Author: Kaloyan Roussev
Date: 14 September 2017
Do not make investment decisions based on this article – read the disclaimer before you proceed and leave the website if you disagree with it.
It is 14 September 2017 today. This review takes into consideration investing in ZRX at its current price at $0.19
0X – a protocol used to build decentralized ERC20 exchanges
How do I rate an investment in this project at the current price? (TL:DR)
With several upcoming bullish events and right after the price has consolidated at $0.19, I decided to invest in ZRX tokens. Another high-quality project, resolving real world problems.
I think that with hundreds upon hundreds of new cryptos and projects being added constantly, with all this decentralization around, we are in desperate need of tools that add uniformity and protocols in this mayhem, because decentralization is good up to a point, and it has recently started to look like chaos and anarchy. The uniformity provided will not centralize rights, ownership and other important stuff, but it will be uniform in terms of how to build tools around all these assets, tokens and cryptocurrencies. This is why I am a fan of Bitquence with their universal wallet and crypto ETFs, Aragon with their tools for creating decentralized companies, issuing tokens and assigning shares, and district0x with their tools for building marketplaces. I think such projects have the best chance to survive the upcoming crash of the crypto market.
0x is trying to provide a platform and a standard to exchange tokens without a trusted centralized party (a crypto exchange) that holds our wallets and private keys. And I am in favor of such projects. They might’ve been a little less hard-to-understand about it though. It requires a lot of effort to understand what they are building and their name is horrible and geeky, so it will reduce the speed of adoption.
Looking at the way the retained by founders tokens will be unlocked for use within 4-5 years, it is apparent that this project has a relatively long-term vision, which is very good.
Branding/Positioning – Their position/nice in the marketplace is to provide a uniform protocol for exchanging tokens on the Ethereum network. So far I don’t think there are any other projects in that niche, so this is good – they are building a subcategory in crypto. Problem is their horrible geeky name (same problem as district0x) – is this a letter or a digit in their name (its a digit), how is it pronounced (zero x) – is what average Joe is thinking. Their product – the upcoming decentralized exchanges, will have to fight the already huge and well established centralized exchanges in operation. I don’t know if the end users to those realize what is the benefit of a DEX and if they need it at all.
Token utility –from their slack: “In the 0x protocol, the ZRX token has 2 main utility functions: 1. Governance : The ZRX will allow holders to vote on changes to the 0x protocol. This is a critical feature since relayers will want to upgrade the protocol and use the same 0x contracts as other relayers in order to maximize liquidity. A governance mechanism decreases the chance of upgrade forks, allows an automatic upgrade of the contracts, ensuring consistency across users, and therefore permits efficient upgrades to the protocol. 2. Relaying fees : Relayers will host off-chain order-books and matching engines to match orders of makers and takers (the users wanting to trade ERC20 tokens). Makers and takers being matched using the service of a relayer will pay a fee to the relayer using ZRX tokens. 3. Important: The ZRX token is to be purchased with intent to use the above-mentioned utilities for the protocol and not as an investment. No profits should be expected from the purchase of ZRX token(s).”
Upcoming bullish events –Radar Relay requires 0x for transaction fees. They have launched their public beta recently and will monitor performance and feedback throughout September. At the end of the beta period they will release a roadmap. Radar Relay adoption will increase demand for 0x. A similar service launched by Bitfinex – EthFinex is also in the works, but I think they might be using their own token, so I don’t know how 0x will benefit from that (although the 0x protocol will be used). And there is also http://www.the0cean.com/
- Website: does it look good/presentable – dry, minimalist, looks like an obituary. Useful nonetheless. They have a very interesting section called portal https://0xproject.com/portal/ that utilizes their own framework and enables peer-to-peer tokens exchange. It will benefit from a little more explanation though. BTW I found a video how to use it, in their Slack announcement section. Put a link to it in the portal, guys https://www.youtube.com/watch?v=_ZnVXAxf2_E Looks very useful, indeed
- Roadmap – updated roadmap in this blogpost: https://blog.0xproject.com/update-0x-development-roadmap-359fc54b8885 The 2017Q4 looks loaded with events
- Whitepaper – yes – https://0xproject.com/pdfs/0x_white_paper.pdf – here is the most important part, as I think what they do needs several explanations: “We describe a protocol that facilitates low friction peer-to-peer exchange of ERC20 tokens on the Ethereum blockchain. The protocol is intended to serve as an open standard and common building block, driving interoperability among decentralized applications (dApps) that incorporate exchange functionality. 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 user”
Now is a good time to clarify some of the domain-specific entities in the 0x world: a maker is a seller who broadcasts an order with an expiration date. A taker is a possible buyer who could partially or fully, fulfill the order. A Relayer is a party that utilizes the 0x protocol to act as an intermediary that hosts the process, somewhat of an exchange. Apparently Radar Relay and EthFinex are such relayers – https://app.radarrelay.com/ and https://www.bitfinex.com/ethfinex and of course 0x’s portal
- What is their progress according to the roadmap – here is an update from their blog, seems that things are moving according to plan on several horizons https://blog.0xproject.com/update-0x-development-roadmap-359fc54b8885
- Website: Is it a quick wordpress template, a 2-hour html job or a custom design with lots of work, money and thought thrown at it – Looks custom and well made.
- What new does this cryptocurrency bring to the world, what problem does it solve, what does it stand for– a uniform protocol to build decentralized exchanges for ERC20 tokens atop.
- How does the cryptocurrency name sound (does it sound legit and like a good brand name) – horrible. If you find a “how do you pronounce our name” entry in the FAQ section, you know there’s no marketing-savvy person on the team. Oh eks. It stands out like a sore thumb, so it might attract attention, but then it might divert potential investors away.
- How does the logo look – I don’t wanna say here what it looks like to me, but it stands out, yes.
- Is it a PoW, PoS or PoW/PoS coin, what is the mining difficulty or APR, does it suffer from inflation – 1 billion coins pre-minted. No miners or mining, which I always welcome.
- Who is behind the cryptocurrency – are they shady figures, or have they placed their names and pictures on the website; what is their track record and reputation; do a quick google/github research on them – a team of 7 people and 4 advisors, most of them with fancy college education and linked in profiles – https://0xproject.com/ – looks legit. And they are also hiring.
- What is the limit on supply of coins in circulation – 1 billion. At this quantity everything over $1 per token is pushing it.
- Is there a link to the source code – there you go https://github.com/0xProject/
- When was the last commit made, and how frequent are commits – daily commits, most recent one 7 hours ago
- How many developers participate in the coding – at least 9 maybe more. They even do automated tests, which is a sign of high-quality programming.
- What the project survival relies on – Ethereum network. It is a utility for it, so it wont need to exist if the ethereum network disappears.
- Will this project survive a cryptocurrency bubble burst and does/will it have enough of a following that needs it every day – it would survive a ban on centralized exchanges, because it offers a decentralized solution. The users of the 0x protocol multiply in numbers (ethfinex, radar, 0cean, aragon, district0x among many others) so it should be able to survive one way or another, but will definitely take a price hit.
- Competition – can you help me out here? Maybe the centralized exchanges, although 0x is not an exchange in and of itself, but a tool for building exchanges.
Exchanges and trading
- Which exchanges (and how reputable they are) is the coin traded on – Poloniex! That’s a biggie. Interesting why it’s not on Bitfinex although they are building EthFinex on it. Waiting for Bittrex, I guess? Although on slack I read that the 0x team is not particularly interested in getting 0x listed on exchanges (but they do not oppose it). It will be used on the Radar Relay for sure, at least in the beginning (manually)
- Daily trading volume – $3 million
- Market cap – 95 million.
- Are there buy (support) or sell (resistance) walls –price might keep going down in the short term
- How does the chart look – bearish market that has recently found support (possibly bottomed out). Price spiked upon Poloniex listing and ICO buyers made 10x (those who could sell). It has returned to the main since then, but still 4x ICO price which was 5 cents.
- Is there a Bitcointalk forum Announcement thread – no – they were very proud of the fact that they carried out their ICO without spending money on marketing OR using the traditional places where ICOs lure investors in – but there is this short unofficial thread – https://bitcointalk.org/index.php?topic=2087992
- How many pages is it – 9 within about a month.
- History of the coin according to the forum and general public impression of the coin throughout – read the first 10, last 5 and several random pages – people are positive about the way the ICO was performed (limited maximum investment so that no whales buy it all up) and asked for a modest amount of money. Some constructive conversations about the project
- Do they have a blog, anything interesting on it? – yes, it seems to be their main channel for communication, along with slack – https://blog.0xproject.com/latest
- Is there a slack channel – https://slack.0xproject.com/ aqxu and PhABC are team members, actively participating. alan_radar is a Radar Relay team member, currently gathering feedback there, today he mentioned something about new updates on their mainnet coming soon.
- Is there a Twitter profile for the cryptocurrency and does it post regular updates, how many followers https://twitter.com/0xproject 22k fol, daily tweets
- Is there a Facebook page for the cryptocurrency and does it post regular updates, how many likes https://www.facebook.com/0xProject/ – 367 likes, couple of posts per month, sloppy there, but crypto isn’t big on Facebook anyway.
Popularity and perception
- What does a quick google search tell us about the coin – articles about 0x from many sources. News about the ICO having raised $24 million. This bearish article stands out: https://www.forbes.com/sites/amycastor/2017/08/15/researchers-find-issues-with-0x-the-latest-etherem-based-project-aiming-to-raise-millions-in-an-ico/#5ab11a3147c7 I have spoken to the 0x team and they are going to reply soon with a technical response, but what I gather is there is little to worry about.
- Are there youtube videos about the coin – A LOT of youtubers doing analysis on 0x most of them are optimistic. Here’s an interview with a co-founder https://www.youtube.com/watch?v=QIoV93JWqtU
- What is the general sentiment in the comment section below the videos (constructive, fud/hype, calling out scam etc) – wide array of reactions. Comparisons with NVO which apparently is a decentralized exchange.
- Is the coin associated with illegal/criminal activity or the dark web – no
I am sure I might’ve made some mistakes in this post or in my research. Please, forgive me, if I have, and contact me to tell me where I went wrong. It takes about 4-5 hours of my time to do a full research on a cryptocurrency, and I try to do at least 4 per week.
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