Introduction
Let’s start with the basics.
0x—pronounced “zero-ex”—was a protocol built to enable peer-to-peer exchange of assets on the Ethereum blockchain. Launched in 2017 by a San Francisco-based team at ZeroEx Labs, it wasn’t a decentralized exchange in itself. Instead, it was the foundation on which decentralized exchanges could be built.
From the start, it was an ambitious project: open-source, community-governed, and full of potential to transform how digital assets are traded.
But that potential was ultimately cut short. In 2023, the U.S. Commodities and Futures Trading Commission (CFTC) stepped in, labeling the protocol an unregistered exchange. The enforcement action led to the project's shutdown and a $200,000 fine for its developers.
As of mid-2024, the 0x protocol was no longer maintained. Its community had largely vanished. And yet, its story—and the lessons it offers—are far from irrelevant.
Chapter 1: The Vision Behind 0x
In 2017, I watched closely as 0x took its first steps into the world of decentralized finance (DeFi). Founded by Will Warren and Amir Bandeali, the project held an initial coin offering (ICO) that successfully raised $24 million. Over the next few years, it would go on to raise an additional $85 million through two funding rounds in 2021 and 2022.
What they built was technically elegant: a secondary protocol on Ethereum that acted as a settlement layer for ERC-20 token trading. If you’re unfamiliar, ERC-20 tokens are the fungible assets that conform to Ethereum’s widely adopted standard for smart contracts.
Then came the governance innovation: in 2021, the team launched the 0x DAO—its decentralized autonomous organization. This DAO was meant to govern the protocol’s development and direction. Token holders had the power to vote, propose changes, and stake their tokens in exchange for liquidity rewards in ETH.
On paper, it was everything the DeFi world wanted.
Chapter 2: How It Worked
The 0x protocol introduced a system built around three main participants:
- Makers — These were users who placed limit orders. They provided liquidity by waiting for someone to take the other side of the trade.
- Takers — These were users who fulfilled those limit orders, effectively removing liquidity.
- Relayers — Acting somewhat like middlemen, relayers maintained order books and matched trades, but without taking custody of the assets.
Each trade involved a carefully structured message format. It included data about the digital asset, the price, an expiration timestamp, and the identities of the trading parties. All of this was handled through Ethereum smart contracts, ensuring a trustless execution environment.
The ZRX token sat at the heart of it all. It was used for governance and staking. ZRX holders had voting rights, and those who staked tokens could earn ETH-based liquidity rewards.
In short, it was a complete trading protocol—modular, open, and transparent.
Chapter 3: Regulatory Collapse
But the DeFi space doesn't exist in a vacuum.
And regulators were paying attention.
In September 2023, the CFTC filed and settled charges against ZeroEx, Inc. The protocol, along with Opyn, Inc. and Deridex, had allegedly violated U.S. law by:
Failing to register as a Futures Commission Merchant (FCM)
Failing to register as a Swap Execution Facility (SEF)
Offering illegal leveraged and margined retail commodity transactions
The result?
A $200,000 fine. A cease-and-desist order. And the end of the protocol as it was known.
By June 2024, the once-active Reddit community had all but disappeared. Development had ceased. Governance was inactive. The DAO was a ghost town.
Chapter 4: Where Things Stand
Despite the shutdown, the ZRX token hasn’t disappeared entirely. As of the latest data:
- Market cap: $307.6 million
- 24-hour trading volume: $10.5 million
- Circulating supply: 847.5 million ZRX
Yet, the direction is clear. With no active development, no regulatory compliance, and no growing user base, ZRX is unlikely to make a comeback—unless a dramatic pivot or registration effort is made.
Chapter 5: Frequently Asked (and Uncomfortable) Questions
What was the 0x Protocol, really?
It was a settlement layer for decentralized exchange functionality on Ethereum. It wasn’t an exchange itself but enabled them to be built.
What was a 0x Exchange Proxy?
An intermediary layer that allowed apps to use the protocol. Developers could plug in and offer exchange-like services using 0x's infrastructure.
Is ZRX still traded?
Yes—but don’t mistake trading volume for project health. With no active roadmap or legal standing, ZRX has become a speculative asset.
Is there a future for 0x?
Not in its original form. Unless ZeroEx (or a successor team) decides to re-register under CFTC guidelines or pivot away from exchange functionality, its future is dim.
Conclusion: The Bottom Line
The 0x protocol was bold. It offered a decentralized, peer-to-peer alternative to centralized exchanges—at a time when DeFi was still finding its identity.
But bold ideas don’t shield you from regulation.
By 2023, 0x had become a cautionary tale: of innovation clashing with legal frameworks, of decentralization tested by centralized enforcement. And of what happens when a protocol, however well designed, forgets the weight of compliance.
It’s worth studying 0x—not just for what it achieved, but for why it failed.
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