06 Jul 0x
0x (ZRX): One Protocol to Rule Them All
Published: 7th July 2018
The Bear Market – A Time Full of Tears and… Opportunities
Nowadays nobody talks about Bitcoin in the way they used to in late 2017. A lot of people have lost their interest due to market meltdown. Is anyone here really surprised by the current state?
After huge and quick growth, significant corrections are to be expected. In fact, from a long term perspective, a big correction is more healthy than not having any corrections at all.
The dawn is always preceded by darkness.. There are no ups without downs.
We don’t want to get too much ahead of ourselves even though it might seem tempting from a short-term gain perspective. Again, slow but steady wins the race.
The bear season is a perfect time for us to accumulate more of our recommended projects at bargain prices. Keep in mind that the vast majority of season investors don’t know much about the projects they invest in. Usually, they just follow whatever is currently being hyped on Twitter or YouTube. As our reader, you are among a small group of people who do proper research before investing your hard earned money. Because we know you care about where you invest, we have prepared something special. Not only will we overview one of the best projects in the crypto space, but also tell you why we expect an even greater bull run.
In the bull season, people don’t believe there could ever be a bear season again. And during the bear season, people doubt there will ever be another rally.
What we experienced in 2017 was a retail boom. Your friends and family asked you what Bitcoin was and some of them probably went ahead and bought it. However, the ones who didn’t really participate during that rally were institutions. Their funds are waiting for the right fundamentals and soon enough they’ll enter the game and make the December explosion seem tiny.
Again, with the current bear market you might be tired of people telling you that “institutional money is coming” and that’s absolutely understandable. Waiting is frustrating!
Remember though, patience is bitter but its fruit is sweet.
Back in May 2018, Coinbase announced a suite of institutional products that they’re adding to their platform. They have the data and connections that indicate clearly that big money is getting ready to enter crypto.
“Over 100 hedge funds have been created in the past year exclusively to trade digital currency. By some estimates there is $10B of institutional money waiting on the sidelines to invest in digital currency today…” — Brian Armstrong, Coinbase CEO
By the way, Coinbase is accepting applications from institutions with at least $10 mln in deposits. In other words, there is big money waiting for the right infrastructure so that it can enter the market. Coinbase provides exactly that.
Years of Uptrend Ahead
Back in the day your grandpa used to perform most of his trading activities on paper and display the current value of shares on a ticker tape. Look at this old school picture below and let that sink in for a moment.
Transmitting stock values using ticker tape
With computers the stock markets have opened their doors to the population at large. Although the market has its ups and downs, year by year more and more people are educated about the stock market and decide to take part. This has not changed until the present day.
Just take a look at the market from a hundred year perspective. The chart represents the Dow Jones stock market index which always shows top 30 publicly owned companies based in the United States. This means new companies jumping in and replacing others. This continuous back and forth is the very reason why we want to diversify our portfolio by investing in various projects.
This is a pretty good history chart that mimics the whole world economy of the past one hundred years. Without even having to mark them on the picture we can clearly observe the dips representing both World Wars, Vietnam, the dot-com crash and the recent housing bubble – that’s how visible they are.
Although so many horrible events happened along the way…we are still climbing up.
Why is that?
Everyday someone out there gets connected to the internet.
Everyday someone creates their first Facebook account.
Everyday someone does something new for the first time.
Everyday someone signs up to our email newsletter 😉
We are talking here about thousands of people worldwide.
This holds true for people willing to invest their money. Every day a new person on this planet gets their feet wet with the stock markets. And this process will continue for many years ahead, fuelling the upward market growth.
Some may argue that you cannot simply compare investing to creating a Facebook account because when people lose money on the stock market they usually don’t go for it again but they are more likely to stay on Facebook for decades.
That’s not quite correct.
Even if you don’t participate in the market directly, your money is definitely there. Take pension funds as an example.
We are getting close to 4 bln people having access to the internet. Sounds great but it’s still only around 56% of the whole global population.
There are still plenty of people that are yet to be connected to the internet and learn about investments, blockchain… even discover the Gangam Style video, not to mention them participating in the markets either directly or indirectly. There is so much untapped room to grow.
Crypto is not even a teenager
So… if barely half of the population isn’t even online, what can we say about crypto space which is not even 10 years old?
If you look up CoinMarketCap we are presented with around $300 bln of total crypto market capitalisation. Is that a significant number?
For everyday people, yes it is. But taking a step back and comparing it to the US stock market alone, which has a size of $30 trillion, we are still a drop in the ocean in comparison.
Oh, let’s not forget that crypto is borderless, meaning money from all over the globe can pour into one bucket. If you compared crypto capitalisation to Japanese, Russian, UK, Chinese markets and so on combined, crypto is gonna look like a single grain of sand.
Companies from all over the world are taking tiny steps towards adapting blockchain technology. Concepts, test networks and pilot programs are being implemented but the truth is the giants are still looking at each other, carefully waiting for the best moment to join the space.
Blockchain space is still in its late infancy. You could say we are learning how to walk and talk . However, we’re getting close to laying the right fundamentals for the institutional giants to take part. And when that happens… oh boy people will wish they had bought Bitcoin at $19,000.
Age of Digital Tokens
With Bitcoin introducing us to programmable money and serving the function of transferring and storing value, we have Ethereum taking us a step further by bringing us to programmable value which goes far beyond peer to peer payments.
Our ancestors used shells as the early form of payment, then we switched over to physical coins which were introduced around 6th or 5th century BCE. With the introduction of print, paper money came into use. Nowadays, plastic cards are taking over physical cash. In fact, the number of cash payments in the UK fell 15% in 2017. UK debit card payments have already overtaken cash.
Finally, there is Bitcoin that gives you full control over your funds, no matter where you are, no matter who you are.
The aforementioned programmability is critical in order to understand what Ethereum has to offer.
Although Ethereum has its own currency of value storage – Ether (ETH) – it’s just the tip of the iceberg when it comes to its limitless possibilities. Most importantly, it is a platform upon which smart contracts and tokens are created.
These days more than a half of the cryptocurrencies out there are built upon Ethereum. Thousands of developers all over the world put their work into Ethereum’s ecosystem, making it more solid and efficient every day.
If you have been in the crypto space for a bit, you have probably heard of the term ICOs, which stand for Initial Coin Offering.
2017 was the year ICOs boomed in popularity. It was a new way for companies to raise funds mostly in the form of ETH while giving back their own cryptocurrency in the form of a digital token.
In this case, these tokens represent partial ownership of the company. It is similar to Initial Public Offering, where a company goes public on an exchange like NASDAQ, but this time you can buy tokens (digital shares) of a company that is still starting out.
How awesome would investing in the next Amazon be while Jeff Bezos is just about to rent a garage from his friend’s mom for their initial operations?
Alright, so we got to the point where money and company shares can be transformed into digital tokens.
But, why stop there?
The same pattern of tokenisation can be applied to any type of asset. Be it real estate, art, licensing, virtual game items, oil, gold and much more. Tokenisation of the world’s assets and fractionalised ownership are what make this vision beautiful.
Welcome to the age of digital tokens.
Tokens not only allow for borderless and efficient fundraising for companies, but also could be used to collect funds for all types of investments like real estate.
Imagine a world where you can buy partial ownership of a local solar farm somewhere in Western Australia. This solar farm produces electricity which is being sold on-the-go to the nearest neighbourhood. When a solar farm is profitable, the gains are distributed in real time on the blockchain to the solar farm’s token holders. (This is basically how POWR works).
No need for a large investment capital. You could easily invest just $1,000, buy yourself a little portion of a solar farm in the form of digital tokens and profit from that.
Imagine a world where you can become a partial owner of a newly built hotel in Miami. You did your research, made sure the company is legit and localisation might be pretty lucrative in the long run. Say you invested just $10,000 and got a share of one of the rooms on the 5th floor with a nice view.
You can either profit from the rooms you own in that hotel or sell them on the market if you find another investment opportunity. Tokens enable fractionalised ownership so you won’t have to have millions of USD in your account in order to participate in these types of investments which normally are reserved for very rich people.
Imagine if you could securely sell your World of Warcraft character with lvl. over 9000 for Ether. The transaction of ownership occurs only when the payment is confirmed.
Apart from that, you are able to buy a portion of this new wind farm in Northern Denmark and assign the ownership to your dad for his birthday.
How awesome do these ideas sound to you?
We envision the future of assets being completely digitally tokenised. A new age of shared economy emerges where everyone with an internet connection can participate in a borderless market of all types of assets.
And yes, these scenarios are still years ahead of us. We still did not figure out the best way to transfer money in crypto, not to mention crypto becoming less of a Wild West.
It will be challenging, we will face security regulations, many law changes, but this is a vision of a world in which blockchain technology allows us to create. And believe us, you are in a tiny amount of the population who is aware of this new era.
Along with the vision of all assets being tokenised, obstacles emerge on the horizon. With literally hundreds of thousands of tokens out there in the future, we will need a way to be able to trade them securely.
While Ethereum enables the creation of tokens on its platform, it does not come with a default built-in way to trade them in a trustless way. Without being able to buy and sell these assets, they would end up being useless.
Unfortunately, in order to trade tokens today we have to use exchanges like Binance or Bittrex which are centralised. The history of crypto has shown many times that centralised exchanges are vulnerable to hacks. When you want to trade on this type of an exchange, you are required to send your precious cryptocurrencies to their wallet.
One wallet to hold them all – How dangerous is that?
Take the Mt.Gox hack in 2013 as an example where 850,000 bitcoins were stolen. This event impacts the crypto space to this day (as some of the recovered bitcoins were sold on the market to cover the loss of Mt.Gox customers).
Next example: about $530 mln were stolen in NEM currency. The Japan exchange Coincheck showed us again that centralised exchanges are not the most secure.
Want more examples? There you go:
December 2014 – 19k Bitcoins stolen from Bitstamp
May 2016 – 185k of ETH stolen from Gatecoin
August 2016 – $72 mln in BTC stolen from Bitfinex
As long as we use centralised exchanges, which are a single point of failure for all exchange customers, we don’t think this list will stop growing.
Let’s welcome the game changer…
With literally hundreds of blockchain based tokens, 0x (that’s zero-ex) comes with a solution to the problem by creating an underlying protocol for a safe token exchange.
Yes, we know, this might not sound sexy to you at this point. But in the following chapters you will read about how 0x redefines the way we exchange tokens and why it has a critical role in the whole Ethereum ecosystem.
You better fasten your seatbelts.
The current state of buying and selling your precious tokens basically looks like this:
You have plenty of centralised exchanges to choose from, but in many cases you can’t tell who’s behind the company or where the company is located.
Say you pick the exchange X, because the token you want to buy trades there.
You open an account and… there is nothing you can do. You can’t start trading because you can’t deposit a dime.
Seems like you have to pass the beloved Know Your Customer (KYC) procedure in order to make a deposit. You take ID out of your wallet, take some nice pictures of it and send them to the company you don’t know much about. Oh, and let’s not forget to attach a selfie with good lightning!
‘Exciting!’ – said no one ever.
Buy crypto, they said. It’s fully anonymous, they said.
So, the hussle should be over… r-right? You get pumped as you are about to trade some crypto, but no… there was a problem with your ID and it requires manual verification.
So you wait…
The verification process sometimes takes days and being unable to trade while your picks are going up makes you feel enraged.
Finally, after ten days your ID has been finally approved. Hurray!
You make a deposit of 3 ETH and you are ready to buy some of these fancy REQ tokens we told you about back in May. You got them… right? They are yours… nope – not until you withdraw them into your own wallet.
Ok, let’s proceed then…
But hey, what’s that? A $500 daily withdrawal limit? Alright, let’s see what we can do about it… oh cool, sending a copy of your aunt’s dog’s passport will lift the limit up to $1000. Fantastic!
Surely that’s the end of any more problems?
If you decide to trade on a centralised exchange you are putting your hard earned funds into their wallets. Something goes wrong? Server unavailable? Maintenance period? Hacks and breaches?
Your funds might get temporarily locked or vanish forever.
We want to be autonomous, anonymous, as well as achieve mass adoption and decentralisation. But how can all this be accomplished if we can’t get our own crypto trading shit together in the first place?
Luckily for us, there are brilliant people out there who are dedicating their lives to developing an underlying protocol for decentralised exchanges (DEX). 0x is about to lay the fundamental set of rules that will set up a secure way of token exchange that creates real competition to centralised exchanges.
Road to Decentralised Fame
Imagine a world, where none of the things from the story above happen while trading tokens.
No need for registration, no KYC hussle, no token deposits, no single exchange wallet to hold them all, no withdrawal issues. And the moment your order is filled the tokens are automatically transferred to your wallet.
We’ve got good news for you. Decentralised exchanges are already here. We can trade tokens in pure harmony with crypto commandments. The thing is, not many people know about them… yet.
If you have been in this space for a while, there is a chance you have heard of EtherDelta (now: Forkdelta). It was one of the first exchanges that paved the way to decentralised trading.
Alas, the one that gets through the door first usually gets shot.
EtherDelta made many crypto enthusiasts realise that it was possible to have a token exchange that bypassed the middleman. This unfortunately, came with a great price. And we mean that literally.
Trading on EtherDelta was like trying to open a can with your teeth. Doable, but damn painful.
If you happened to place a buy order, it had to be stored on the blockchain.
If you wanted to cancel your order, it had to be stored on the blockchain.
Ethereum’s blockchain was also harassed to store the whole data of the order book.
Basically, all taken actions had to be written into the blockchain. Just like ETH transactions, putting other types of data into blockchain does not occur instantly.
Additionally, a small fee is required each time in order to execute your desired action.
All this clogged up the trading platform.
That’s not exactly how we envision the future of decentralised exchanges.
0x is not an exchange, it is a protocol
Protocol investments confuse a lot of people because they are a new concept that differs from simply investing in a company.
Let’s step aside for a second and imagine that 0x builds an engine, gear, suspension, chassis – all the necessary components for a car to drive. This is our foundation, a protocol upon which a car body (an exchange) can be build.
Anyone can utilise the 0x base, as it is open source and free to use. This means teams of developers from all over the world have a ready to use base to create their own dream car.
The goal for 0x is to standardise the way we trade Ethereum tokens, by creating a set of rules which anyone can easily utilise.
A project such as an exchange that utilises 0x protocol is called Relayer. (Of course, a crypto exchange is only one of the potential use cases.)
Why would companies use someone else’s engine instead of creating their own?
0x protocol is the first to introduce a certain set of rules for token trading. A few developer teams decided to go ahead and build Relayers on this protocol.
The results are fascinating.
Today, more than 15 Relayers have been created and are operating. All of them are active and tradable.
With more exchanges still in the beta phase, it’s clear the numbers are growing. This ensures us that 0x is being used by a growing number of developers each day.
If someone were to build a better protocol with a similar ecosystem backed by so many teams around the globe it would definitely pop out on our radar. But for now, there is no project that can compete with 0x’s transparency, ease of use and its current adoption.
How Relayers Benefit from Utilising the Same Protocol
Aristotle once said “The whole is greater than the sum of its parts.” This applies pretty well to the whole 0x ecosystem. Although teams and exchanges that create their own dApps upon 0x compete with each other, each of them benefits from the success of the others.
As previously stated, we have 15 different exchange Relayers that utilise the same engine which powers their activities. What they have in common, with the exception of the same engine, are the tokens being traded on their platforms.
This is extremely significant, as these exchanges can share their liquidity pools with each other. Liquidity is critical for an exchange to function. If there are not enough buyers and sellers willing to trade their tokens, then new users have no incentive to use the particular exchange.
0x protocol allows the exchanges that run upon it to freely share their order books.
Let’s say we have a big boy like Paradex (it’s a DEX) with plenty of users, and therefore a high token liquidity. On the other hand, there is this new exchange built upon 0x that’s just starting out.
You may ask, what is the incentive for competitors to share their liquidity pools?
The answer is simple. When a transaction on a small exchange is settled thanks to tokens provided by the larger one, then they split the fee (it works the same way the other way around). It is a win-win situation.
It is pretty much an affiliate model that works both ways.
The Incredible Benefits of Investing in 0x
The 0x token (ZRX) gives a fantastic opportunity to benefit from the rise of decentralised exchanges. Instead of investing in one particular exchange, say by purchasing Binance Coin, 0x is somewhat like investing in an index fund linked to Dow Jones where you can profit from its overall performance.
This statement can be easily confirmed by looking at the recent events where Coinbase announced their purchase of a decentralised exchange, Paradox, on 23 May 2018. Paradox runs on 0x protocol.
Here is the market reaction to the news:
44% gain in one day, not bad!
Not only does the 0x team work for the success of the ZRX token, but the projects build upon it can also drive the price up. Currently we have more than fifteen 0x Relayers which work for the success of 0x. That’s fifteen independent teams, using different market angles that increase the overall chance of success for our 0x investment.
That’s what we call synergy!
The Need of Anonymity Drives DEX Movement
Countries all over the world are trying to get their hands on crypto. Some of them like Malta, create a friendly environment for businesses that operate in crypto. Alas in other countries like Poland the government tries to kill cryptocurrencies with huge taxes on each crypto transaction.
0x Protocol allows people to trade tokens without the need for a deposit on the exchange. It allows us to trade from wallet to wallet and the DEXs are there just to match sellers and buyers. They of course take their small fee, which we’ll talk about in a second.
People who’d like to avoid footprints such as trading history on a centralised exchange with a KYC verified profile will seek a safe haven to trade. Actually, this is already happening and is comparable to the crypto trading we saw in 2012 – still young and only a few know about it.
Once the crowds realise that they can anonymously trade, the shift will happen.
Half a year ago the sum of trades on 0x Relayers amounted to between 20-40 trades per day.
Since then, despite the heavy bear market, the amount of daily trades increased by over 13000%! That’s amazing.
The snowball effect has already taken over, though we are still a tiny ball that has only started to roll. If the trend continues, we can expect 250k of daily trades performed on 0x’s relayers by the end of 2018.
Investing in 0x today gives us an unusual opportunity to be a shareowner of a protocol that lays the fundamentals for the DEX uprising.
Aside from the users who enormously benefit from using decentralised exchanges, it is the new crypto projects that seek to list their tokens on an exchange.
As Mark Twain once said – ‘During the gold rush it’s a good time to be in the pick and shovel business’.
Centralised exchanges are the ones making money not only off the traders, but the companies willing to list their cryptocurrency too and the prices are insane.
With new projects popping out every day, we expect a new wave of tokens to migrate to decentralised exchanges as the listing fee is much cheaper.
This shift will speed up the snowball effect as people become more aware of DEX which leads us to:
Benefits from Investing in 0x
The ZRX token allows anyone to own a part of the protocol. 0x aims to become a fully autonomous organisation where the token holders have the right to vote on the future of the protocol.
Governance is the most important utility of the ZRX token. Currently, DEXs are reserved for more tech savvy users but once they become more user friendly and the crowds realise the benefits of using it – especially the whales who try to avoid moving larger sums of crypto on centralised exchanges – we expect 0x to explode in price.
If you missed investing in exchanges like Binance in their early days then this is your second chance. Most of the 0x’s Relayers (exchanges) are no more than six months old.
We are given a second chance to invest in not one or two exchanges, but in a protocol that powers all the future giants of crypto trading.
Coinbase made the first move by purchasing Paradex, which runs on 0x protocol. This put the topic of decentralised exchanges into the spotlight.
Changpeng Zhao (CZ) – the man behind the largest centralised crypto exchange, Binance – announced a contest for their new DEX. We have strong fundamentals to place our bets on 0x being utilised in this instance.
With Binance adopting 0x, it will benefit from a protocol proven to work and liquidity pools from all other existing relayers. Once this happens, the price of 0x will skyrocket. But for now we can still purchase the ZRX token for under one dollar.
Secondly, ZRX is used for paying the transaction fee for Relayers. But, it is up to the exchanges whether they want to settle that fee in ZRX or profit from the spread. That’s why at this moment the governance aspect is more important in terms of a token’s utility.
A Team with Gigantic Experience and Connections
We preach that the team is amazing in every single report we publish but the reason why we repeat this over and over again is because it’s important. The idea is worth nothing if there are no right people behind it to execute it effectively.
In this case, as you probably guessed already, the team behind 0x is brilliant and incredibly skilled.
Will Warren is the co-founder and CEO of 0x who studied Structural Engineering at the University of California. He used to be a technical advisor for Basic Attention Token, giving them technical guidance related to Ethereum smart contracts.
The other co-founder and CTO is Amir Bandeali who studied finance at the University of Illinois.
Although we’d love to, we won’t go into detail for every single one of the fourteen team members. But there is one thing worth your attention, namely the companies that people currently working at 0x used to work for.
Also Facebook, Instagram, Dropbox, LinkedIn and Yelp among others.
On top of that, some of them studied at places like Stanford and Cambridge.
And when we move to the advisors part, it gets even more exciting.
Fred Ehrsam, a former Forex trader at Goldman Sachs and the co-founder of Coinbase is their advisor. Also, 3 out of 4 of their advisors have worked for Coinbase.
You know who also worked for Coinbase? Charlie Lee… whose Litecoin was one of the first cryptocurrencies to be added on Coinbase.
If three out of four 0x advisors worked for Coinbase, does that increase their chances of getting listed on Coinbase?
The fact that Brian Armstrong (if you don’t know, he’s the other Coinbase co-founder) calls 0x ‘interesting’ definitely doesn’t hurt either:
Undoubtedly, you know what happens to the price of a token when it gets listed on Coinbase. Though it’s not guaranteed that it will happen, the odds are massively in our favour.
The core idea of cryptocurrencies is decentralisation, albeit the current state is far from that. In fact it’s fairly centralised. This has created a huge hunger and need for DEXs and 0x gives us an amazing opportunity to profit from the upcoming influx.
The fact that 0x is a protocol allowing other companies to build upon it makes us even more confident in the incredible growth potential that it presents. You only need to look at Ethereum or NEO to see what happens with the price of their tokens when other companies started building upon their ecosystems.
Furthermore, there is a high chance for 0x to win Binance’s contest for their DEX.
On the top of that, we’ve got both Coinbase co-founders saying positive things publicly about 0x (with Fred Ehrsam being 0x’s official advisor).
And then we’ve got the team consisting of people with experience working for companies like Google, Apple or Facebook.
We hate the term moon shot but if there is an undervalued cryptocurrency that has extremely solid foundations to go to the stratosphere soon it’s definitely 0x with their ZRX token.
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