Cryptoassets: A qualitative due diligence framework of DEX 0x

Contact: ebrunet40@gmail.com
Etienne Brunet – Case Study
October 2017
ebrunet40@gmail.com
@etiennebru
https://medium.com/@etiennebr

I wrote this case study back in October 2017 in order to better understand / assess the 0x project. Note, this is
a fictitious case study. The CRYPTO FUND named in this analysis does not refer to a real fund. It is here to
provide guidance on what would be potential synergies between 0x and a CRYPTO FUND.
I am quite surprised by the lack of research on specific crypto project.
Hence, I thought it would be great to share my research in order to (i) gather feedback from the community
(I know there are typos. I know), (ii) try to create a framework around evaluating crypto companies, (iii)
Connect with other individuals / investors in the space.
Don’t hesitate to share feedback!
The next step of this research would be a valuation analysis.
This is not an investment recommendation. I would not at all recommend to base your investment thesis
solely on this paper. That would be not wise.
Background
2

Summary of case study: 0x
3
Team
• Co-founders have impressive and complementary backgrounds
(Finance and engineering)
• Founders have shown commitment in building a new protocol &
were able to build a decentralised team (both Tech and Ops)
• Potential questions around their capacity to grow their team
and blockchain/crypto experience need to be further investigated
4/5
Protocol
• Driven by the rise of Ethereum based dApps lacking open
standard and centralised exchanges ill-equipped to sustain their
growth and current DEX tech with severe tech architecture flaws
• 0x is building an open protocol facilitating low friction p2p
ERC20 tokens using a proprietary hybrid implementation "off-
chain order relay with on-chain settlement“4/5
Technology
• Relayers can built on top of 0x their own DEX and the 0x
protocol can be integrated with other dApps. 0x charge no fees.
• Relayers and dApps using 0x can share with each others their
order books creating less friction and more liquidity for tokens
• Some challenges remain including around the governance token
model and potential risks of side deals3.5/5
Community
• 0x has built a top advisory board and raised pre-ICO from top
crypto funds (Polychain, Pantera etc..)
• The number of partnerships since the August ‘17 launched
reached about 12+ dApps and 7 relayers providing confidence
around the team ability to build a network
• Without marketing spent, they have one of the strongest social
community which is quite astonishing
4.5/5
Market
• 0x does not compete with DEX as other DEX can use 0x protocol
and build on top of it a UI, moreover, 0x will beneficiate from the
lack of smart contract open standard and the high level of market
fragmentation
• 0x go-to market strategy of partnering with other dApps and
relayers is innovative and likely to create a network effect4/5
ICO
• 0x successfully reached their hard cap of $25m and all token
investors invested the same amount of ETH in order to prevent
“whale” investor and to maximise the distribution of the token
• Post-ICO the price surged to 10x forcing some early investors
(e.g. Polychain) to sell tokens. There may be a risk that 0x left
money on the table. In addition, investors lack geography spread3.5/5
0x protocol is a very interesting and exciting project for token investor. In the last 12 months, the two co-founders started working on building a new open protocol for
DEX on the Ethereum Blockchain and successfully raised $24m via an ICO, signed partnerships with dApps and relayers and built a strong community of 0x enthusiasts.
CRYPTO FUND
synergies
• CRYPTO FUND has gained a strong understanding of the
centralised exchange sector through its early investment in a
centralised exchange which could beneficiate 0x growth strategy
• Through its network, CRYPTO FUND could help foster dApps
partnerships, help hire new tech talents and support 0x in its
growth journey to become the reference open protocol4/5
Valuation
• No valuation metrics was used in this case study.
• A network valuation model could have been used but need
further researched and discussion with management to be
pertinent
The rating out of five aims to provide guidance on each sub segments

Team: Founders 1/2
4
• Complementary Skillset: Good public speaker, experience researcher
• Blockchain experience: Technical guidance on matters related to Ethereum smart
contracts for the BAT Token
• Social media (Twitter, Reddit etc..):
o Github: Doesn’t have any public repositories yet. 582 contributions in the
last year. 24 followers and following 1 individual – joined in October 2016
o Medium: 3.5k followers – joined in the beginning of 2017
o Twitter: 3k followers – only started using the platform beginning of 2017
• Association, school: LosAlamosNatLab, @UCSanDiego.
• Experience building community: No clear information
• Complementary Skillset: Has experience working in large companies and
working in Trading / Finance
• Blockchain experience: Has done some work on different blockchain
protocol / dApps shown on Github over the past 1.5year
• Social media (Twitter, Reddit etc..)
o Twitter: Not very active joined March 2016 and has 164
followers
o Github: 1,636 contributions in the last year, 31 followers
• Association, school: Finance at University of Illinois, Urbana-Champaign.
• Experience building community: No clear information
• Both co-founders have strong and complementary backgrounds ranging from Structural Engineering doctoral program for Will and Trader at top prop shop for Amir
• Since October ‘16, they both have been committed to 0x long before the ICO craze started which is a good sign of their long term commitment to build a protocol
• Some questions around their ability to grow a community and their blockchain tech experience remain but the ICO success brings some confidence
Will Warren, CO-FOUNDER & CEO
• Past experience and achievements:
• B.S. in Mechanical Engineering from UC San Diego then
worked as a graduate research assistant at Los Alamos
National Laboratory conducting applied physics research.
• Spent two years in UC San Diego’s Structural Engineering
doctoral program before dropping out to focus on 0x
• PhD dropout; Has never worked in a corporate
environment
Amir Bandeali, CO-FOUNDER & CTO
• Past experience and achievements:
• Finance at University of Illinois, Urbana-
Champaign.
• 4 years as a fixed income trader at prop
shop in Chicago (Chopper trading and
DRW)

Team: Founders 2/2
5
Additional questions needed to further assess founders:
• Reference calls with former employers and colleagues
• When did the two co-founders start to develop blockchain applications?
• How did the two co-founders meet?
• Have the two co-founders both worked together in the past?
• What is 0x hiring competitive advantage?
• Background check on the two co-founders
• Do the co-founders have a track record of operating across multiple cultures?
• In this case study, I based my research on desktop research (Reddit, Medium, YouTube, Whitepaper, press etc…) - including sources at the end
• In a ‘real’ due diligence, I would spend time with the co-founders to get to know them better and ask them some of the below questions
• In my view, assessing founders and teams for crypto companies is one of the most important thing due to the fact that these companies are early stages and
Founders are very important for the growth of the protocol until it reached maturity (3-5 years). After that phase, the protocol may run more independently

Team: Rest of the team
6
• Team size: October ’17: 6 FTE of which 3 engineers, 1 Ops, 1 Designer, 1 Dev relation
manager
• Past experience and achievements: The rest of the team has strong experience from
large tech firms including Google, Amazon, Airtable, Apple, Twitter and WealthLift
• Complementary Skillset: Both engineers (Fabio and Leonid) have strong blockchain
dev experience and the others employee have a mix of Tech, Design background.
Moreover, they have different nationality among the team members from US,
Poland and Switzerland
• Blockhchain experience: One of the engineer, Leonid, used to work for Neufund
Berlin
• Social media (Twitter, Reddit etc..): None of the rest of the team have strong social
media presence except on Tech focus platform such as Github
• Association, school: Duke University, UC San Diego
• Team location: Decentralised between US and Europe
• The core team was only the two co-founders from October ‘16 and until March ’17 when Fabio Berger joined the team. Alex and Leonid joined before the ICO
whereas the three others joined post ICO. Quite impressive to see that the co-founders wrote on their own the whitepaper and first beta of the 0x OTC (p-to-p)
• The co-founders need to continue hiring engineers but also need to further strengthen relationship with dApp partners and continue to work on the governance
model in 2018. Hence, they may need to attract further talents on top of engineers or / and work closely with their advisor
Joined before ICO
Joined after ICO

Community: Advisors, partners and social
7
• 0x founders were able to build a strong advisory board composed of some of the brightest / well-known crypto leaders as well as being backed by some of the top
crypto funds. In addition, 0x has been active raising the awareness of its products and has seen the number of dApps using its protocol growing over the past
months which is a strong signal for the future growth of its network effect. Additionally, the team has gained good visibility in the crypto community
Advisors Institutional backers
Partnerships
• Advisors and institutional backers:
o 0x has been able to attract a strong advisory board composed of Fred Ehrsam (Co-founder of
Coinbase), Olaf Carlson-Wee (Founder of Polychain Capital), Joey Krug (Co-CIO at Pantera Capital),
Linda Xie (Co-founder of Scalar Capital. Previously PM at Coinbase)
o In addition, 0x has been backed by some of the top crypto funds including Pantera, Polychain,
Blockchain Capital, Jen Advisors and Fintech Blockchain Group
• Partnerships
o One of the most interesting aspect of the 0x protocol is that it is designed to be a pluggable
building block for dApps requiring exchange functionality. By using 0x the dApps are able to
increase their liquidity as each relayers / dApps share their order book
o Partnerships with others dApps is key for creating a strong network effect for 0x and becoming an
utility block of the crypto system. Since August ‘17, 0x has been able to sign partnerships with
well-known dApps including Augur, Aragon and MelonPort. Moreover, some niche protocol has
been created on top of 0x such as dYdX, a decentralized protocol for financial derivatives
o In addtion to dApps, about 7 companies were founded to act as relayers on top of 0x including
RadarRelay and Ethfinex. The latest is actually a partnership between Bitfinex (major centralised
exchange) and 0x. This is another interesting sign where legacy exchanges use 0x protocol to
create their own decentralised exchange rather build their own smart contracts, liquidity etc...
• Social / Awards
o None of the co-founders have a strong social media presence but 0x reached about 30k of Twitter followers and about 3k of Reddit readers which is actually one of
the largest Twitter account (Filecoin: c. 10k and Tezos: 31k on Twitter). The two founders have been to many Ethereum meetups around the world (SF, HK, NYC,
Coinbase etc..) to explain their protocol to the public and raising awareness among the community. All of this was done without marketing expense
o In addition, the firm won Proof of Work pitch competition at CoinDesk’s Consensus 2017 worth $10k

Protocol: Drivers for 0x adoption 1/2
8
• dApps based on ERC20 are growing very quickly but suffer a lack of open protocol standard hurting liquidity, network effect and interopatibility
• As a result, an open standard for exchange is critical to support this open economy. 0x view is that smart contracts should act as modular building blocks that can be
assembled and reconfigured. Moreover, in the long run 0x believes that open standards tend to win in the long run as it increase liquidity and efficiency for all
• The recent rise of dApps are built with rapid
iteration and a lack of best practices which
have left the blockchain scattered with
proprietary and application-specific
implementations.
• Currently, each dApp requiring an exchange
functionality such as Augur, Gnosis or
Melonport has to build their own smart
contracts offering no interoperability with
other dApps and high risk of bugs. Moreover,
each dApp needs to bootstrap their own
liquidity
• The current approach imposes unnecessary
costs on the network by fragmenting end
users, destroying valuable network effects
around liquidity
The rise of ICO and Ethereum based dApps
• The world is becoming tokenized and
Ethereum has become the protocol leader
for companies wanting to build a dApp
• Of the top 100 tokens ordered by market
cap, 91 are based on ERC20 token and
represent 83% of total top 100 token
network value
• Beyond the ICO market, it is expected that a
number of assets will be tokenized in the
next 5-10 years such as stocks, fiat currency
(recent announcement of Russia is another
strong signal) etc…
dApp suffer from a lack of open standard
hurting the end users and network effect
Current centralized exchange providers
suffer massive challenges
• Centralised exchange (Kraken, Bitfinex) have
been one of the major winners of the recent
crypto assets growth aggregating massive
amount of transaction fee. Centralized exchanges
offer fiat on/off ramps, better performance (for
the moment) than decentralised one and cater to
customers uncomfortable to manage their own
key
• However, these exchanges face security failures,
downtime from DDOS attacks, high traffic spikes,
low level customer service, high transaction fee
as well as regulatory challenge forcing some
exchanges to delist some crypto
• In addition, centralized exchanges are not based
on smart contracts making it impossible for
dApps to call other smart contracts for liquidity

Protocol: Drivers for 0x adoption 2/2
9
Decentralised exchanges based on on-chain order books face many challenges
• Expensive and slow: Exchanges such as EtherDelta have their order book stored on the
blockchain requiring market maker to spend gas each time they post, modify or cancel
an order. Moreover, maintaining an on-chain order book results in transactions that
consume network bandwidth and bloat the blockchain without necessarily resulting in
value transfer
• Exposure to arbitrage: The lack of automatic matching permits in-market arbitrage,
whereby stale orders are filled to the disadvantage of users unable to quickly cancel
their orders in response to market fluctuations
• Slow cancellation: After a cancellation order is mined on-chain, the requirement of
waiting until the next mined block (or later with potentially full blocks) imposes a
significant barrier to real-time exchange, potentially locking up user funds and enabling
profitable miner arbitrage on larger orders through frontrunning
• Slow order processing: On-chain exchanges often face significant delay when users try
to place orders in the system.
Automated market maker (AMM)
• AMM smart contracts get away from on-chain order books by having an automatic
price-adjustment based on the asset's market force on either side of the trade. This
has the benefit of always being available since there's only ever one price.
• Impose an artificial constraint to the supply curve: AMMs model may face challenge if
the price-adjustment model is too sensitive, small trades will effect the price more
than they should.
• Risk of front-running: If it's not sensitive enough, arbitrage will take over and the
AMM bankroll will run out
State channels
• State channels move transactions off the main blockchain by having participants send
cryptographically signed messages between each other. Once the "micro transaction"
is complete, the result is published on the main blockchain and gas fees are applied.
This method is one way of scaling the Ethereum blockchain and reducing costs.
• Require high number of transactions: Numerous on-chain transactions are required to
set up the state channel and ensure security and honesty among market participants
• Participants has to be online for the entire state channel transaction

Protocol: Comparison of exchange architecture
10
• Radar Relay is one of the relayer building a decentralised exchange on top of the 0x protocol. The graphics below highlights the differences among the different
most known exchange architectures
• Better security, speed, API access are one of the features that set DEX based on 0x protocol with others
Source: Radar Relay Medium

Protocol: Overview of 0x
11
Overview of 0x
• 0x is a protocol facilitating low friction peer-to-peer 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.
• 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 – though there is a lack of details on this topic
Overview of 0x technology
• 0x uses an hybrid implementation named "off-chain order relay with on-chain settlement“ combining the
efficiency of state channels with the fast settlement of on-chain order books.
• In this approach, makers generate an order consisting of a package of data including information such as assets,
exchange rate, expiration time and finally cryptographically sign orders
• Makers have two options either to broadcast using their own preferred medium to another party (point-to-point
orders) or through a relayer.
• Note, relayers can charge fees as a reward for their broadcasting services: When an order is filled, the DEX will
transfer any fees from the Taker and Maker's accounts to the Relayer's account. The order book owned by the
relayer can be either public or private and Relayers cannot be given the ability to execute trades on behalf of
Makers and Takers.
• An interested counterparty may inject one or more of these orders into a smart contract to execute trades
trustless-ly, directly on the blockchain
• The DEX processes the exchange on the blockchain

Technology: Network effect
12
• In the current state (Figure 1), most of the decentralised exchange operate with only one
relayer. As it is a close system, it has a limited liquidity pool and no interoperability with
others participants
• One of the very interesting feature of the 0x protocol is its ability to allow anyone to become
a relayer (Figure 2). As the orders share the same format and can be matched by anyone in
any venue, from a p2p relay network to a decentralized exchange app to a text message.
• Moreover, it significantly lowers the friction of running a dApp requiring an exchange. Smart
contracts cannot make web-based API calls, so they cannot directly access web-based
centralized exchanges. But they can call other smart contracts, so they can directly access
decentralized exchanges. This is in line with the vision of a broader tokenized world.
• Relayers and dApps can share with each others their order books which ensure more
liquidity
• In addition, one interesting features is that 0x protocol can automatically support new
tokens immediately unlike other centralised exchanges which again ensure the increase of
liquidity
• The long term vision is that there will be decentralised application stack with many
specialised networks with distinct tokens. dApp could require users to use 0x token to use
their application. The dApp will then use smart contracts to automatically retrieve the
needed token for the stack to be properly used. Though, this required broad adoption of
tokens, dApps with multiple token and improvement of the overall Ethereum network.
Relayer
DEX
(Protocol)
Figure 1: Current DEX state
Figure 2: Future network effect with 0x
Relayer
Relayer
Relayer
dApp
dApp

Technology: Role of token
13
• 0x is deployed on the Ethereum blockchain with a fixed supply of protocol tokens issued to partner with dApps and future end users.
• 0x protocol and its native token does not impose unnecessary costs on users, seek rent or extract value from Relayers. The protocol's smart contracts is publicly
accessible and completely free to use. No mechanisms is put in place to benefit one group at the expense of another.
• The token have two use cases: i) Token holders will be able to vote for future updates of the protocol, 2) Makers need to use 0x token to pay relayers’ fee
2. For market participants to pay transaction fees to
Relayers
1. decentralized governance over updates to the
protocol.
• The main purpose for ZRX is decentralized governance over 0x
protocol’s upgrade system, meaning owning ZRX gives users a say
proportional to their holdings in how the protocol should be
improved over time
• Decentralized governance will be used to securely integrate updates
into 0x protocol. Initially, a simple multi-signature contract will be
used for decentralized governance until a more sophisticated DAO is
developed
• Without this governance mechanism, relayers and dApps integrator
may risk to update the protocol via a fork or force users to switch to
a new protocol.
• The decentralize governance will ensure dApp interoperability
• Note, there are no clear information about how the vote will be
done. e.g. There could be a risk of a 51% attack.
• As indicated previously, relayers can create their own liquidity
pools and charge transaction fees on volume
• Transaction fees are paid in ZRX, 0x token.
• This is another way to ensure the use of the 0x token and
increase the utility value. However, as noted later, the protocol
could have accepted an Ethereum token rather than its own.

Technology: Ox review
14
• Project progress on code base over time: The project progress has been impressive. The whitepaper was released in Feb ’17 or about eight months before their ICO.
They launched their smart contract in March ’17 and launched their 0x OTC platform (without relayer) in may ‘17 to the public. Few months after they made 0x.js open
sourced and an audit of their smart contract was conducted by a third party. Their August ICO was successful and since then they have been able to continue foster
partnership adoption and continue to improve their code base
• Whitepaper: The whitepaper focus on providing an overview of the current landscape, highlighting protocol specification and token. However, it lacks information on
team, roadmap, token distribution, governance information. Having said that, the team has done a great job on their website with their Wiki, Medium posts and their
public Github. One potential reason of the light level of information of their whitepaper could be the fact it was released back in Feb ’17
• MVP: As mentioned, the 0x team had their code shared to the public and also released a OTC solution named 0x portal. Ox Portal aims to be a one-stop-shop for all
things ERC20 token related. The goal is to build the gold standard of ERC20 token wallets, where users can view their token balance, trade with known counter-parties
directly via the Ox protocol, and explore transactions on the blockchain. This is a great signal and furthermore provide confidence in the ability of the team to execute.
• Quality of the code: The smart contract was reviewed by ConsenSys diligence and the report was shared on Github including comments and updates. No major bugs
were found.
• Tech stack: 0x uses some very innovative technology in its product ranging from the use of “off-chain order relay with on-chain settlement” to the use of relayer and
integration within dApps. Unlike some other DEX projects that use ‘classic’ technology, 0x has developed an interesting new way to become an open standard for dApps
that incorporate exchange functionality.
• Roadmap: In a recent post, 0x shared their roadmap which is quite impressive. Q4 ‘17 will be focus on improving the protocol, improving websites and else. In 2018, the
team mentions that there will be some R&D around governance though no additional info is shared around the governance mechanism and token holders will need to
wait until Q2 2018 for the governance whitepaper. The lack of details around governance is one of the challenge around the protocol
• Adoption over time: The team has been active partnering with other dApps and relayers with today 15 dApps integrated with 0x, 7 relayers including Ethfinex and
KinAlpha.

Technology: Roadmap
15
Source: 0x Medium

Technology: Challenges
16
• Based on ERC20 Token: Currently 0x is based on the Ethereum blockchain and is only ERC20 compatible. The protocol lacks compatibility with other open software platforms based on
other blockchain technology enabling developers to build and deploy decentralized applications.
• Mitigate: As describe, earlier in this presentation Ethereum has become the reference to build dApps. Large corporates and accelerators such as ConsenSys are pushing the
adoption of the technology. Hence, it makes sense to start with Ethereum and later to become chain agnostic
• Competition from other DEX: 0x is not the first decentralised exchange and face many competitors including ‘legacy’ one like Etherdelta or new ones like Kyber, AirSwap etc..
• Mitigate: Unlike most of the others 0x sets itself from the competition as it is intended to serve as an open standard for dApps that incorporate exchange functionality.
Moreover, 0x has been in production before most of the competitor.
• Use token to pay relayer: As mentioned previously, there is no clear indication why makers need to user a dedicated token to pay for Relayer fees. 0x protocol could have simply use
Ether.
• Mitigate: 0x does not provide much information on that point but it could be inferred that it is another way for the company to ensure the utility of its token.
• Centralised exchanges still have competitive edges with fiat currency and low latency: As describe by Fred Ersham in its recent medium post, centralised exchanges currently offer low
latency and high throughputs compared to decentralised exchanges like 0x facing low throughput and the same scalability challenges as their underlying blockchains. Another point, he
raised is around the fact that DEX do not support fiat currency.
• Mitigate: 0x does not actually compete head to head with centralised exchange. 0x aims to be integrated within other dApps and build a network of relayers. The use case would
be to facilitate the usage of multiple tokens within apps. In the long term, one could see that fiat currency will be tokenized and 0x could integrate with them. Until that point
and until the further development of the Ethereum blockchain, centralised exchange will likely keep a market share for certain use cases and specific users.
• Governance is unclear: The role of the token as a way to provide governance in future protocol update is one of the major challenge for the protocol. However, there is a lack of
information on the plan to use the 0x tokens in the governance scheme. The roadmap, indicates that the team will spend time looking at this details in Q1 2018 and will release a
whitepaper in Q2 2018. During a Meetup, the CEO of 0x explained that governance is a very important topic which needs to be fully assess and that they literally had not time to assess it
before the ICO.
• Mitigate: The governance question may be the biggest challenge (in October 2017). Some people think that the team rushed a little bit to raise their ICO when the market was
still ‘hot’ before having a full understanding of the role of their token. I have been impressed by the governance and the team so far but definitely think it is something to
monitor and investigate further.
• Risk of side deals: There is a risk that 0x makers and takers would be able to identify one another through a publicly viewable order book. They could directly trade between each others
rather than through the 0x protocol leaving the relayer without any fee.
• Mitigate: Even though it is correct that the exploitation of side deal would have negative impacts to relayers, such deal will not likely take major scale and will not be challenging
to implement in a dApps integration

Market: Ox market review
17
• Market size: Interestingly, 0x is not only targeting the classic crypto exchange market but wants to become the open protocol for DEX on the Ethereum Blockchain
and serves as an open standard and common building block, driving interoperability among decentralized applications (dApps) that incorporate exchange
functionality. As such, not only next generation DEX will use 0x protocol but also dApps requiring decentralized exchange
• Value chain Analysis and Market structure: Currently there is no open protocol for decentralized exchange on the Ethereum blockchain. Most of the decentralized
exchange use legacy technology which as discussed previously suffer sever setbacks. On the other hand, dApps based on the Ethereum and requiring a
decentralised exchange have had to build their own smart contracts and built their liquidity from scratch. The latter created the effect to have a fragmented smart
contract landscape with no interopatibility between dApps and affecting liquidity. Such market structure is an opportunity for 0x to become a new protocol. “The
world is the most efficient if everyone is on one order book" Polychain founder
• Direct and competitors:
• As discussed extensively in previous slides 9 and 10, there are other competitors in the space using different technology. However, 0x has built a
proprietary open source protocol and has an innovative way to approach the problem of decentralisation. The support for cross-chain trading requires far
more complex architectures, e.g. KyberNetwork and Omega One. At this stage of the decentralisation, it is somewhat more interesting to focus on one
protocol (here Ethereum) and try to build a new decentralised protocol rather than building a much more complex and potentially not stable DEX
• As a side note, 0x and Kyber are different and do not actually directly compete with 0x. Kyber will be more a high-liquidity exchange and is today not
launched. We would need to wait Q1 2018 and its first public launch with a limited subset of tokens before being able to draw tech and business
comparison
• Competitive edge: The company has built its own protocol using its off-chain order relay and on chain settlement architecture offering low friction costs for market
makers and fast settlement. Moreover, its protocol can be hooked with any other dApp with a long term view to create a shared protocol layer based on
standardization and decoupling drivers. The interoperability between dApps will in the long term offer network effects around liquidity as every relayers will be
able to share their order books. The protocol will reduce barriers-to-entry, driving down costs for market participants and eliminating redundancy as well as
improving UX and security
• Go-to-Market: 0x does not take any fee, hence relayers keep 100% of the fee they collect from makers. This is a clever way to foster growth of relayer which can
themselves focus on building niche order book with user friendly UI. In addition to relayers, 0x has already started to be integrated with 17 dApps which is another
clever way to become a trusted protocol and build a network effect.

ICO: Review of fundraising and distribution
18
• Registration: 0x ran a registration period for the ZRX token sale which lasted only 24h due to Sybil attacks even though 0x used Civic for the pre-registration
• Fundraising:
• Started at 8am PT on August 15. Just 24 hours and 10 minutes into the sale, 100% of the 500M ZRX tokens that were set aside for sale had been purchased
for a total of $24 million from 13,000 token holders
• The token price was fixed, which instantly gave a “market cap” valuation to the offering. As no token investors were able to invest more than 6 ETH, there
were an important price spike post-ICO up to 10x as some large investors “whales” wanted to have more stake in 0x
• Ox main goal was to have a large number of token holders with the same number of 0x tokens. Hence, other alternatives such as selling more tokens at
higher price to large investors do not actually fit into their long term view. Having a lock up period for investors would have also been against the company
idea to have their protocol in production post-ICO.
• Token distribution:
• A great majority of the people that registered to purchase ZRX tokens were based out of the United States and Canada
• The team did an excellent job in further analysing its ICO process and what went right and wrong.
• An interesting metric is the Gini coefficient that the team calculated post-ICO and equal to 0.627, lower than Bitcoin 0.65 and Ethereum 0.76. This is a
positive sign that the token distribution is well distributed among token holders. Note, it would have been interesting to continue tracking the Gini numbers
• Token details
• Ownership: 70% to crowd sale investors, 18% to the foundation, 10% to the founding team and 2% to advisors. The ownership structure is reasonable and
align the founders, team and token investors incentive
• The ZRX tokens have a fixed amount of 100,000,000 and there is no continuous issuance model (no mining) ow which 50% will be sold at ICO
• The lockup period for founders, advisors, and staff is over 3 years with a schedule to release 25% after the crowd sale, 25% after each subsequent year in
monthly instalments. New staff has a 4 year vesting schedule with a one year cliff. The ZRX tokens sold in the crowd sale to investors are not locked up in
order to ensure usage of their protocol from day 1. The vesting is a very good feature as it ensures the long term strategic alignment

ICO: Review post ICO
19
• The 0x ICO successfully reached their hard cap of $24m,
however its decision to allocated a fixed amount of token
to each investors had a massive spike effect post ICO.
• The company saw its valuation jumped to $290m as larger
investors were not able to have the allocation they
wanted during the ICO
• Polychain sold some of its token as the ZRX token reached
price well above investor expectation - This is an
interesting point as crypto funds need to mitigate short
term volatility
• Since September, the price has been somewhat stable at
$0.20 or about 4x the ICO price. There could be a
discussion around the fact that the company left money
on the table and under-price their ICO
• A last point is about the fact that the firm avoided
international ICO financing platform, which is a good sign
that they build strong reputation in US / Canada. However
they will need to foster international awareness for
broader success
• Overall, the ICO further strengthened the idea that 0x is a
developer led project building an innovative protocol and
aiming to build a sustainable network. Such projects are
the most interesting ones for token investor
Source: Coinmarketcap, Slack 0x

How does CRYPTO FUND can have an impact?
20
Experienced working with
centralised exchanges
• CRYPTO FUND has been an early investor in a centralised exchange. Hence, the team has a good
understanding of the challenges that centralised exchanges face
• Moreover, there could be an opportunity to foster partnerships just like the one made with Bitfinex and
its Ethfinex subsidiary
Can help 0x fostering new
dApps partnerships
• As mentioned previously, one of the interesting feature of 0x is its capacity to be integrated into other
dApps. The more partnerships, the more likely 0x will become a building block utility
• CRYPTO FUND has a strong network and relationships with some of the major dApps and could have an
impact in helping the company grow its partnerships
Support in hiring and
building a decentralised
team
• 0x has a decentralised team with talents based in US, Canada and Europe. One of the major challenge for
the company and similar others ICOed companies is the difficulty for them to find top tech talents and
top ops talents
• CRYPTO FUND could have an impact in the hiring plan and helping introduce 0x to its network
Support the company in its
growth journey
• The ICO is just the start for 0x and the road to building a viable and sustainable network is still long. As
such, the company needs to have long term backer that will invest in the company with a long term
horizon (3-6 years) rather than having short term investors
• 0x needs to keep track of its expense as $24m is indeed a large sum but needs to be properly managed

Sources: List of articles used for the research
21
• https://0xproject.com/pdfs/0x_white_paper.pdf
• https://0xproject.com/about
• https://0xproject.com/wiki#List-of-Projects-Using-0x-Protocol
• https://github.com/ConsenSys/0x_report/blob/master/report/3_general_findings.md
• https://0xproject.com/portal
• https://blog.0xproject.com/update-0x-development-roadmap-359fc54b8885
• https://blog.0xproject.com/the-0x-ecosystem-6f2e780567e8
• https://medium.com/@RadarRelay/comparing-token-marketplaces-3606ca8d780b
• https://steemit.com/cryptocurrency/@tomshwom/0x-protocol-analysis
• https://blog.0xproject.com/analyzing-the-zrx-token-sale-a94b8642c78e
• https://tokeneconomy.co/token-economy-10-0x-decentralized-exchanges-metropolis-bch-m-as-platform-funds-5179227826e1
• https://blog.0xproject.com/a-beginners-guide-to-0x-81d30298a5e0
• https://www.forbes.com/sites/amycastor/2017/08/15/researchers-find-issues-with-0x-the-latest-etherem-based-project-aiming-to-raise-millions-in-an-
ico/#22b4445f47c7
• http://hackingdistributed.com/2017/08/13/cost-of-decent/
• https://picoloresearch.com/22/0x-project-zrx
• https://crushcrypto.com/analysis-of-0x/
• https://www.youtube.com/watch?v=h8daWRgzg9w&t=1665s
• https://www.youtube.com/watch?v=xlLkssXtCWQ
• https://www.youtube.com/watch?v=dVT36N8wUIo&t=87s
• https://www.youtube.com/watch?v=s1dNM3UtlLk
• https://www.coingecko.com/en/coins/0x
• Twitter, Linkedin

Appendix
22

ICO: ICO token investors
23
Source: 0x Medium

ICO: ICO token investors - geography
24
Source: 0x Medium

Cryptoassets: A qualitative due diligence framework of DEX 0x

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