As a entrepreneur: Exchange services is very difficult to differentiate. It’s a commodity service. Why should I invest in marketing to promote my new exchange?
As a customer: Why should I buy tokens? - Most of existing tokens have not active project behind - Many times the token is useless for the project and it will not increase in value if project succeed (just see ZRX token. It’s down -76% from 52wk high while your team is working actively on the project. Why investors have to buy tokens?
We think of 0x more like Stripe: an under-the-hood technology that allows entrepreneurs to move more quickly and easily add exchange to their product. The concept of "tokens" and "exchange" will become very abstract in the near future.
Could one think of stores as one-sided exchanges, where resale is just not natively possible? Does Google operate an ad exchange? Is iTunes an exchange? If digital goods ownership were on a blockchain then resale would be possible... What about physical goods?
One’s velocity should always be slightly less than their SEC defense attorney. If you're legit, take the time to make sure your paperwork is legit.
https://news.ycombinator.com/item?id=18185701 (Top comment by Animats should draw your attention)
I created a dapp that allows people to do [stuff] which generate some erc-20 token for users. They can then use this token to access special features on the dapp.
It's easy to let users send and receive the tokens they have. But I want the token to have a value outside the dapp itself.
Unfortunately I cannot get this token accepted on coinbase and other exchanges. Just because it is not important enough.
I still want people to be able to sell or buy these tokens. The next best idea is to create a small exchange platform on my dapp: let people trade the token for ether or for other tokens. It's time consuming to code so I gave up.
Now this is where this thing would have been great.
Hope this helps.
Because financial markets are very globally fragmented. The hardest part about opening an exchange is banking, clearance and KYC/AML. For example the chance that a citizen of say Benin or Uzbekistan could open safely and easily open an account at one of the major crypto exchanges is essentially zero.
There's a lot of parts of the world where there's a captive audience with high demand for crypto trading, but no decent service available. There are pre-existing traditional brokerages and forex shops that have the local banking and KYC/AML infrastructure place, but don't have the tech for the exchange itself.
Think of chains as subnets on the internet. The gaps will be bridged to allow seamless transfers between them.
I've been wrong before but to me this is bound to happen. How many businesses in competitive areas have fax as a preferred method of communication today?
Don't take what I'm saying as an argument in favor of buying ZRX tokens. I do think it's a cool project, albeit IMO could have done better without the utility token as an inherent component. But that's more about the business model than the tech. It will probably be another boom and bust before we see the leading protocols emerging.
"Tokens" can be a special kind of object which can be "exchanged" for other kinds of objects. It is not always about purchasing or swapping; this interaction can solve many different kinds of coordination problems.
The exchange can create a context around users interacting via various types of tokens, enabling new kinds of services and communities to form. This could lead to enormous value for users.
In what way? I think that was the parent poster's question. I think it's fair if we're going to be making huge broad-strokes claims we should at least attempt to justify them.
Or more trivially, TPL for account tagging.
Microsoft's initiative on decentralized identity leveraging on the Bitcoin blockchains could be a component in this. Excellent podcast episode here: https://letstalkbitcoin.com/blog/post/what-bitcoin-did-107-m...
Not to say you're completely wrong, just that smart contracts can be used to enforce regulation rather than skirt it - like any tool the outcome depends on the intentions of the one wielding it. :)
As a customer I want an exchange so that the tokens I buy have some liquidity, at least in theory. You're not going to be listed on an exchange initially and those exchanges that do list smaller tokens tend to be sketchy.
As an entrepreneur, you figure out how your use-case benefits from tokens. For example, let's say you provide a product/service. You can sell tokens that can be redeemed for the product/service to investors at a "wholesale price".
There's no need for tokens to go "to the moon", just to serve as a medium of exchange and ideally provide some margin to you and/or your investors. You could also offer a company ownership structure for tokens, but now you're in securities regulation territory, which nobody wants to deal with right now, at least at the moment.
Of course a lot of crypto projects are garbage, just like most businesses fail and wipe out investor money in the process. The hype surrounding crypto certainly has massively underpriced risk, but the same could be said about stock like Tesla, Lyft or Uber.
Maybe you have the on-off ramps sorted out, a friendly bank and a regulatory environment, licenses, legitimate AML/KYC measures and can do it properly?
While there are many exchanges already, how many can say they're that above board?
There's actually several use cases here that are worth noting. As technology improves, more and more centralized crypto exchanges (where the majority of trading volume currently lies) are creating decentralized counterparts - yielding lower custodial risk among other benefits. Also, newer blockchains that don't have DEX's yet are completely untapped markets for developers. Lastly, there are a variety of different use cases beyond just an exchange that benefit from basic exchange templates: prediction markets, decentralized lending, etc.
Disclaimer: I work for Hydro (https://hydroprotocol.io/), a competing product.
Because you can steal the assets, like about half of Bitcoin exchanges to date.
That's the genius of the 0x protocol. The Relayers that LaunchKit lets you create are effectively just order books or other matching-engines that exist as a website or other service. They expose completed trades to the 0x smart contract, which atomically swaps the tokens of the trade. (Official 0x people can correct me here, I've done just a bit of research.) At no point does any organization other than you actually have control of your funds, nor can they receive them without giving you equivalent funds under the terms of the trade.
I've said before that the real use-cases for blockchains will be in doing stuff that nobody in their right mind would want to do because it's currently foolhardy. This is a good example. Giving money to a fly-by-night exchange is foolhardy - unless you don't have to give money to them. And that's what 0x enables: tradable assets without trust.
Only if all the related elements are all virtual and on the blockchain can it do anything - so we're stuck with gambling and cryptokitties for real world usage.
1. Technology
2. Regulatory
3. Trust
4. Critical mass
This looks like it only address 1. Which is certainly a big hurdle but I would have loved to seen something explaining how to get 2 - 4 done.
From some of the answers bellow:
> You don't have to trust! 0x Exchanges are non-custodial
That's great. There should be a writeup on that front and center of the how and why.
Since 0x is a blockchain project, it has moved at a snail's pace compared to the multitude of centralized and web-based "decentralized" exchanges that have sprung up since. These newer exchanges have largely solved the needs identified by 0x.
That's the reason to do this on the blockchain: you don't need to trust that the exchange operators will keep your funds safe, because they don't have your funds.
Too expensive for who? 0x protocol allows you trade digital assets with anyone in the world, trustlessly, through the internet, for $0.10-$0.25 per trade. While this isn't perfect for all use cases, it is an incredibly powerful capability.
Scaling is indeed a limitation for decentralized networks. You can learn more about our scaling R&D efforts here: https://blog.0xproject.com/0x-roadmap-2019-part-2-scalabilit...
But you have to trust those centralized exchanges with your funds. While with 0x you don't have to. One could say centralized exchanges can't compete on trustlesness with decentralized ones.
Hardly a week goes by without a couple of new ones starting. Surely we must have more than enough by now?
What do you suggest for people who live in regions where this technology is banned or where the difficulties of connecting orthodox bank accounts, etc, make access impossible?
The last decentralized exchange I knew about was EtherDelta, and 0x seems to be an improvement.
You can't buy crypto with fiat there, though, so connecting your orthodox bank accounts is irrelevant in this case. The founder said yesterday in an interview [1] that they may work with partners to enable this eventually, but so far I don't know any good decentralized exchanges that offer that. Buying crypto on a decentralized exchange with your bank account seems pointless to me - either buy it in cash or buy it on a safe platform (and then get it out immediately so they can't exit scam you or get hacked with your money).
Just curious, does anyone know of a kit like this for digital marketplaces for goods or services (not crypto)?
https:/www.originprotocol.com/creator
After reading the Why page, I still don't have a concrete notion of what this is. So I'll jab a few questions that might help me make some sense:
First question is about decentralization. What is off-chain relay in this case? Is that a centralized part of the system? Are there centralized parts of the system?
Can this be used to implement more robust margin trading? To my knowledge, only centralized exchanges/brokers currently exist for margin trading.
What settlement speeds can be expected?
That's it for the questions. I don't want to retract from them, but I'll mention that the site doesn't work well with Dark Reader: all theme generation modes, except static, render most of the text invisible.
First question is about decentralization. What is off-chain relay in this case? Is that a centralized part of the system? Are there centralized parts of the system?
Off-chain relay is how parties find each other facilitate a trade. As a maker, I can create an order off-chain, but I still need to find a relevant taker who is interested in filling the order by sending it to the 0x smart contracts on-chain. Relayers pool together these off-chain orders and serve them up through a website, so that it's easy to find people to trade with. Note that this process is optional -- you can still trade peer-to-peer if I send you the order over email, SMS, etc. While relaying is centralized, relayers are non-custodial, so your funds are never at risk. We also have plans to make some parts of relaying less centralized in the future through 0x Mesh: https://blog.0xproject.com/0x-roadmap-2019-part-3-networked-...
Can this be used to implement more robust margin trading?
As for margin trading, yes, you can trade dY/dX tokens on 0x relayers, or combine 0x orders with any on-chain lending protocol such as Dharma or MakerDAO to get leverage.
What settlement speeds can be expected?
All trades currently settle on-chain, so the Ethereum block time is our bottleneck. Look for some updates on this near future :)
ergo, the user benefit here is that the user only needs a Coinbase or like account to transfer dollars to tokens, and then the user can obtain other tokens within any particular app. The user doesn't need to sign up to yet-another-exchange-with-my-personal-data-and-who-are-these-people-anyway-and-do-they-have-the-tokens-i-use-etc,etc. Now the user can readily take tokens not in use on one platform and transfer them to a token of another platform, all without leaving the platform specific application. That's a big win for the ecosystem.
I can see why you built the slick ui to demo your product, i think it's the right move because i can use it without a single line of code. I think the next challenge you will have is getting developers to adopt an underlying api client library. If I understand what you are doing correctly, perhaps build that client library in js to be used in react and a demo app that has reduced exchange funcationality for quickly swapping two tokens. it should look as simple as the interface for sending tokens to someone now.
If I guessed all that right, the company i work for may be willing to be an early adaptor. Let me know. We certainly aren't going to build yet-another-exchange, but i think empowering a transfer of btc/eth/eos/xrp -> myLittleUtilityToken within app would be very powerful.
I'm extremely curious what the business model here is.
Who is paying for this to be created, and what do they get out of it in the long run?
A dapp of any sufficient complexity will have bugs, some of which can probably be exercised to steal funds.
Most investments regulated in the US cannot legally be bearer instruments. This means there must be a ledger listing who owns what with real names attached. For public companies they must use a registered transfer agent to keep these ownership records. Private companies can keep their own records, but in most cases cannot use bearer instruments. What happens if I transfer you the token if there is a master ownership ledger with names and addresses? Nothing happens. The token record becomes out of sync with reality is the only thing that happens.
worried that loses the “trustless” of blockchain? hash the KYC entry and store it on chain so you make certain that the off-chain real world ownership information hasn’t been tampered with
An alternative might be found in protocols like UMA (https://umaproject.org/), Augur (https://www.augur.net/) or MakerDAO (https://makerdao.com/) which allow you create synthetic tokens that trustlessly track the price of a real-world asset by creating financial incentives to rebalance the price of the minted tokens. MakerDAO has already been used to create over $80MM in a synthetic USD token called Dai (https://makerdao.com/dai/) and UMA has created a synthetic S&P500 token, allowing anyone anywhere around the world to get exposure to US Stocks (https://medium.com/uma-project/announcing-us-stock-index-tok...).
- Giving certainty about the properties of the token asset to the user. Whether trading the exchange or in use at a service which accepts the token, the user verify what the token actually does. And what might change! Reduces risk of policy-change by owners and managers of services.
- Giving control of the token asset to the users, or at least a verifiable level of control. Reduces risk of interference.
- Securing the token asset, protecting the asset and related data. Reduces risk of loss.
- Enabling easy integration or migration to other smart contract systems, due to token standards like ERC-20 and ERC-721. Reduces risk of vendor lock-in. Powers beneficial second-order effects.
- Enabling composability. With primitives like various kinds of tokens and "exchange" addressed and standardized, new layers can be built, new configurations found. Creates value by reducing steps for users as they engage with each other within token-based smart-contract systems.
In what way is regulation actively harming your ability to purchase shares of a legitimate operating business without overextending yourself financially? Please be specific.
I actually don't see how your question relates to what I wrote at all..? Sorry, English not native language etc. Please clarify if I wooshed.
To clarify, many, especially investors, bigger businesses and financial institutions have been cautious because of regulatory uncertainty.
There's still ways to go, but it's happening. The sky is far from blue but the wind is blowing, so to say.
Oh just large legal and healthcare companies[1].
Some examples that have been gaining buzz recently (these are just examples, there are alternatives to each) if you want to read up and grok the statr of implementation and thoughts today: Plasma chains, PoA Networks xDAI, SKALE, PegaSys.
Zero-knowledge proofs or RingCTs? Great, require disclosure and reporting of proofs or view keys to the man, who will enforce it for all interacting parties.
"You can't enforce bans on running nodes"? Well, start enforcing strict control of the public IP space so everyone address has a responsible individual behind it and put severe penalties on unlicensed crypto/privacy enabled assets/what have you.
I am thinking more and more we need to seriously consider moving the web to something like I2P or Freenet before it's too late.
Anything controlled by a private key is a bearer instrument by definition because the person bearing the private key has custody of the asset.
You're making up your own definition of transfer agent, not the one used by the SEC. They have specific requirements and responsibilities.
At best the key signing is providing a partial audit trail with no case law to support any liability transfer created by its use. Typically transfer agents take very little liability by requiring a medallion signature before allowing a transfer.
What happens when someone loses their private keys? The asset by US law is tied to them as a person, not a bearer instrument like a private key.
The stealing occurs in the relays not in the contract.
While yes, that word is overused and misunderstood, and regular users still admittedly do put trust in open source code on a public network, it's a much more open system than we've been able to have before. The trust users depend on in this instance doesn't rely on faith in any single entity to tell you what's changed in their private DB behind the scenes, you can verify it for yourself.
Just like when you push your code to a git repo. It's guaranteed immutable, tamper proof. Data side is handled by appending to the blockchain as well. But this doesn't mean it's bug-free.
You have essentially a tamper proof Database with Stored Procedures that doesn't need DBAs. I imagine it as a giant growing BitTorrent file that is maintained (and rewarded) by many computers worldwide. Any tampering to this file, it's immediately detected via hashing (just like in BitTorrent).
The only way to break this is by branching out like you do in git. But in Blockchain, you will have to convince those computers to maintain your fork. And on this note, a Blockchain is technically not controlled by 1 entity, it is the choice of every individual blockchain maintainers (aka miners).
substitute crypto kitties with something more real, like say a government starts to issue ownership information for cars (pink slips in the US i think? idk exactly) on the blockchain... there’s live, traceable ownership information, duties can be calculated and applied automatically, and traded on a platform like this. this is an asset that has real value because it exists in the real world; it’s not the bit of paper that has value, it’s the significance that it constitutes ownership of an asset
*EDIT: and i’m not saying that this idea has value either; it was just an example of something with intrinsic value rather than “third party created value”
By building on 0x, or other cryptocoin software it's essential to be aware of the elephants/whales in the "economy" of cryptocoins and tokens.
For my needs, the decentralization they currently offer is all I really care about (I am able to get my funds out at any time, and no one else is).
What you are saying is not a technical problem. But a problem in Human Society. Or even just an inherent due to it's novelty. This issue is present to almost anything that is not yet widely adapted.
With that said, giant evil mega corporations have grouped up to work on an 'enterprisy' version of Ethereum with a standard spec for interop. We're on a good track to get more 'thought leaders'.
If you sold one of your TODO notes for $170,000 [1] frankly I think that'd be a fair judgement to make.
> substitute crypto kitties with something more real, like say a government starts to issue ownership information for cars (pink slips in the US i think? idk exactly) on the blockchain... there’s live, traceable ownership information, duties can be calculated and applied automatically, and traded on a platform like this. this is an asset that has real value because it exists in the real world; it’s not the bit of paper that has value, it’s the significance that it constitutes ownership of an asset
You know you can do that with a database right? Literally, a database. Like we have today. That's how it works today. You're trying to introduce complexity and inefficiency into the US government. It's like trying to sell ice blocks in the arctic, but somehow dramatically less efficient.
I already trust the government to allow me to drive my car. Why on earth does this need to be decentralized? It's the definition of centralized. A vehicle registration reflects the governments acknowledgement that you own that vehicle and are allowed to drive it at the governments discretion. If they revoke it your blockchain entry will be totally worthless and just out of sync with reality. The value is created by the government.
[1] https://ethereumworldnews.com/worlds-expensive-cryptokitty-6...
Other than the fact that people spend stupid money on stupid things [1], I'm not sure what your point is
> You know you can do that with a database right? Literally, a database
Yes, and this is a generic solution that applies to any kind of asset, and then software like 0x can plug in to trade said assets. Generic cases are always more complex than specific cases
> trying to introduce complexity and inefficiency into the US government
Well actually I'm trying to do nothing of the sort: As I said, it was an example of asset trading of something with intrinsic value, and not a valid use-case
> I already trust the government to allow me to drive my car. Why on earth does this need to be decentralized?
It has nothing to do with trusting the government, or driving a car. It has to do with transferring ownership information of an asset with intrinsic value between 2 parties, ensuring payment without relying on (possibly expensive) escrow
You seem to be conflating a number of examples that I made to explain specific points to be a proposition of things that should actually be done
[1] https://mentalfloss.com/article/54308/9-most-pointlessly-exp...
The government is the entity that recognizes the change of ownership, it's not something you can do without their approval. Your change of ownership is being filed with the government and is available at their discretion - they can choose to block it. Car registration isn't for your benefit. If you require the government's approval you may as well store it in their database. I just saved you a blockchain :)
Let me say it again so it's really obvious:
It has to do with transferring ownership information of an asset with intrinsic value.
Stop arguing the specifics of the admittedly flawed example that I came up with between starting to type, and ending typing the sentence.
Ok your car is registered on the blockchain and you fail to pay your bills. Now it belongs to your lender. Well, the blockchain says one thing but the lenders tow truck says another. So what good is it? Blockchain technology does not address this critical component which is the faith that reality reflects the consensus on chain.
The reason the only thing that has any traction at all is cryptocurrency is that the entire concept is encapsulated on chain. The second the chain becomes a record of the real world it falls over because the world won’t change to reflect the blockchain and the blockchain won’t change to reflect the world. Only cryptocurrencies have intrinsic value captured on chain, and I am being generous when I say value.