0x Protocol is an open-source infrastructure enabling peer-to-peer exchange of Ethereum based digital assets directly from users’ wallets. No intermediaries, no custodial risk. 

Built on the Ethereum blockchain, it provides the infrastructure for developers to create decentralized exchanges (DEXs), NFT marketplaces, and other DeFi applications, all while keeping things open-source and permissionless.

How it works: off-chain speed, on-chain security

At its core, 0x blends the best of both worlds: off-chain order relay for efficiency and on-chain settlement for security. Here’s how it operates:

1. Order creation: A trader creates an order, specifying the tokens they want to swap, the exchange rate, and additional conditions like an expiration time
2. Cryptographic signing: The order is signed to confirm authenticity, keeping private keys safe.
3. Off-chain matching: Instead of immediately hitting the blockchain (which would rack up gas fees), the order is broadcast off-chain through entities called relayers. These relayers match buyers and sellers but never take custody of funds.
4. On-chain settlement: Once a match is found, the trade moves on-chain. A smart contract verifies everything—validity, funds, conditions—before executing the swap in a single atomic transaction.
5. Wallet-to-wallet transfer: The tokens go directly from wallet to wallet, cutting out counterparty risk entirely.
6. Relayer fees: Relayers earn Ethereum (ETH) or other tokens to facilitate the process.

Relayers get paid in Ethereum (ETH) or other tokens for their role in the process, keeping the system running smoothly.

What makes 0x stand out?

Decentralization is a given, but 0x brings more to the table. For starters, it’s not just another DEX—it’s a protocol anyone can build on, meaning developers can create custom trading platforms tailored to different needs. Some key advantages include:

• Gas efficiency: Thanks to off-chain order books, traders don’t pay gas fees until an order is settled on-chain. This is a significant win over fully on-chain exchanges, which incur fees at every step.
• Flexibility and modularity: 0x can be adapted to fit any use case, whether a DEX, an NFT marketplace, or even an institutional-grade trading desk.
• Interoperability: Supports all Ethereum-based tokens, from ERC-20 fungible tokens to ERC-721 NFTs.
• Liquidity aggregation: Relayers can pull liquidity from multiple sources, helping traders get better prices with less slippage.

The role of ZRX

The native token, ZRX, keeps the protocol running smoothly:

1. Governance – Holders can vote on protocol upgrades, keeping decision-making decentralized.
2. Staking – ZRX can participate in the protocol’s governance system, aligning incentives for long-term network health.

ZRX aligns the interests of users and the protocol’s future.