If you have been following the crypto trend, the concept of decentralization seems to be on the front burner of activities.

Decentralized payment systems, decentralized mining, decentralized exchanges, decentralized this, and decentralized that.

This is because decentralization returns all the power to the people and users generally.

The Ox protocol and the ZRX token were invented to raise the bar of the standard of decentralized exchanges as we know it.

What are the Ox protocol and the ZRX token?

Ox is one open source protocol which allows ERC20 tokens to be traded and exchanged on the Ethereum blockchain in a very cost efficient and swift way.

It was developed to offer a decentralized exchange as part of the Ethereum blockchain. This implies that Ox was designed in a way that would involve Ethereum smart contracts to allow users all over the world to run a decentralized exchange.

The Ox team strongly believes that with the tokenization of the world economy, Ox will provide tools to effectively and efficiently exchange these tokens freely.

A question that pops up is: ‘Why not use centralized exchanges like Binance or Bitfinex or may be decentralized exchanges like EtherDelta or DexAge for these token exchanges?

Of course, we can, but centralized exchanges are security prone while decentralized exchanges are slow and costly. This raises the need for some tech like what the Ox protocol has to offer.

It should, however, be noted that Ox is neither a centralized nor decentralized exchange but improves on flaws of both to deliver the best possible way to exchange tokens.

Who is behind the Ox protocol?

Founded in October of 2016, Ox is the co-founded brainchild of Will Warren and Amir Bandeali. While Warren doubles as the CEO, Amir doubles as the CTO both of those who are involved in smart contract researching, development, and deployment.

Amongst other team members are blockchain engineers, graphics and product designers, software engineers, and several other individuals with different skills.

The advisors of the project also include founder or employees of notable companies such as Panthera capital, Coinbase and Polychain capital. The funding of the Ox project also consists of groups like the Jen advisors, blockchain capital and some other Blockchain Fintech groups.

How It Works

Ox is designed to achieve its goal in two ways;

• Ethereum smart contracts i.e on-chain
• Through relayers i.e off-chain

Using Ethereum smart contract option, the maker first approves the exchange to access their balance of token A and then makes an order to trade token A for B specifying all terms and conditions and then signs the order with their private key. Then he broadcast the order through any communication medium available.

Then if the taker likes the order, he consents the contract to access his balance of the said token B and submits the maker’s signed order to the DEX contract.

Then finally the DEX contract verifies maker signature, validity, and openness of the order, and then transfers the agreed tokens between participating parties at the predetermined exchange rate.

Using the relayers or off-chain option, orders are routed through a relayer and not a DEX smart contract this time around and the relayer may have a fee schedule and an address used to collect their fees.

Here, the maker creates order and sets a fee that satisfies the relayers fee schedule and setting the receiving address to the relayers provided address and then signs the order with his own private key and then transmits the order to the relayer.

Relayer then checks for validity and proper transaction fees. If the order is not valid or falls short in term of transaction fees, the order would immediately be rejected. If it meets requirements, then relayer post the order in their order book.

Takers receive the order book which includes the makers’ order. He then fills the order by submitting the order to the DEX contract on the Ethereum blockchain.

Note: Relayers keep an off-chain order book for transaction fees. These fees from the maker and/or taker get to the relayer on the completion of a trade. Again, relayers just facilitate signals between trade parties by maintaining an order book. They do not actually execute trades on behalf of these parties.

Decentralized Exchanges and Ox Protocol

Decentralized exchanges were a wakeup call to the vulnerability and theft issue of centralized exchanges. With this, users keep control of their money instead of sending money to a wallet controlled by one individual or entity.

Therefore, users make use of a digital signature to authorize orders. This, in fact, means that while centralized exchanges are very fast, their decentralized counterparts are much slower.

Ox is more of a decentralized crypto exchange than a centralized one but with a few important differences. Ox improves on the main flaws of decentralized exchanges; expensive, illiquid, and much slower. The project addresses this by designing a standard protocol that can be used on all orders relayed off the blockchain.

With this protocol, orders only have to go back on the blockchain when executed instead of at every single transaction. This hastens order processing and cuts costs by eliminating some unnecessary cumbersome transaction fees.

Ox doesn’t charge you in any way for using their protocol, it is free.

However, if a person decides to use the protocol to develop a decentralized exchange, the person best known to be a relayer may charge an amount for transaction fees.

What is Ox OTC?

In addition to the Ox protocol, the project team also developed the Ox OTC. It allows peers to exchange any type of Ethereum tokens directly without even requiring the services of the relayer. This is possible as far as they connect with their counterpart directly. It is live, relayed through the blockchain, and very easy to use.

Simply forward a link to your counterpart to generate and send your order. This can be sent in any way or by any means you deem fit because it goes through the blockchain. This implies that you can use paper and pen, social media, email or any other means at your disposal.

The ZRX Token

Another development alongside the Ox protocol is its own Ethereum utility token known as the ZRX token.

This token is how users pay relayers transaction and trading fees. It is also a form of decentralized governance for the Ox protocol.

This implies that every hodler of ZRX token has an input in the future improvements to be made on the Ox protocol. The votes or inputs would be proportional to the amount you own.

The token has a fixed supply of one billion ZRX with 50% released during launch with 15% retained by Ox, 15% going to developers funds, 10% going to advisors and early birds, and 10% going to the founding team. Allocated tokens to team members would be released over the course of four years while purchased tokens would be liquidated immediately.

Conclusion and Verdict

Considering its smart contract protocol, Ox is putting together the benefits of centralized and decentralized exchanges while inheriting none of their problems.

Its off-chain relayers feature enables low-cost transactions that centralized exchanges do offer.

The on-chain settlement feature also lets its users enjoy all the benefits of decentralized trading.

Judging by its easy availability and versatility, it is somewhat guaranteed that Ox will grow quickly.

That is all you need to know about the basics of the Ox protocol.

Be sure to leave your questions and comments below.

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