Altcoin Deep Dive

Mt.Gox, Cryptsy or Bitgrail show that centralized crypto exchanges contain a single point of failure. However, as recent developments around Etherdelta and IDEX show, this can also be said about decentralized exchanges. 0x tries to increase the decentralization of a DEX by providing a protocol.

The cryptosoft market’s crashing

Do you really want to hear about interesting cryptosoft projects? Here is an important review. In any case, the 0x price has almost reached the much-cited floor. However, it remains to be seen whether this is the lowest floor or whether more basement floors will open up. So the bear is raging through the market again. In these times, it is important to analyze projects more closely with regard to technology. 0x now makes the start with the relaunch of the New Coins on the Block.

Crypto exchanges contradict one of the central visions behind crypto currencies. Bitcoin, Ethereum, and other crypto currencies may be as decentralized as possible, but when the bridges between different systems are completely centralized, you still have a single point of failure. A buzzword that promises a solution is that of the decentralized stock exchanges, or DEX for short. DEX stands for Decentralized Exchange.

There are different approaches for such bridges between different crypto currencies. Today we would like to limit ourselves to the simplest type of decentralized exchanges, namely those on which ERC20 and other tokens issued on Ethereum can be traded.

The dramas around EtherDelta and IDEX show that not all gold that glitters is decentralized. However, several other projects are trying to increase the degree of decentralization. One of them is 0x. We have reported about this project several times. So it’s high time for a deep dive.

0x – A protocol (not only) for decentralized stock exchanges

It is important to emphasize that 0x itself is not a decentralized exchange like EtherDelta or IDEX. Rather, it is a protocol which is suitable for setting up a DEX. As interested parties can read in the White Paper, this protocol is not only about the creation of platforms on which Ethereum-based tokens can be traded. If only a fraction of the token-based projects become really used dApps, a common standard for the communication between them is necessary.

Originally, only ERC20 tokens could be traded via the 0x protocol – which would not fit apps based on ERC721. Non-fungible tokens have become known with the Cryptokitties hype. For the exchange of different Collectibles a focus on ERC20 tokens would not help. With the launch of the 0x version 2.0 at the end of September this is now possible. In addition, the Smart Contracts on which 0x is based now have a modular structure so that in principle other token standards can also be implemented.

Such approaches are possible due to the pipeline-like structure of the Smart Contract. The core is always retained, while different modules are written for different token types, for example. Unlike other decentralized Exchanges, this allows fast changes. In addition, modularity makes them easier for the user to recognize and evaluate.