Welcome to our first biweekly update on 0x protocol!
For those who aren’t familiar, 0x is an open protocol that facilitates peer-to-peer exchange of digital assets on the Ethereum blockchain. The team tirelessly works towards the bright decentralized future! Over a period of two weeks, they were immensely active as usual and a lot of essential news appeared! Firstly, dYdX protocol is now sourcing liquidity from 0x via Radar Relay! This integration is powerful in that it leverages contract-fillable liquidity, which describes the ability for smart contracts to programmatically swap tokens by filling orders on DEXs. Contract-fillable liquidity unlocks a variety of applications, giving devs and businesses the opportunity to build or combine smart contracts to create novel financial markets. Fantastic to see this integration in action! The team also released version 0.0.4 of 0x Launch Kit, which allows for greater customization, smaller containers, and includes a number of other improvements! Launch Kit takes care of all the complexities of building a crypto exchange. The team published a few walk-through videos for developers and businesses looking to build on 0x! In this ‘Build with 0x’ video series, you can learn how to use 0x Launch Kit to freely and quickly launch your own ERC-20 decentralized exchange or ERC-721 marketplace. Additionally, you can learn how to connect 0x Instant, a flexible way to offer simple crypto purchasing, to your DEX. Check out these videos on 0x official Youtube channel! As for social encounters, in June the 0x team hosted their first internal hackathon! This hackathon was intended to foster the innovative spirit and give team members the freedom to build whatever piqued their interest! Last week the team issued a detailed article, in which they review the structure of the hackathon, describe all of the submissions, and congratulate the winning projects. ‘0x Ecosystem Developer Meeting’ took place and the recording will be available on 0x YouTube channel soon. The new episode of ‘Decrypting the Law by 0x’ was published. In this episode, Jason Somensatto (0x Strategic Legal Counsel) explains the basics of the U.S. Securities and Exchange Commission and their approach to regulating the crypto industry. As for upcoming events, Clay Robbins will be talking about “The Future of Automated Finance” on the main stage at BuildETH 2019 in San Francisco on July 19th. The 0x community is quite active and it constantly grows. 0x is definitely a promising project! Keep on powering decentralization! Stay tuned for 0x biweekly updates in the coming weeks!
Development
Github metrics:
Developer activity (from Coinlib.io):
dYdX and Contract-fillable Liquidity
Tapping into 0x’s Networked Liquidity Pool
dYdX, a margin lending exchange, is now sourcing liquidity from 0x via Radar Relay! dYdX is currently pulling liquidity for DAI/USDC, ETH/USDC, and plans to add more trading pairs in the future. This integration is powerful in that it leverages contract-fillable liquidity (CFL), which describes the ability for smart contracts to programmatically swap tokens by filling orders on decentralized exchanges.
DeFi projects consume liquidity from DEX networks to enable the exchange of assets within products ranging from decentralized lending services to leverage trading platforms. Even atomic arbitrage bots need consumable liquidity in order to trade effectively across exchange venues. Contract-fillable liquidity is the bedrock of the Open Finance space and is one of the most important functions enabled by smart contracts on permissionless blockchains. It opens the door for capital to frictionlessly flow between crypto protocols to allow for the creation of markets that couldn’t exist in the traditional financial system.
Source liquidity from 0x for your DeFi project here.
dYdX, a Case Study for CFL
dYdX is both a margin lending protocol and a user-facing decentralized exchange that creates leveraged short and long positions on Ethereum-based assets such as ETH, DAI, and USDC. Whenever a user wishes to open, close, increase or decrease their position(s), dYdX’s contract automatically finds the best token pair liquidity available on 0x and fills the order.
dYdX takes advantage of the flexibility of smart contracts and the composability of crypto protocols. In a DAI/USDC trade, for example, dYdX utilizes the dYdX protocol, MakerDAO, 0x protocol, and Ethereum. All of the logic and settlement for these trades are executed automatically by smart contracts connecting these open-source systems. All of the interactions are happening under the hood and are abstracted away from end users. This implementation shows that decentralized apps of all kinds can use 0x infrastructure to automate token swaps and improve their user experience.
Effect on the 0x Ecosystem
In the 0x Network, there is a maker and taker for each trade. As more makers and takers trade with each other, liquidity in the network grows. Liquidity begets more liquidity, and the flywheel spins faster and faster.
The 0x Core Team is working to increase outstanding orders, primarily through our Market Maker Program. However, that’s just one side of the equation. Contract-fillable liquidity addresses the other side by growing taker volume. Every time a dYdX user makes a trade, they fill an existing maker order on Radar Relay, an open orderbook relayer built on 0x. In the past weeks since going live with ETH-USDC and DAI-USDC, dYdX trades have added roughly $199,000 and $32,000 in volume per week to those pairs on Radar Relay.
As more great projects like dYdX attract retail traders and increase taker volume, the stronger the incentive to provide orders becomes. The more orders that are provided, the deeper the liquidity pool becomes. In addition to adding volume to the network and creating documentation to easily source liquidity, the team is very close to releasing a beta of 0x Mesh, which will greatly reduce the friction involved in sharing orders within the asset pool.
CFL Use Cases
Contract-fillable liquidity unlocks a variety of applications, giving developers and businesses the opportunity to build and combine smart contracts to create novel financial markets. Some of the use cases the team has explored so far include:
- Administering convenience functions, such as wrapping ETH or setting allowances, before function execution.
- Executing arbitrary transactions in order to combine multiple actions together atomically for improved UX.
- Performing risk-free atomic arbitrage across exchanges.
- Pre-baking terms of an asset sale into a smart contract so that it can be trustlessly executed in the future.
0x now has some of the lowest slippage compared to other DEX protocols (IDEX, Kyber, Uniswap, etc.) for popular pairs like ETH/DAI, ETH/USDC, DAI/USDC, BAT/ETH, and more. In addition to providing liquid markets for key trading pairs at all purchase prices, the team has added new documentation to help developers easily tap into the 0x networked liquidity pool.
How to Launch a DEX in Minutes
Creating Your ERC-721 (Non-Fungible Token) Marketplace:
In this Build with 0x video series, you can learn how to use 0x Launch Kit to freely and quickly launch your own ERC-20 decentralized exchange (DEX) or ERC-721 (NFT) marketplace. Additionally, you can learn how to connect 0x Instant, a flexible way to offer simple crypto purchasing, to your DEX.
Required Resources
• Docker
• npx
• An Ethereum node on Kovan testnet; Infura can get you started for free
🎥 Watch the other videos in this series
» Creating Your ERC-20 Exchange:
00:34 Walking through an ERC-20 DEX demo
02:47 Building your own ERC-20 DEX
06:09 Minting test tokens
» Connecting 0x Instant to Your ERC-20 Exchange:
» Creating Your ERC-721 (Non-Fungible Token) Marketplace
Launch Kit v0.0.4
The team released version 0.0.4 of Launch Kit. This release allows for greater customisation, smaller containers and a number of improvements.
Custom Config
A config file can be used to modify the tokens, trading pairs, themes and general properties of Launch Kit frontend.
Below you will find the default config when starting Launch Kit
With a few tweaks and changes to the tokens listed, the trading pairs and the styling you can quickly create an Exchange for REP as an example.
The new config and additional assets need to be mounted into the frontend container when using the docker-compose file generated by the wizard.
services:
frontend:
image: 0xorg/launch-kit-frontend
environment:
REACT_APP_NETWORK_ID: 1
REACT_APP_DEFAULT_BASE_PATH: '/erc20'
REACT_APP_THEME_NAME: 'DARK_THEME'
REACT_APP_RELAYER_URL: 'http://localhost:3000/v2'
command: yarn build
volumes:
- frontend-assets:/app/build
# Mount in the custom config
- ./config.json:/app/src/config.json
# Mount in any custom icons into public assets
- ./custom_token.svg:/app/public/assets/icons/custom_token.svgFor more information on Customising Launch Kit with a config file, please see the documentation.
Smaller Containers
The team has made a number of optimisations in the Launch Kit containers. This reduces the time to getting started by an order of magnitude.
Getting started with a 30Mbps connection is down from over 6 minutes to less than a minute.
Persistent Backend
A Docker volume can now be attached to the backend to allow for persistent orders through restarts
backend:
...
volumes:
- backend-database:/usr/app/src/dbImprovements
Frontend
- 0xProject/0x-launch-kit-frontend#552
- 0xProject/0x-launch-kit-frontend#522
- 0xProject/0x-launch-kit-frontend#526
- 0xProject/0x-launch-kit-frontend#510
- 0xProject/0x-launch-kit-frontend#544
- 0xProject/0x-launch-kit-frontend#550
Backend
Wizard
Upgrading to 0.0.4
If you have already used the wizard and wish to upgrade the docker containers, simply run docker-compose pull to pull the latest containers.
Assets:
Will Warren @willwarren89 on Twitter on Jun 29:
One of our core values on the 0x core team is to consistently ship. Excited to see the ZRX staking is on track to ship in late Q3/early Q4*. Fills pay the bills! @HyszSkies @abandeali1 @merklejerk
*assuming tokenholders approve of the change. 0x-monorepo
Read also 0x Ecosystem Update, June 2019!
Social encounters
The Inaugural 0x Team Hackathon
In June, the team hosted their first internal hackathon! This hackathon was intended to foster the innovative spirit and give team members the freedom to build whatever piqued their interest.
Hackathon Details and Structure
0x internal hackathon was limited to 24 hours and everyone on the 0x Core Team was encouraged to participate. There were no specific guidelines or restrictions around what teams could build. Hackathon projects could range from smart contract implementations to educational videos. After all the projects were submitted, the 0x team voted on winners in several categories including:
- Best in Show: Awarded to the project that could most impact the overall crypto industry.
- Most Liquid: Awarded to the project that has the highest potential to increase liquidity for 0x and the DEX space.
- Best Technical Achievement: Awarded to the project that made the biggest technical breakthrough.
- Most Creative: Awarded to the project that was the most out-of-the-box.
- Judges Choice: Joey Krug (Founder of Augur, CIO of Pantera Capital) and Olaf Carlson-Wee (1st Employee at Coinbase, Founder of Polychain Capital) were kind enough to join us during the hackathon to judge. They reviewed all the projects and selected their favorite.
Hackathon Projects
Clippy by Greg Hysen, Peter Zeitz & Ben Burns [Best in Show + Judges Choice]
Clippy is a 0x extension contract that allows minting of tokenized put and call options from ERC-20 token collateral. Combinations of these option tokens can be ‘clipped’ together to create a variety of tokenized financial products, including margin positions, token loans, etc. The Clippy UI is a p2p application that runs locally on a user’s computer and relies on 0x Mesh as a back-end for relaying order messages. Watch out BitMEX, Clippy offers up to 80x leverage!
0x Orderbook Visualizer by Steve Klebanoff [Most Liquid]
The 0x Orderbook Visualizer provides a dashboard that gives real-time visual insights into the health of 0x relayers’ orderbooks. A unique color is used for each maker address to notate how diverse the set of market makers is for a given pair. Users can also filter orderbooks to specific maker addresses, which details the spread each maker address is providing individually. Real-time slippage statistics are displayed, along with the DEX.AG ranking, giving viewers quick and instant information about the health of each orderbook.
ShardToken by Remco Bloemen [Best Technical Achievement]
In a scaling future where state-rent and sharding are enabled, we can say goodbye to the ERC-20 standard as we know it. But what will replace it? In this hackathon project, Remco built a fully functional and tested token contract for a post-state-rent, post-sharding world. It works by keeping tokens in wallets and having honest wallets recognize each other through their ancestry. This ancestry check is implemented in a shard-proof way by (ab)using the way addresses are generated to create a family Merkle tree. As a bonus-hack, he worked around a Solidity limitation so that a contract can spawn a copy of itself.
Tokenized Second Life by Paul Vienhage, Lawrence Forman & Rui Zhang [Most Creative]
Second Life is a game created by Linden Lab, which allows users to create, buy, and sell items in a digital world for an in-game currency Linden dollars which are convertible to US Dollars through a centralized exchange, LindeX. The centralized exchange averages around $230K of daily Linden dollar to USD volume. The USD-volume of transactions for in-game items appears more significant. This hackathon team created the smart contracts and back-end needed to tokenize the Linden dollar as an ERC-20 token and to tokenize Second Life’s in-game items as ERC-721 tokens. A virtual in-game ATM was scripted to automatically accept Linden dollars and issue an equivalent number of ERC-20 Linden dollars to the depositor’s Ethereum address.
Users could also reverse the process by sending their ERC-20 Linden dollars to the ATM’s wallet address, which would burn the tokens and issue an equivalent number of in-game Linden dollars to the user in Second Life. The hackathon team is excited about the prospect of bridging the Second Life economy to DeFi.
0x Wire by Francesco Agosti, Fabio Berger, Alex Browne & Patryk Adaś
0x Wire is a decentralized cross-platform desktop app that comes bundled with 0x Launch Kit and a 0x Mesh node. Download and launch the application to access the first decentralized exchange that taps into the 0x Mesh network, and therefore 0x’s networked liquidity pool. The orders don’t necessarily go through a centralized database. Instead, they travel through a p2p network of 0x Mesh nodes. Since the app is installed on your personal computer and does not rely on any centralized infrastructure, it is completely decentralized and unstoppable.
BARF by Tom Schmidt
BARF, the Bay Area Real estate Fund, allows users to buy a share of San Francisco real estate with as little $10. By creating a synthetic token that tracks the price of the median SF home sale using UMA protocol, BARF lets renters hedge their naturally short position on housing and get access to the best performing asset class of the past 100 years.
CheezX by Clay Robbins
CheezX is an NFT relayer for the battle royale game, CheezWizards. Built by Clay (0x Ecosystem Development Lead) with 0x Launch Kit’s front and back-end, the purpose of the project was to prove that a relatively non-technical person can easily launch a 0x Relayer, enable trading for a specific type of asset, and begin monetizing the marketplace.
Coin Correlation Finder by Weijie Wu
Coin Correlation Finder is a research project and an engineering tool to find the correlation among various tokens, in terms of any meaningful metric, including price and transaction volume. In addition to researching how to define linear and non-linear correlation, Weijie wrote a python program that takes inputs from particular metrics and combines it with custom histograms and window sizes for statistical analysis. The output of the program details the correlation for various token pairs. His initial tests revealed that most tokens are strongly, positively correlated with ETH and that stablecoins are negatively correlated with ETH.
Launch Kit stylizer by Patryk Adaś, David Sun, Brandon Millman & Will Warren
Launch Kit stylizer empowers anyone to customize the look and feel of their Launch Kit UI without touching code. Instead, users simply open a Figma file in the browser that contains UI mockups that may be modified through an intuitive color palette interface and style guide. Behind the scenes, Figma’s powerful API modifies a Launch Kit configuration file such that the changes to the mockup are reproduced on their live running version of Launch Kit.
Launch Kit is intended to make it easier to spin up a digital asset marketplace that delivers a tailored user experience. As a case study, the team used Launch Kit stylizer to design an NFT marketplace for a new concept universe, BreadMages™.
SolFix by Alex Towle
SolFix is a Solidity code formatter. The simplest use of Solfix is to prettify Solidity code. The stylizer is very configurable, and the formatter can apply different formatting depending on what part of the AST is being currently being written. An example of how this is useful is that the 0x style guide has different formatting for the contents of a contract definition body and a function body, so a formatter that is aware of the grammar of Solidity is needed to apply this formatting in general. While configuring the prettifier in a syntax-aware manner is nice, Solfix can do much more.
Solfix can write keywords as user-specified strings, so it can perform actions like replacing all instances of contract with class in a source file. In this way, Solfix is like a text editor that has a configurable tab width: everyone can choose how they would like to read Solidity down to the most granular detail.
BTCAV by Amir Bandeali
BTCAV is a decentralized stablecoin that is pegged to the price of bitcoin. It uses the same technology as DAI, but with one key difference: it utilizes a BTC/USD price feed in addition to the ETH/USD price feed that is currently used by the DAI system in order to derive a BTC/ETH price. This new price feed can be used to create a stablecoin that is pegged to Bitcoin while using ETH as collateral. Since the price of ETH is much more positively correlated to the price of Bitcoin than it is to USD, this system can lower the minimum collateral requirements (150% required for DAI) in order to create this synthetic Bitcoin in a capital efficient manner. In addition, this project is nearly compatible with all of the existing tooling in the DAI ecosystem.
Sourcery by Marc Savino
Slack is a central part of our recruiting efforts here at 0x. We leverage Slack to gather stakeholder info, share resumes, align around decisions, manage feedback, and even coordinate interviews. Built to boost our recruiting efforts, Sourcery is a Slack command that scrapes a given LinkedIn profile and posts a simple, visual summary of a candidate’s resume and work experience. It’s an easy way to share profiles and gather opinions. Sourcery is a very simple prototype, but this app can certainly evolve into a core part of any recruiter’s toolkit!
Bling by Chris Kalani
Bling is an NFT display web app where users can showcase the limited edition tokens they receive anniversaries, birthdays, etc. or earn during contests. These event-based NFTs are intended to replace the useless t-shirt and sticker handouts you normally get at events. Users are ranked in a leaderboard based on their NFT accumulation.
0x Vault by Daniel Pyrathon, Mason Liang & Xianny Ng
0x Vault is a plugin for Hashicorp Vault that allows applications to sign transactions and orders without ever disclosing the private key. This team built an MVP that allows you to persist a private key in a secure vault, and then use that private key for signing an order, using a REST API.
Decrypting the Law by Brent Oshiro & Jason Somensatto
Members of the 0x community sometimes ask questions about the legal implications of developing and trading on 0x. Decrypting the Law is a concept for a recurring video series featuring Jason Somensatto diving into various legal issues impacting the 0x ecosystem and broader crypto community. For the hackathon, Jason and Brent produced a high-quality sample episode explaining the basics of the US Securities and Exchange Commission’s current involvement in the crypto industry.
WrappedOrderTokens by Gene Aumson
The 0x Core Team envisions a world where all assets are tokenized. What happens if we tokenize the fundamental 0x construct, the 0x order? Specifically, if we tokenize the taker position as the right to fill the order and the maker position as the obligation, we effectively end up with call/put option position tokens. A maker can submit a signed order and a good faith deposit to mint a pair of position tokens. Tokens with analogous terms (exchange rate, expiry, etc.) are fungible. All fungibility classes can be managed by a single ERC-1155 contract.
Congrats to all the winners!
July 2nd: 0x Ecosystem Developer Meeting
Post-call, technical help session with Ecosystem Engineer, Jacob Evans
Upcoming events:
July 30th: 0x Ecosystem Developer Meeting
📅 Sync the Public Calendar to keep up to date on future sessions. The team also posts a recording on their YouTube channel.
July 19th: One-day Ethereum developer conference in San Francisco. Clay Robbins will be talking about “The Future of Automated Finance” on the main stage at BuildETH 2019.
Videos:
The ABCs of the SEC | Decrypting the Law by 0x
In this episode, Jason Somensatto (0x Strategic Legal Counsel) explains the basics of the U.S. Securities and Exchange Commission (SEC) and their approach to regulating the crypto industry.
Open-Source Legal Resources:
Finance
Token holders and the number of transactions dynamics (from Etherscan.io):
0x Network Data
Thanks to Craig from 0x Tracker for pulling this month’s 0x v2.0 trade data (5/20–6/18)!
- Trade volume: $20,224,744 (+17.05% MoM)
- Fill count: 45,613 (-21% MoM)
- Fill volume: $21,880,703 (+5.5% MoM)
- Trade count: 18,249 (-39.14% MoM)
- Unique makers: 843
- Unique takers: 763
- Unique addresses: 1,372
Top Tokens
We calculated volume using both canonical and Ethfinex wrapper tokens. Also note that volume exceeds total fill volume due to two-sided nature of trades.
- ETH: $20,497,988
- USDT: $8,637,253
- DAI: $4,381,098
- MKR: $4,096,005
- TUSD: $1,954,124
Top Relayers
- Tokenlon: $9,841,977 (+537.75%)
- Ethfinex: $5,658,555 (-26.85%)
- Radar Relay: $3,379,367 (-34.29%)
- Paradex: $960,373 (-59.33%)
- Tokenmon: $268,592 (+12.1%)
Roadmap
0x Roadmap 2019
Part 1: ZEIPs
0x v2.0 is designed for iterative upgrades
0x v2.0 is battle-tested, designed for iteration, and there are already a number of ZEIPs queued up. Members of the 0x core team are excited to move quickly. However, they are now working with a live system that has access to a great deal of digital assets. It is critical that they put a more formal structure around the ZEIP process to ensure the community can help drive decision making, communicate needs, and provide oversight.
ZEIPs
0x Improvement Proposals (ZEIPs) were introduced as a concept almost six months before 0x v1.0 was launched on the Ethereum mainnet. To date, ZEIPs have primarily been used by the core team to propose and document potential upgrades to 0x protocol’s system of smart contracts. There has not been any formal process for vetting and prioritizing these proposals; it is time to change that.
In the next few months, the 0x core team will put forth some of the first ZEIPs, work with the community to improve the ZEIP process, and undoubtedly learn a ton along the way.
ZEIP-23: support multiple assets on each side of a trade
ZEIP23 introduces a new component to 0x protocol’s pipeline of Ethereum smart contracts — the MultiAssetProxy (MAP) contract — which makes it possible to atomically trade any arbitrary bundle of ERC20/721 tokens. Numerous teams have expressed the need for this feature, and it can support a variety of use cases:
- Sell 20-card booster packs for your ERC721 trading card game.
- Buy a cluster of neighboring LAND parcels in decentraland to establish your virtual territory.
- Open a short position within a categorical prediction market. For example, use Augur or Veil to bet against a specific political party winning the 2020 US presidential election by going long all of the other political parties.
ZEIP23 has reached the end of the ZEIP process; development is complete and the implementation passed a security audit.
ZEIP-24: support for the ERC1155 token standard
ZEIP24 adds support for the ERC1155 token standard, which allows a single smart contract to maintain user balances across a collection of internal ledgers. The design is ideal for use cases that require large-scale creation of tokens such as gaming, loan origination, and prediction market platforms. Instead of deploying a vast number of distinct ERC20 tokens that each maintain a single ledger, an ERC1155 token can collect all of these ledgers into a single smart contract. Projects that have committed to using the ERC1155 token standard include Gnosis, Horizon Games, and Enjin.
ZEIP-X: Trade Execution Coordinator (TEC)
Today the two most common relayer models are the open orderbook and order matching models. The team releases a ZEIP and specification for a TEC, an extension contract that enforces a strict set of rules around trade execution and that combines some of the best attributes of existing relayer models. The TEC will prevent front-running/trade collisions and allow for free off-chain order cancellations without sacrificing the ability for third-party smart contracts — such as dYdX — to consume 0x liquidity. The are targeting a launch in late Q2 2019 for the first version of the TEC which will likely be somewhat centralized in nature, but will hopefully prove out the concept, leading to more decentralized designs and research interest in the future. You can learn more about the TEC concept here.
0x Protocol v3.0
The team is targeting the next major version bump for 0x protocol to occur in Q3 of 2019. The move to 0x v3.0 will involve replacing the Exchange contract which contains the bulk of the system’s logic for trade settlement. The transition from 0x v1.0 to v2.0 involved migration to a completely new system of smart contracts; it was a disruptive process that halted trading. Traders were required to reset their token allowances and relayers were forced to shut down their v1.0 order books and spin up empty v2.0 order books. The process took months to play out and a number of traders dropped off. In contrast, the transition from v2.0 to v3.0 will require zero disruption to markets; users won’t have to do anything to take advantage of the upgrade and relayers will be able to smoothly transition their order books with zero downtime. Relayers will not even need to clear their order books; both 0x v2.0 and v3.0 orders can exist on the same orderbook. The experience for traders should be seamless.
The bump to v3.0 is an opportunity to integrate multiple ZEIPs. Areas of focus will likely include more flexible order matching, extending 0x protocol’s ability to leverage meta transactions, and generalized callbacks that unlock a richer experience for smart contract devs. Finally, the update will provide 0x with an opportunity to revisit ZRX token mechanics and how they may be used to incentivize liquidity. The role of the ZRX token as a means of paying relayer fees has been a frequent focus of conversation both externally and on the core team. One of the most compelling properties of tokens is that they have potential to serve as rocket fuel for network effects.
Part 2: Scalability R&D
Layer one and layer two
In short, layer two is where the transactions will happen most of the time, and layer one is always there to guarantee that everything is done correctly. Layer one doesn’t get involved unless it has to. In many ways it acts as a court to resolve conflicts in layer two.
Layer two trade offs
There are many trade-offs in layer two solutions having to do with where data is stored and how the blockchain is informed of the goings-ons of layer two. There are two guiding principles:
Principle 1: Cryptographic guarantees. It should be impossible to break the guarantees of the system, not merely expensive.
Principle 2: Exponential scaling. Any layer two scaling solution should allow for exponentially more transactions than layer one.
Scaling Decentralized Exchanges
Right now scaling may not seem a big concern in DEXs. While DEXs constitute a significant fraction of all Ethereum transactions, there is still plenty of room for it to grow. The team’s expectation is that usage can go up by about 5x before it becomes problematic.
Remember that it is still very early days for DEXs. They are looking at a 100x increase before centralized crypto exchanges are replaced. With tokenized securities it will be another two orders of magnitude to support the loads of traditional security exchanges. Add another two for mainstream consumer adoption.
Long term, they expect the majority of the trading volume to come from tokenized assets that currently don’t have a marketplace, like prediction markets or game items.
Zero Knowledge Proofs
A zero knowledge proof allows someone to do a computation on some data and prove that they did this computation correctly, without revealing the data.
ZKPs for scaling
Research done between 0x and Starkware shows that STARKs proofs can be verified on Ethereum today without requiring any changes to the protocol. The team is currently working on a proof-of-concept implementation to demonstrate the performance on testnet.
Evolving the 0x stack
ZKPs are a powerful new tool that are well-suited for the DEX use case, but how do they fit into the 0x roadmap? Isn’t this a completely different technology?
Right now 0x has the Standard Relayer API to connect liquidity together between different relayers, market makers, and 0x Instant. This works, but is kind of an old-world way of doing things. Each endpoint must be correctly implemented and each connection must be setup manually. The team is working on a peer-to-peer network transport layer that automates all of these connections, greatly increasing order flow throughout the ecosystem. As an added bonus, they are making the whole thing work in the browser so you can participate in the decentralized liquidity network without having to install a node!
With networked liquidity improved, the next step is to coordinate trades. Trade execution coordinators (TECs) are little services relayers can opt into. These coordinators provide a variety of benefits including protection against front-running, innovative marketplace mechanics, and soft cancels. They can do this while still allowing unrestrained liquidity sharing.
When trades are ready to be settled, they get collected in large batches and processed. The final result of all this is a small proof that shows all of it was done correctly. This proof is submitted to the on-chain contract for verification.
Looking even further ahead
Instead of straying away from the current design, the team hopes to replicate the 0x pipeline on different shards and stateful blockchains, and use cross-chain governance to push out synchronized updates. Each replica of the 0x pipeline, or “embassy,” will support local shard-specific trading activity and, due to the system’s extensibility, it should be able to support most use cases.
The highly scalable ZKP-based sidechain will plug into each of these embassies, allowing users to seamlessly transition from synchronously trading their assets locally with other people on the same shard to synchronously trading on a global network that connects markets together.
Part 3: Networked Liquidity & 0x Mesh, a peer-to-peer communication network for the 0x ecosystem
In March the team introduced 0x Mesh, a peer-to-peer network for sharing orders which will serve as an alternative to the Standard Relayer API. 0x Mesh will massively reduce the effort required to tap into the 0x networked liquidity pool and the technical work associated with maintaining a compliant endpoint. One of the most compelling aspects of 0x protocol is its ability to facilitate networked liquidity: the seamless flow of orders through a network of interconnected marketplaces and dApps. The Radar team has described networked liquidity as a paradigm shift that transforms the term “exchange” from a noun to a verb. The 0x team agrees with this assessment.
While market participants tend to meet in specific locations to facilitate more efficient markets, networked liquidity allows orders to flow outward through a growing number of web3 capillaries, reaching a broader cross-section of users. These interconnections act as a source of network effects that lead to a greater number of opportunities for market makers and better prices for end-users.
Over the past months, the 0x Core Team has shipped key components needed to facilitate networked liquidity. 0x Instant allows orders to flow to a variety of surfaces including popular Ethereum wallets (MyCrypto), dApps (Augur), and blockchain explorers (Coingecko, EtherScan). 0x Launch Kit provides a simple way for developers to launch a custom digital asset marketplace in a matter of minutes. The one underlying component that all of these products have heavily relied upon is the Standard Relayer API (SRA), which provides guidelines for sharing orders between endpoints. Moving forward, 0x Mesh can connect these products and tools in a more seamless way.
The team is planning to launch a beta version of 0x Mesh with a handful of early participants near the end of Q2 2019. The 0x Mesh beta will be written in Go and will be compiled to WebAssembly when run in the browser. It will use WebRTC as a first-class protocol for inter-node communication (both browser and non-browser based nodes) and will rely on signaling servers to bootstrap connections between peers. The team has developed a novel order eviction algorithm that precludes the need for explicit staking while preventing malicious nodes from filling up the available space on other nodes and evicting the orders of benign users.
Part 4 : Proposal for Stake-based Liquidity Incentives
Key points
- The team has published a draft for ZEIP-31, which proposes an upgrade to the 0x protocol to utilize new ZRX token economics.
- Under the proposal, takers pay a small protocol fee on each 0x trade.
- Market makers (MMs) receive a liquidity reward that is proportional to:
— the protocol fees generated from their orders.
— their stake of ZRX tokens. - MMs who do not own sufficient ZRX to collect liquidity rewards will be able to form a ZRX staking pool for third-party delegators.
- Next steps: Community discussion. Implementation details finalized. Gauge sentiment. Smart contracts developed/audited. Tokenholders approve/reject integration into live 0x pipeline via token vote.
- Timeline: The team aims to include ZEIP-31 in 0x protocol v3.0 in Q3 2019.
Ecosystem
Project Updates
Chris from Tokenlon (imToken)
Tokenlon is a mobile DEX embedded in imToken, a popular crypto wallet.
- Last month, Tokenlon saw $9.81M in trading volume, stayed #1 0x relayer, climbed to #2 in DEX 7day trading volume — overtaking Kyber.
- Now on the strategy side, we are focusing on supporting more trading pairs.
- If you want, you can link our weekly tweets from https://twitter.com/tokenlon
Joshua from Bamboo Relay
Bamboo is an exchange that allows users to trade, lend, or borrow any ERC-20 token trustlessly.
- Launched our implementation of the 0x coordinator onto mainnet
- Created a hummingbot connector for Bamboo Relay — allowing anyone to market make across all the pairs that we offer
- Listed new USDC/TUSD/DAI markets
Greg from OpenRelay
Open Relay is an open source relayer and infrastructure company.
- Concluded EthCattle Initiative project (Big thank you to the 0x Team for your support!)
- Announced Rivet, a product delivering hosted Geth node access — powered by EtherCattle
- Preparing for Rivet beta launch, will go live in early-mid July — sign up at rivet.cloud and hit up Greg w/ questions
Michael from Hummingbot
Hummingbot is an open source software client that helps you build and run high-frequency market making bots for both decentralized and centralized exchanges.
- Liquidity bounties are live! Users can earn rewards based on their market making volume for our token partners
- [New strategy] “Pure market making”: Make a market in a single exchange by setting and maintaining a bid-ask spread
- [First community connector] Bamboo Relay has built a Hummingbot connector, and we are helping them have it support the new 0x Coordinator spec.
- [New connector] IDEX: Hummingbot now supports the IDEX decentralized exchange.
Ryan from Fabrx
Fabrx is an infrastructure company that enables businesses to quickly spin up a 0x relayer.
- Fabrx has fully integrated the 0x Relayer Frontend into the Fabrx Builder Platform! Platforms who build on Fabrx can now launch a decentralized exchange, with a fully functioning frontend, in 30 minutes or less.
- Two new DEX’s have launched on Fabrx: Merchcoins (exchange for tokenized gift cards) and Compound Exchange (the first DEX for Compound Assets. e.g. cDAI, cUSDC)
- Fabrx has implemented a Fabrx DEX API that mirrors the 0x SRA API. Now, connecting to the backend of a Fabrx built DEX is as simple as connecting to the standard 0x API (e.g. “/v2/asset_pairs/” ==> “https://api.fabrx.io/relayer/merchcoins_exchange/asset_pairs")
Aditya from ForDEX
ForDEX is a stablecoin relayer and exchange.
- Fordex is fully compliant with 0x’s standard relayer API, web socket support will soon be enabled.
- Other performance and reliability improvements.
- UI improvements for the my accounts page.
- Kyber liquidity pool integration for market orders.
- Allow users to trade in decimals units on markets. ( It was previously disabled )
- We continue to push on the market maker front to bring additional liquidity to the venue. Most market makers like Keyrock are asking for an upfront monthly payment which is something we are struggling with because we are not charging on either side yet. Discussions with wallet providers ongoing with Fordex being the backend FX provider.
Jim from Emoon
Emoon is a p2p marketplace for ERC-20 and ERC-721 (NFT) assets.
- We’ve been internally focused on our ENS auction work and proposal, as well as other prototyping
- Three interesting new listings for ERC20 utility tokens on Emoon: Merchcoins (https://www.merchcoins.com) gift card backed stable coin, Wrapped CryptoKitties (https://wrappedkitties.com/), NFT backed stable coin and ClearCoin (https://clearcoin.co/) smart contract based advertising and media buying technology.
Bass from MARKET Protocol
MPX is a relayer for trading MARKET Protocol Position Tokens, which track the prices of traditional or crypto assets.
- We officially launched MPX and Position Tokens, introducing our first token — leveraged BTC/DAI! Traders can start trading on MPX (ex. US for now).
- We kicked off an educational blog series titled MPExplained. Our first two posts explain how to price and trade Position Tokens.
Daniel from Kordex
Kordex is a 0x relayer based out of South Korea.
- Babeldex is currently building out its 0x relayer platform, Kordex, in Korea with the blockchain community group, Nonce. For clarity, the Kordex platform includes a relayer with an integrated educational on-boarding platform with community focused content affiliated with Nonce.
- We are focusing on the hyper-localization of interfaces through user profile interviews, educational on-boarding modules, and DeFi tool introductions. We have been expanding our Korea-based team specifically from the user interface side.
- For a soft introduction to the Korean market, we will be co-hosting DeFi Seoul, an open finance event focused on the Korean market for decentralized finance tools during the buidl.asia blockchain developer conference (July 22nd). We will be speaking on about we built Kordex with the 0x protocol, the importance of understanding the sovereignty of cryptocurrency, and non-custodial exchanges.
Lauren from Microsponsors
Microsponsors.io is a p2p sponsorship marketplace and ad network.
- Integrating SendWyre for fiat onramp
- Proof-of-Content registry and tooling are also in-progress. It will ensure that our marketplace users are selling valid sponsorship slots on content they own.
- Our first two blog posts went up, to explain what we’re doing: https://medium.com/@microsponsors
- Marketing website went live a little over a month ago, gives a high-level overview of what we’re doing: https://microsponsors.io/
Matt from LedgerDEX
LedgerDEX is an ERC-20 token relayer.
- LedgerDex has been included in Etherscan’s Dex Traker.
- A number of bug fixes and UI improvements.
Jai from Ambo
Ambo is mobile relayer that was recently acquired by MyCrypto.
- Upcoming redesigns all around the Ambo ecosystem
- Update coming soon with tons of bug fixes and new features (biometrics and cool stuff)
- We are actively looking to expand our liquidity, if you are a relayer or liquidity provider please reach out to jack@ambo.io
David from GU Decks
GU Decks is a secondary marketplace for Gods Unchained NFT card packs.
- Added live match results, tier lists, and rankings from Gods Unchained.
Abe from MobiDex
MobiDex is a mobile token relayer.
- Mobidex 0.9.8 released with updates to wallet.
- Planning 0.10.0 release with Bitski integration on iOS.
Rumors
Twitter:
Antonio Juliano @AntonioMJuliano on Jul 1:
In the past 24H @dydxprotocol has originated more loans than MakerDAO, Compound, and Dharma combined
cc @LoanScan_io
0x @0xProject on Jun 28:
Notice: 0x and StarkWare ARE NOT offering tokens as part of our StarkDEX project. Anyone saying otherwise is scamming you!
Reddit discussions:
- Need help understanding this diagram from Will’s tweet
- Let Your Users Trade ZRX for Merchcoins, Tokenized Gift Cards, by Integrating Merchcoins DEX. With Crypto Profits, they can Buy a Laptop at Best Buy, Coffee at Starbucks, or even Home Decor at Target.
- Is front running an actual problem with 0x?:
I’m trying to understand how much actual demand there is for projects that provide privacy for smart contracts.
One supposed use case for those secret smart contracts is to avoid front running. Is this an actual problem currently for 0x?
Hey /u/dror88, I’m guessing that you recently read Preventing DEX front-running with Enigma, which proposes using private contracts to order trades without relying on any single party (which is how 0x matching relayers work). IMO it is definitely worth investigating/experimenting with this approach. In fact, I originally proposed this idea in my explainer series on front-running, which led to a conversation with the Enigma team awhile back.
I don’t have data to compare the frequency of front-running on 0x open orderbook relayers versus other DEXs, but front-running is definitely not just a theoretical issue. A significant percentage of DEX volume is created by arb bots that take advantage of price discrepancies created on Kyber, Uniswap, and Bancor, so you can be sure that there are highly sophisticated traders playing in the DEX market. That being said, there are a number of 0x relayer models that prevent front-running. I’d encourage you to read through the explainer posts.
Other:
Multi-Collateral Dai: Collateral Types: MakerDAO voters are considering ZRX for one of the First Collateral Types Beyond Eth.
Social media metrics
Social media activity:
Social media dynamics:
0x community continues to grow! There is a slight constsnt increase in the number of followers these weeks.
Discord chat with about 2,500 members.
And 0x Research forum. Top discussions:
Research on Protocol Fees and Liquidity Incentives
0x Developer Update: V2 Tools Published! (July 26th, 2018)
Research on Selective Delay TEC Process
Research Note on the Impact of ZEIP-31 on User Behavior
TEC-compatible forwarder contract
0X smart contracts deployed on other Blockchains
There is a slight growth in 0x community over time. The graph above shows the dynamics of changes in the number of 0x Reddit subscribers, Twitter followers and Facebook likes. The information is taken from Coingecko.com.
