Relayer Report #20 — 0x Roadmap and Launch Season

The latest updates from the 0x ecosystem: 4/17/19

Apr 17, 2019

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0x Recap

In January, we published the first part of our roadmap series from Will, detailing the vision of 0x for 2019: build out our data infrastructure, grow the DeFi pie, and bring more liquidity to the protocol. As part of this post, we also established a formal process for improvements to the 0x protocol, titled ZEIPs, which included details about the Multi Asset Proxy for trading bundles of assets and ERC-1155 support to 0x.

Part two came from Remco, with a focus on scalability and zero knowledge proofs. Scaling is one of the major blockers of blockchain tech, and solutions are generally divided into two categories: layer 1 and layer 2. Layer 1 solutions, like sharding, make the base blockchain able to handle more work, while layer 2 solutions, like state channels, take processes off chain so the blockchain has even less work to do in the first place. For scaling DEXs, Remco believes zero knowledge proofs are the answer, aka “magical alien math” will allow the blockchain to know if a computation was done correctly without knowing the data inside. The 0x stack will evolve in the next one to two years to look like this:

Part three introduces 0x Mesh, a peer-to-peer communication network for sharing 0x orders that serves as an improvement to the Standard Relayer API (SRA) standard we have today. There were two major problems with the SRA: first, compliance to the spec was difficult to get right for relayers using all sorts of programming languages and server frameworks, and second, plugging into each relayer’s SRA endpoint was a manual process that made it hard to join the networked liquidity pool. In addition to that, SRA was built with only ERC-20 tokens in mind, meaning as 0x became a multi asset protocol, the SRA no longer worked as well. Our solution to this is 0x Mesh, which enables relayers to easily share orders of all types across the network. Products like 0x Instant will eventually connect to the P2P network as opposed to a single Relayer’s API, greatly increasing the visibility of orders.

Finally, part four of our roadmap is a proposal to upgrade 0x to utilize new token mechanics. If I were you, I’d watch this video from our R&D lead Peter while you eat lunch, contribute any thoughts to his forum post, and finally ask your open questions for our AMA. The basic idea is as follows:

Takers pay a small protocol fee on each 0x trade
Market makers receive a liquidity reward proportional to the protocol fees generated from their orders as well as their stake of ZRX
Market makers who do not own ZRX can use stake from third party delegators

The proposal is quite detailed, but in my biased opinion, it’s a pretty elegant solution that in one shot attempts to address the problems of governance and liquidity. The purpose of governance is to hold decision makers accountable to the interest of the end user, and the goals of market makers align well with the end user. ZRX owners can also stake their tokens on market makers to earn a percentage of the rebates themselves, involving them in the governance process and earning them a rebate. The protocol fee enables the long term sustainability of the protocol, while also rewarding market makers when high gas cost arbitrage trades happen, as opposed to miners. And as the providers of liquidity, market makers should help make 0x the most liquid DEX out there.

Launches

From enterprise company 8base comes Rex Relay, a relayer as a service that lets anyone in the world launch a relayer with no coding required.

GUDecks is a reselling marketplace for Gods Unchained cards, built with the idea that if Gods Unchained becomes successful, many users will be looking for a place to share strategies and gameplay ideas. GUDecks will provide “meta” information about the game in an easy and intuitive way. The Gods Unchained roadmap is here, indicating a hopeful release of June 10th for the open beta and September 10th for the full launch. Cards are locked until the full launch, at which point people can freely trade cards on GUDecks.

Flux Market is a user-friendly way to trade derivatives on startups, built on Augur, 0x, and Maker.

Built on Augur and 0x, BlitzPredict is a betting exchange focused on sports, esports and politics. Q&A below.

Hummingbot is an open source market making bot for crypto exchanges. Q&A also below.

Q&A with Brett Richey, CEO of BlitzPredict

How has the experience of building on multiple protocols been like? What tools would you love to see to make this easier?

The experience of building any level of complexity into smart contracts on Ethereum can be challenging and the space could use a lot of tooling but we’re really happy with the tools that 0x has provided to the community, such as sol-trace and sol-profiler. Building on multiple protocols is sort of linearly more challenging than building directly on Ethereum but the main issue lies with things like getting revert codes on failed transactions and debugging why a given transaction fails. We would love a way to simply get the revert code when a transaction fails. Overall, we are really happy with the direction of the ecosystem, it’s just early and developer tooling is still in a formative stage. We aim to be positive contributors to the ecosystem and are excited about areas we can help in going forward.

What’s the background of your users? What geographies have you focused on? What are people betting on?

Our users generally fit one of two types (or both): crypto enthusiasts excited about prediction markets, and sports bettors looking toward the future. They are pretty spread out geographically but, unsurprisingly, we have a higher concentration of Americans and Canadians. We are still on testnet so there haven’t been any bets made, but the main activity has been on the major leagues: NFL, Premier League, NBA, Dota 2, etc.. Esports betting is a bit of a sleeping tiger right now — we are really excited about the potential in that space.

Can you explain what tournaments will look like? When will they be released?

I expect tournaments to launch later this year, after mainnet launch. We are targeting our mainnet launch ahead of Augur’s v2 release so, depending on their timeline, tournaments may come out first. Tournaments will be the first implementation of staking XBP (the BlitzPredict token). Stake a certain amount of XBP for a certain period of time to enter the tournament, and earn ETH and other prizes.

The tournaments will be pick ’em, bracket, and survivor style contests that pay out similar to a poker tournament (first plays earns more than second place, who earns more than third, etc..) The mobile user is going to be a major focus of ours with tournaments — the mobile blockchain experience is pretty challenging right now and we would like to help make it smoother.

Coming from the poker world, how does it compare to the blockchain world? There seems to be some crossover there.

There is a lot of crossover between the two worlds — poker players tend to be pretty risk tolerant so a lot of early adopters of blockchain technology came from the poker world. In order to succeed in poker, you need to be good at making quick decisions based on imperfect information, a skillset that certainly translates to the blockchain world — it’s such a fast moving, early space. There are a lot of parallels between it and the online poker boom, which consisted of a bunch of people trying to figure out a relatively new game at the same time. Being a professional poker player has been a really valuable background just in terms of running this company — I think my poker experience helps me to tune out distractions and focus on making good decisions and focusing more on the process as opposed to the results.

Q&A with Michael Feng, CEO of CoinAlpha

In a few sentences, what is Hummingbot and how did you get around to building it?

Hummingbot is an open-source orchestration tool that helps you create and operate high-frequency market making bots on both centralized and decentralized cryptocurrency exchanges. We originally ran a quantitative crypto hedge fund but had to close it due to regulatory issues. Afterwards, when we were trying to figure out what to do next, we started talking to people in crypto and realized that liquidity was a huge problem for everyone in crypto. There aren’t enough market makers to serve all the exchanges, especially the new exchanges who need liquidity to grow their user base. Therefore, we decided to open source our technology stack, so that anyone can be a market maker and contribute liquidity to exchanges.

What does the current state of market making look like in the crypto ecosystem?

A market maker posts continual buy and sell offers in a market, thereby providing liquidity while earning profits from the bid-ask spread. Because market makers have to react quickly to dynamic market conditions, it’s almost impossible for humans to compete with bots that can process information and trade instantly while running 24/7. Building these bots also requires domain expertise in both quantitative trading and blockchain engineering. Quantitative market making is dominated by a handful of algorithmic hedge funds and trading firms. These firms charge up to $100,000 per month for their services and cater to only the largest exchanges and projects.

You’ve talked a bit about direct market access before. What is that and how does that help Hummingbot?

Direct market access is the biggest difference between trading crypto and trading stocks or FX. Traditional exchanges like NYSE and Nasdaq are oligopolies; they only allow designated market makers to place orders directly on the exchange. When you place an order via a broker like Robinhood or E*TRADE, the broker actually sells your order to a market maker, and only the market maker has the right to execute the order. This means that strategies like market making, which are only possible when you can make and take orders directly on an exchange, are not available to the average person.

In contrast, we have direct market access in crypto: virtually every crypto exchange makes available APIs which allow anyone, both individuals and institutions, to trade directly on the exchange. This means that for the first time, anyone can be a market maker.

Why did you choose to build an open source market making bot as opposed to getting into the highly profitable market making operations yourself?

The primary constraint for market making is inventory; to buy and sell an asset, you have to maintain dedicated inventory of both the base asset and the quote asset in the exchange/wallet. Given the near-infinite number of markets that need liquidity, it would be impossible for any single firm to maintain enough inventory to serve each and every market.

On the other hand, open sourcing market making infrastructure allows anyone holding crypto assets to make more productive use of them via market making. As a venture-backed company, this allows us to make the biggest impact on the market possible.

As markets get saturated and strategies get more complex, how will Hummingbot stay relevant? How will you become profitable?

We think of each market as a node in a graph, while a strategy is an edge that connects multiple nodes. We’re only starting with a few markets, but as we build more and more connectors to different exchanges and financial protocols, the number of possible edges grow exponentially. In addition, since our strategies are fully transparent and open source, we expect our users to customize them and create new ones.

Like many other open source projects, we utilize an “open core” business model: the base software is open source and free for individuals, and we create premium modules that are suited for institutions. These premium modules, targeted at crypto funds, OTC market makers, and token projects, will address enterprise needs such as security, integrations, historical data, and professional services.

Ecosystem

STAR BIT (James):

Taiwanese matching relayer focused on gamifying the buying of tokens, with a native token SBT.

Added chat room on the new homepage which integrates a Telegram channel
Reviewed token liquidity and unlisted some tokens which did not qualify
Improved homepage and will integrate with STAR Wallet, also planning new marketing events for the new version update

BoxSwap (Charles):

NFT relayer and wallet made for ERC-20 and ERC-721 assets in gaming communities.

Released Trader Profiles, so traders can now show off and accept offers on their NFT
Released NFT marketplace directly on Twiitter; added support for Neon District swaps and management
Released our first NFT Badges that are used as loyalty rewards and exclusive feature access

Gods Unchained (Tyler):

A next-generation trading card game pushing the boundaries of digital asset ownership.

We released dates for the open beta and season 1 launch of Gods Unchained & the Apollo Marketplace
We released a new Trello-based public roadmap

LedgerDex (Matt):

Open order book relayer that allows wallet to wallet trading and next generation token management.

Updated the URLs for the Infura API endpoints to prepare for the deprecation of Infura’s legacy API authentication
A few bug fixes and UI improvement to our web app

GU Decks (David B):

Secondary marketplace for Gods Unchained assets.

GU collectable listings are now shareable with direct links
Added the ability to estimate the total value of your GU collection (including the new Etherbots promo cards)
Improved deck descriptions now allow formatting and automatically link card names to their card

Rex Relay (Andrei):

Relayer as a service made by enterprise company 8Base; build a relayer with no coding required.

Released RexRelay (ERC20/721 relayer-as-a-service) in private alpha
Looking for a small set of launch partners who need a relayer backend for their project
You can watch a demo video here

Fabrx (Ryan):

Platform as a service for developers, enabling them to easily integrate features from NFTs and DeFi.

We’ve launched the ability for anyone to deploy a 0x Relayer without code. Hosting and management is taken care of on the backend
We’ve enhanced our Non-Fungible Token launcher. Issue and distribute your own NFT with Metamask
Call for Pilots: Launch a rewards system which utilizes NFTs and secondary exchange, directly from the Fabrx terminal. Set up a pilot today

Radar Relay (Whitney):

Popular open order book relayer for trading ERC-20 tokens wallet to wallet, headquartered in Denver.

In the process of designing a new wallet handler
Implemented new archive structure to optimize order database
Updated the Radar Relay landing page to match Radar brand identity

Emoon (Jim):

A marketplace for the buying and selling of ERC-20 game tokens and ERC-721 crypto collectibles.

Enabled the purchase of ERC20 game tokens using 0x Instant
You can now buy Enjin Coin, Abyss, God’s Unchained PASS tokens, Benzene, Dragon Series Token (for HyperDragons) and more
Enabled third parties to embed 0x Instant for game tokens using liquidity from Emoon

Nzinghaa (Nelly):

Mobile-first wallet and relayer for ERC-20 and ERC-721 crypto-assets based in Cameroon.

Developing MVP version of our Android app
Working on legal and financial plans

Ambo (Jai):

Mobile app and wallet looking to serve as a portal to DeFi protocols, acquired by MyCrypto.

Launch coming soon! Starting work on a few new products that help make web3 easier
Opened up our public beta here
Join our email list here

Bamboo Relay (Josh):

An open orderbook relayer for ERC-20 tokens.

Integrated WalletConnect support, allowing you to place orders on desktop and confirm on your mobile wallet
Simplified buying for takers by using the Forwarding contract to avoid having to wrap Ether
UI improvements across the board — backfilling prices from CoinGecko, mobile quality of life enhancements, hiding orders with near expiration, site-wide loading indicators

ForDex (Aditya):

Open order book relayer that enables stablecoin arbitrage, supporting tokens like DAI and PAX.

We have reduced trade conflicts compared to previous code implementations
Flipped WETH Markets for easy calculation of prices
Market maker tool in alpha to facilitate additional liquidity

Market Protocol (Bass):

MPX is a venue for trading ERC-20 Position Tokens that track the prices of traditional or crypto assets.

Built out our APIs and documentation
Soft launched our relayer MPX with a wETH / DAI market
Working with market makers to provision liquidity

Links

Tokenary, who I interviewed on RR 19, with a pretty funny video about safe transactions.

Compound V2 coming out. Improvements include specific risk assessments of collateral, more asset types, and governance within the platform.

Maker raises their stability fee to 7.5%, as Dai is a bit below its peg (in the $0.96 to $0.99 range). Also released their plans for multi collateral Dai.

Dharma analytics platform, as well as something called LoanScan that shows interest rates across very crypto lending platforms.

Pretty good deep dive into fake volume on centralized exchanges from Bitwise, given to the SEC.

Coinbase Custody released a staking service for Tezos, with Maker support coming soon.

Is this prediction market art?

Augur V2 released, including Dai as a denomination token, among other upgrades.

Fun Stuff

Banksy authenticates his art (spoiler: he is not compatible to the new ERC-721 standard). Also, the world of AI Art.

Hottest bird in New York.

Largest collection of Latin American music, all on vinyl.

Fascinating profile of Demis Hassabis, founder of DeepMind.

Stiegler’s law of eponymy that no scientific law is named after its discoverer.

Interesting dive into the changes happening at A16Z.

Much love,

Rahul

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