by Will Warren and Amir Bandeali | Feb. 21, 2017
This paper introduces 0x - an open protocol for creating decentralized exchanges on the Ethereum blockchain. The authors hope that this protocol can become the open standard for such exchanges. The paper discusses the current state of decentralized exchanges, specifications for the 0x protocol, and details on the protocol token.
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 users.