

ZRX
Current Price $0.41 (+2.78%)
0x is a decentralized exchange protocol built on top of the Ethereum blockchain. The ZRX token is required to build decentralized trading layers on the 0x protocol.

Our Rating:

Market

Problem that it solves

The 0x is a protocol for the decentralized trading of tokens on the Ethereum blockchain. It's a free, open-source infrastructure that anyone can use to build user-facing decentralized exchange apps.

Customers

0x incentivizes third parties to create channels called 'relayers' so that they can build on top of 0x, offering their own order books and user interfaces while conducting trades using the 0x smart contracts. The 'customers' in this case consist of 'Relayers' and 'Takers.' 0x charges relayers certain fees to use their smart contracts, so the target audience from a business perspective is other independent companies like Radar Relay and Paradex.

Value creation

Decentralized exchanges have become commonplace in the blockchain industry due to the mistrust associated with their centralized counterparts. The inherent value of using a decentralized exchange comes in the form of safety, security, and privacy. The relayers give takers a multitude of trade options while also providing the decentralized aspect that everyone covets.

Market structure

The 0x protocol will serve an emerging market in the DEX space. Centralized exchanges like Binance and Coinbase currently dominate the market, but users will happily migrate to a more decentralized platform if they can receive the same functionality and ease of use.

Market size

The market for DEX has been steadily growing over the last few years as the community continues to see the constant issues that plague centralized exchanges. Having said that, the exchange behemoths running the world, namely Coinbase and Binance, still hold the majority of the market.

Regulatory risks

As a utility token on a decentralized trading protocol, ZRX faces less regulatory risk than many other digital assets. However, its use in financial trading may attract regulatory scrutiny in the future.

Average Market Score

Average the six scores above

Competitive Advantage

Technology/blockchain platform

The ZRX token runs on the Ethereum blockchain as an ERC-20 token. All other tokens traded on the 0x platform must also be ERC-20.

Lead time advantage

Will Warren and Amir Bandeali founded 0x in 2016, giving them an incredible lead time advantage in the DEX space. They've managed to separate themselves from the competition with their quick start and unique features such as relayers and off-chain order books. The off-chain feature means that congestion on the Ethereum network will not prevent orders from being completed.

Contacts and networks

0x has a niche method of connecting with major players in the industry, and it starts with their 'relayering' protocol. 0x has to attract projects to its platform so that developers will build upon their protocol and expand the number of channels offered to takers.

Average Competitive Advantage Score

Average the three scores above

Management Team

Entrepreneurial Team

The 0x team consists of a small (only six core members), young group of engineers who have made a significant impact on the blockchain industry thus far. The majority of news pieces or articles about 0x praises the team for their fundraising efforts as they have received money from many different groups.

Industry/technical experience

The 0x team has been running their project for a several years now, so its team has met the 10,000 hours experience milestone.

Integrity

0x has yet to give investors a reason not to trust its team of engineers.

Average Management Team Score

Average the three scores above

Token Mechanics

Token required

The most common knock on the 0x protocol is that its token, ZRX, does nothing more than serve as a unit for DApp fees and acts as a form of decentralized governance via voting. ZRX allows users to vote on future changes to the 0x protocol, which remains a critical feature if 0x plans to maintain a truly decentralized exchange.

Value added

The token adds most of its value via the voting rights, but its overall utility is limited to the settlement of relayer fees.

Decentralized

0x is one of the more decentralized protocols in the market.

Token supply

ZRX has a total supply of 1 billion with approximately 652 million in circulation.

Public exchange

The team at 0x has done an excellent job promoting and listing their token on a number of exchanges including Binance, Binance.US, Bittrex, Coinbase, Coinbase UK, Ethfinex, OKCoin.com, and Poloniex.

MVP

0x was co-founded by Will Warren and Amir Bandeali in October 2016. The alpha version of 0x has been live on 0x’s private test network since January 2017. The 0x v3 went live on the Ethereum mainnet in December 2019.

Average Token Mechanics Score

Average the six scores above

User Adoption

Technical difficulty

The 0x protocol goes beyond the 'exchange' title, consisting of multiple layers of decentralized apps all running on the Ethereum blockchain. Even experienced members of the blockchain community would require a few explanations on the details of the platform to fully grasp its technicals.

Halo Effect

0x does not list any specific partnerships of note, but they successfully collaborated with Coinbase and were listed on the exchange in late 2018.

Buzz

The 0x protocol has remained a hot topic since its inception as the company looks to lead the charge for decentralized exchanges. Crypto media depicts the project as one of the first movers in this space. Its social media buzz however, has calmed down lately.

Average User Adoption Score

Average the three scores above

Overall Score

Weighted Average of the five section scores above

Blockchain Investor Analysis

The secret sauce of 0x rests in its "relayer" protocol and off-chain integration features. ZRX is a significant feature within the ecosystem, but it's not integrated in a manner that would cause a significant jump in value should the 0x exchange protocol become incredibly popular.

Subscribe to Bitcoin Market Journal to stay up-to-date with the latest developments in digital asset markets.

Comments are closed.