Decentralized exchanges (DEX) are a giant spring in permissionless and transparent trading, and they be every bit fantastic alternatives to centralized exchanges.

While DEXs ease the procedure of list new ERC-20 tokens and remove the need to pay a central authority high listing fees, they stil have the issue of loftier gas fees. This is precisely the issue 0x Protocol (ZRX) aims to solve.

The 0x Protocol (ZRX) ICO raised $24 1000000 in August 2017 for 50% of its supply, with no pre-sale. Every bit an ERC-20 token, the permissionless Protocol connects liquidity providers through smart contracts, therefore aggregating liquidity.

The protocol allows interoperability between unlike decentralized applications and DEXs. Thus, ZRX should not exist seen as a Uniswap competitor, as it benefits from the sectors' increased liquidity.

0x Protocol (ZRX) token price in USD. Source: TradingView

Although the ZRX token has been quite volatile over the past weeks, at that place's an uptrend happening as it tries to found $0.l as a support level later on a 22% price increment past 24 hours.

From servers to service

Initially launched every bit a voting mechanism for governance proposals, ZRX tokens received staking capabilities later on its v3 update in late-2019. Marketplace makers were then able to earn ETH rewards for liquidity providing services. Meanwhile, holders could benefit past delegating their tokens using pools.

In June 2020, the project launched a DEX liquidity aggregator service, known as Matcha. After serving exclusively every bit a backbone for three years, 0x Protocol created a smart order routing service that encompasses DEX like Uniswp, Curve, and Kyber.

Customs and DEX activity are probably the about vital metrics for measuring DeFi token growth. Data from Dune Analytics shows that Uniswap and SushiSwap both account for over 60% of the volume but it'southward important to call back that liquidity aggregators are not direct competitors to 0x Protocol.

Weekly DEX volume in USD. Source: Dune Analytics

Therefore, the general DEX market growth of the past year is actually a positive commuter for ZRX token. Looking at 0x Protocol usage, we can see that 0x weekly volume more than doubled from the October to November $350 million weekly average, reaching 10% market place share.

0x Protocol top apps activeness past 30 days. Source: 0xtracker.com

Taking a more detailed view of 0x network activity, the nautical chart above shows that multiple platforms employ 0x Protocol's liquidity aggregation capabilities. These trades can accept place at numerous DEXs, including Uniswap, Curve, and Balancer.

Marketplace makers returns and v4 update

On Dec. 15, Theo Gonella, 0x Labs product manager, showed information from a market maker that made a 100% render in 2020 by providing liquidity on 284 ETH across 41,000 trades. More recently, 0xTracker stated that 1,782 ETH were distributed to 0x market markers as liquidity rewards in 2020.

The 0x Projection v4 voting process will occur from Jan. 16 to January. 23 and aims to reduce requests for quotation gas costs by 70%. According to the 0x Labs blog, this version enables customizable modules to execute diminutive operations, including token wrapping and unwrapping.

Forepart-running problem

For those unfamiliar with front end-running, the problem lies in on-chain data. Savvy arbitrage desks monitor Ethereum's main concatenation for transactions, to and then add extra gas on a similar trade and buy (or sell) the asset ahead of the other political party. Thus, the college fee transaction will be able to front-run other users' executions.

Albeit non exclusively an 0x problem, this certainly limits DeFi aggregators utilize.

ZRX Twitter user activity vs. price (USD). Source: TheTie

Data from TheTie shows that the recent price spike has been accompanied past increased social network activity. Nevertheless, the indicator remains 50% beneath the previous May and August peaks. Therefore, judging past social network metrics, there is perhaps an enormous upside for ZRX price.

0x Protocol may find further success every bit the DeFi sector continues to grow and mature. Equally long as at that place is a need for lower gas costs and multiple price providers, liquidity aggregators will have a void to fill.

To conclude, for those who believe that the v4 update will exist a game-changer, there's room for plenty of growth in DEX market share, and therefore price potential.

The views and opinions expressed here are solely those of the autho r and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves take a chance. You should carry your ain research when making a determination.