The World is Becoming Tokenized
The Ethereum blockchain has become host to a variety of variety of digital assets, with more being created every month. Soon, thousands of assets will be tokenized and moved onto this open financial network.
As the token space continues to develop, the need to exchange these assets will be compounded. 0x protocol will act as a critical piece of infrastructure for the token economy, allowing Ethereum smart contracts to programmatically and seamlessly exchange Ethereum-based assets.
Trades are executed by a system of Ethereum smart contracts that are publicly accessible, free to use and that any dApp can hook into. DApps built on top of the protocol can access public liquidity pools or create their own liquidity pool and charge transaction fees on the resulting volume. The protocol is unopinionated: it does not impose costs on its users or arbitrarily extract value from one group of users to benefit another. Decentralized governance is used to continuously and securely integrate updates into the base protocol without disrupting dApps or end users.
Attention. There is a risk that unverified members are not actually members of the team
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Opportunities:The problems that 0x is trying to solve benefit from decentralization. The risks pertaining to centralized exchange are some of the biggest factors preventing the wide adoption of cryptocurrency. The hacks at different exchanges are some of the biggest news that layman learn about cryptocurrencies and this is undesirable.Network effect is in place for this project. The more usage the 0x protocol (exchanges) has, the more valuable ZRX is. This is because investors prefer exchanges with heavy volume and lower bid/ask spread.ICO is a new trend that is gaining popularity very quickly. In July 2017 alone, $665 million was raised – that is twice as much money as was raised in the first five months of the year combined.Among different ICO platforms, Ethereum is by far the most popular one. According to Coinmarketcap, 69 out of the 100 most valuable tokens are using the Ethereum platform.0x has already secured partnerships with promising projects including Ethfinex, District0x, Augur, and Melonport, among others.The partnerships with established companies such as Bitfinex (for their Ethfinex spinoff) and ANX International (for their OpenANX spinoff) are especially exciting.Bitfinex is one of the largest cryptocurrency exchange in the world, with trading volume in the past 24 hours reaching $250 million. If Ethfinex is remotely close to the scale of Bitfinex, ZRX will be receiving heavy usage from this exchange alone.Bitfinex is starting to dabble into token trading with the addition of Santiment and Omise GO recently. It looks like the Ethfinex project is the next focus of Bitfinex.Multiple blockchain-focused venture capital firms have invested in 0x, meaning that the project has already passed due diligence of those institutional investors.
Concerns:SEC regulations may have restrictions on exchanges operating in the US / for US citizens, potentially limiting the usage of 0x as certain ERC20 tokens are considered to be securities.0x only works for ERC20 tokens. If another smart contract protocol overtakes Ethereum in fund raising popularity, there may not be much demand for ZRX going forward.It is not clear if 0x will apply to list their tokens on any exchanges. If they don't, then the only exchanges that will list ZRX probably going to be smaller exchanges such as Etherdelta or Liqui.
Conclusion:Overall, I like this ICO both for short- and long-term potential. The project, team, progress, and execution all look to be promising.Aside from its investment merit, I am also rooting for 0x’s success because the project moves Ethereum forward as the leader of tokens and smart contracts.Our thoughts of the tokens for short term and long term are as follows:For short-term holding:Good because 1) the market environment is improving so it looks very likely that the $24 million hard cap will be reached, 2) the partnership with Ethfinex really helped the exposure of 0x, and 3) tokens will be distributed immediately after contribution.For long-term holding:Good because 1) ZRX will have fairly strong demand right out of the gate with the partnership with Ethfinex, 2) I believe the prevalence of tokens is just getting started – in 5 to 10 years, the market could be orders of magnitude bigger than what it is now, 3) it looks like 0x’s protocol is better than the existing solutions, either in the centralized or decentralized space.
0x has lofty ambitions to combine the best of both centralized and decentralized exchanges. Its team is focused on gaining support and adoption, and it’s well positioned to overtake major centralized exchanges like Binance and Coinbase, depending on how the US SEC and Congress decides to regulate cryptocurrencies and blockchains (especially Ethereum). 0x somewhat decentralizes crypto exchanges, even offering a p2p option with 0x OTC. Still, majority governance means whoever owns over 50 percent makes the rules. 0x uses off-chain ledgers and on-chain verification to enable trading among ERC20 tokens, of which there are nearly 500 to date. 0x has a lot of competition, and it’s unclear how government regulations may affect its future viability. Cross-chain platforms like Wanchain will soon open the gates for 0x to trade other tokens and coins from other blockchains. Although 0x has a lot of unknowns clouding its future, it’s never easy competing in a billion dollar industry. Giants like Upbit, Huobi, and Binance aren’t going to go down easy, and 0x isn’t the only option available. We’ll wait and see whether or not the crypto industry is big enough to support them all, or which projects will survive a collapse.
0x Protocol is highly niche in that it’s not a product or service, it’s not a new mineable cryptocurrency, and it’s not even an ICO – it’s a piece of software that’s being designed to make Ethereum-based digital tokens more easily exchanged. With the rampant growth of blockchains – and the constant need to find ways to increase scalability to avoid the same expensive slowdowns that the Bitcoin blockchain is already showing – learning more about 0x Protocol is likely a good idea if you’re involved in blockchain development. However, if you’re just a run-of-the-mill blockchain enthusiast or a cryptocurrency speculator, the specifics of how 0x Protocol works are unlikely to thrill you to any degree. The best we can tell you is to look products in the future that adopt 0x Protocol as part of their API, as these dapps will likely be well-received because of their ease of use.
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