0x: An Open Protocol for Low-Friction P2P Exchange, MIT Bitcoin Expo ‘18
Talk given by Will Warren
Will Warren is co-founder & CEO of 0x and spoke on Day 2 of the MIT Bitcoin Expo 2018.
Anything of value (currency, traditional assets, digital goods) can be represented as a token
- Numerous amount of digital currencies
- Traditional Assets: stocks and bonds
- Digital Goods: video games, online collectibles
There will be a NEED to exchange ALL of these tokens
*If each dApp was creating their own smart contract → bootstrap liquidity → no interoperability
0x View
Smart contracts should act as modular building blocks that can be assembled and reconfigured
Open standards tend to win in the long run | Early decentralized exchanges on Ethereum took the functionality from traditional centralized exchanges
Order Book — list of people try to buy and sell digital assets existing within a Ethereum Contract
On-Chain Order Books — every time you have to place, modify, or cancel an order
Issues with On-Chain Order Books
- Expensive
- Bloats the Blockchain
- High Latency
Automated Market Makers (AMMs) — instead of two parties entering into a trade directly, a buyer or seller will enter into a smart contract. Smart Contract offers a spot price
Issues with Automated Market Makers
- Low throughput
- Front-running
- Gameable
State Channels (aka payment channels) — move some assets into a smart contract that is locked up, variety of transactions happen off the blockchain. Aggregate activity off the blockchain and then record it on the blockchain, then close state channel
Issues with State Channels
- 3+ txt security deposit, challenge period
- No smart contract integration bc transactions happen off the blockchain
- Are all parties behaving honestly off the blockchain
Order Schema — tells you how to arrange data into a packet and signal intent to enter into a trade
- Contains details of the trade: time of trade, amount of asset, time for order to live
- Smart Contracts on the ethereum blockchain that accept these cryptographically signed 0x orders and settle trades to the blockchain
User would cryptographically sign data packet (content of data packet above):
- Sell token x and receive token y at this exchange rate → send it to counter party
- Manual OTC trade
Relayers
- Someone who takes orders and charges fees
- Take trades into order book and display to public
- Open Order book
- Might want exclusivity before placing trade
- Will match buyers and sellers
- Orders exist off the blockchain
- Trade only occurs when transaction is settled
Why create an open standard?
- Global network for marketplaces, dApps, exchanges
- Pool liquidity + standardized, robust dev tools
0x has created
- 0x Javascript Library
- Standard Relayer API
0x Protocol launched in August 2017 on the mainnet
- Kin Alpha — created by one developer |WAIT WHAT| yes just one developer
- Radar Relay — first one to go live on the main net
- Approximately — 1,000 people truncating using 0x protocol 1 month prior to the expo
0x Protocol V2 Announced
- Will support any digital asset or future token standard
- ERC20, ERC721, and more
- Solidity ABIv2 pass structured data btwn smart contracts → will make it easy for developers to integrate 0x into their protocol
- Signature Generalization — will be able to sign human readable structured data
- 0x trade widget
Video Link: Will Warren’s full talk at the MIT Bitcoin Expo ‘18 — https://www.youtube.com/watch?v=A8uTmhcQodc
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