What Was the 0x (ZRX) Protocol?
The 0x (zero x) protocol enabled the peer-to-peer exchange of assets on the Ethereum blockchain. It was launched in 2017 by ZeroEx Labs, an organization based in San Francisco. The protocol itself was not, by the developer's definition, a decentralized exchange; it allowed for the creation of decentralized exchanges that can be used in broad applications.
However, the Commodities and Futures Trading Commission disagreed—it shut down the 0x protocol in September 2023 for operating as an unregistered exchange, and its developers were fined $200,000.
KEY TAKEAWAYS
The 0x protocol was an open protocol that enabled the peer-to-peer exchange of assets on the Ethereum blockchain.
The 0x protocol was open source and managed by the 0x decentralized autonomous organization.
The 0z protocol was shut down, and as of June 26, 2024, it is no longer maintained.
The History of 0x (ZRX) Protocol
0x was founded by Will Warren and Amir Bandeali in 2017, who launched an initial coin offering in 2017. The ICO was a success, raising $24 million and another $85 million between two fundraising rounds between 2021 and 2022.1
The secondary protocol was created on Ethereum to act as a settlement layer for trading ERC 20 tokens. ERC 20 tokens are fungible (exchangeable) tokens that follow the standards set by Ethereum Request for Comment 20.
In 2021, 0x launched the 0x Decentralized Autonomous Organization (DAO), the organization that would allow participants to govern the progress of the project.2
But in September 2023, the Commodities and Futures Trading Commission filed and settled charges against ZeroEx, Inc, along with two other digital asset exchanges, Opyn, Inc, and Deridex. Charges included failing to register as a futures commission merchant, failing to register as a swap execution facility, and illegally offering leveraged and margined retail commodity transactions.3
ZeroEx was ordered to pay $200,000 in fines and cease operating as an exchange. As of June 26, 2024, the project community was very small, and the 0x Project's Reddit page had been abandoned.45
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As of this writing, 0x (the ZRX token) had a market cap of $307.6 million and a 24-hour trading volume of $10.5 million. It had a circulating supply of 847.5 million ZRX.6
How the 0x (ZRX) Protocol Worked
The protocol set up a system of makers, takers, and relayers. Makers were the users who placed orders on the exchange proxy and waited for a match (providing liquidity). Takers placed orders that were immediately matched (removing liquidity). Relayers were network participants who maintained the order book, acting similarly to an exchange.
The 0x protocol’s message format was composed of a set of data fields that carried vital information, such as the digital asset or token to be traded, the price value of the transaction, the expiration time, and the defined identities of the transacting parties.7
Smart contracts took care of the necessary business logic for generating, sending, receiving, and processing the data linked to the trading activity. ZRX was 0x’s native governance and staking token. ZRX owners had a say in how the protocol evolved, and token holders could also stake their tokens to earn ETH (the Ethereum token ether) liquidity rewards.
The Future of 0x (ZRK)
0x's future is somewhat unclear, as its market cap and price have continued a general downward trend since its introduction. Having been shut down by regulators in 2023, the protocol and its few remaining fans don't have many options unless it transitions from exchange services or registered with the CFTC.
What Is the 0x Protocol?
0x was a protocol for the Ethereum blockchain. It facilitated peer-to-peer exchanges of assets built using Ethereum. The project was shut down by the CFTC for operating as an unregistered exchange and abandoned by its developers.
What Is a 0x Exchange Proxy?
A 0x exchange proxy was an entity that allowed applications to be developed using the protocol.
What Is the Price Prediction for 0x Protocol?
Although the project has been abandoned, there is still ZRX trading activity. However, as there is no active development, ZRX is likely to continue to decline in market value.
The Bottom Line
The 0z protocol allowed users to exchange assets using the Ethereum blockchain. In 2023, the CFTC shut it down for operating as an unregistered exchange.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own ZRX.
