Inspiration to move the tokenized economy forward

Exchange is a core function that underpins the entire crypto economy — from game items to meme markets to local maize markets in Ghana, decentralized exchange is what enables new markets to function in a global and trustless manner. Furthermore, we believe the 0x Protocol will be the technical standard that delivers seamless interoperability of tokenized value across platforms, geographies, and individuals.

 

Over the last few months, it’s been thrilling to witness and work with teams building businesses on 0x. Complementary building blocks from the DeFi (Decentralized Finance) stack are being used in conjunction with 0x to create new products and markets that couldn’t have existed before. New verticals such as digital art, gaming, crypto-derivatives, and compliant financial instruments have launched in just the last 6 months, and we see entirely new markets developing on the horizon. Progress like this shows not only that our industry is maturing, but also how far the concept of exchange can extend.

In May 2018, Tom Schmidt created a list of 18 project ideas that could be built using the 0x Protocol. The space has evolved at such a rapid rate that we felt we needed to add to our request for product. 2019 will be the year where teams across the world begin to combine underlying financial primitives and UX improvements to push the crypto economy forward to a new set of long-term users. To kickstart a new year of development, we created an updated list of of product ideas to inspire developers and teams about what can be built with 0x today.

 

If any of these resonate with you, or if you’d like to learn more about building with 0x, please feel free to give me a shout: [email protected] or @crabbylions.

Gaming & Non-Fungible Tokens

When done correctly, game mechanics provide a powerful feedback loop that drives habitual use. With the addition of NFTs, this existing deep level of engagement can be amplified by delivering unique experiences that expand gameplay beyond a specific console or platform though open secondary markets. These markets not only provide a benefit to users, but they also democratize the ability for creators to thrive — which isn’t the case with the closed ecosystem model today. The following set of ideas can be used as a jumping off point for game developers, marketplace creators, and gamification enthusiasts to bring utility to the world of NFTs.

Bundle Trade Marketplace ⚔️?

 

Gaming interoperability is a future destination that every Non-Fungible Token enthusiast loves to pontificate about without offering concrete instructions for building toward this end state. One of the first steps toward getting there is enabling bundled transactions for unrelated assets. Since price discovery is not an easy task to solve, a UX/UI oriented team could create the standard for bundled transactions in a hybrid NFT marketplace / messaging platform that allows you to negotiate a fair trade for your 3 rusty swords, 2 fancy Cryptokitties, and park view LAND. Bonus points for pushing forward a new NFT standard like ERC-1155 into the mainstream. To get started, check out 0x Launch Kit.

NFTy Ads ??

Networked liquidity is a unique aspect of decentralized exchange that enables companies to extend their assets beyond their respective products, which, when combined with the 0x forwarding contract, enables contextually relevant surfacing of NFTs, helping new games grow their initial user base. For example, high quality games like God’s Unchained or Project Genesis are likely to a get a lot of coverage leading up to and after launch. To help with distribution of their starter decks or in-game assets, teams like these could partner with several gaming blogs to surface assets via the forwarding contract on specific posts related to the launch of their games. This would allow new users to get started as they read posts and gives news outlets a unique way to monetize the content they produce by setting an affiliate fee as a parameter in their configuration. Alternatively, an enterprising team could white label this as a value added service, enabling Google-Ads-like distribution for assets across multiple surfaces ahead of launch.

 

NFT Scavenger Hunt ??

I was first introduced to the idea of scavenger hunts for scarce digital assets by Brian Flynn back in October and have been intrigued by the idea ever since. During DevCon this year, I got my first taste of the action when I participated in ETH Hunt. In the long run, this concept becomes Ready Player One, but in the short term, a team could create an HQ Trivia-like experience where users all convene at a set time to begin scouring the digital or physical world for scarce NFTs. To claim discovered NFTs, users simply sign a 0x order.

ENS Marketplace ?

Whether it’s for squatting or utility, the demand for ENS domains is high. That said, the process of acquiring the vitalik.nongiverofeth domain leaves a lot to be desired from a UX standpoint and we envision a vibrant secondary market existing for claimed names. A team focused on ease of acquisition and transfer could become the GoDaddy or Google Domains marketplace for ENS domains. Use 0x Launch Kit to get things started and ENSNifty to wrap ENS Domains.

NFT Humble Bundle ???

Rather than requiring new users to earn assets by downloading and playing blockchain games, an NFT Humble Bundle starts them off on the right foot with a bundle of assets that introduce users to a variety of fun and engaging games. For example, teams could leverage the 0x Multi-Asset Proxy to offer a set of Cryptokitties, Axies, Gods Unchained cards, and Etheremon. As the variety of gaming categories grows, these bundles will become more specialized to meet user preferences — think card games, fantasy sports, RPG, FPS, etc.

Supreme NFTs ??

Conspicuous consumption in the physical world is supported by the simple formula of limited supply and awe inspiring demand — the sneaker heads and millennials call it “hype.” In this confounding marketplace, the higher the cost of a good, the greater the demand. I think this is the perfect use case for verifiable digital scarcity if two sides of the equation can be solved: 1. The assets and issuance mechanism must build the same type of hype that brands like Supreme, Off-White, and Jordan do in the physical world and 2. The vehicle for social signaling / display of assets (aka “flexing”) needs to be as ubiquitous as Instagram or Snapchat. Too soon to call 0x the “hype-machine”?

License to Thrill ??

Software licenses are a notoriously opaque and illiquid market. Luckily, a few teams are working on tokenizing these licenses for easier, more transparent distribution and access. Imagine businesses being able to sell off licenses that they no longer need, or being able to loan a license to a friend if you don’t plan on using a piece of software for a while. Purchasing and managing these licenses will naturally require a much different interface than purchasing other commodity tokens, and could potentially be integrated into the software itself. This could eventually even morph into a service for offering initial sales of these licenses.

Winning Bid ?‍

Another way to combat difficult price discovery. No one knows how much every unique CryptoKitty should cost off-the-bat, thus requiring the use of an auction to help the crowd find out the market price of a Gen 12 Sluggish Gold Bobtail Cat. Unfortunately, these auctions usually occur on-chain, requiring participants to spend gas to bid (famously clogging up the Ethereum network) and requiring the auctioned asset to be held in escrow. Using 0x, orders can be programmatically generated off-chain to simulate a Dutch Auction or other auction system until one is finally taken by a buyer, decreasing the number of on-chain transactions.

Decentralized Markets

Traditional financial assets like stocks, bonds, and real estate assets being tokenized. This process will create more efficient, transparent, and liquid markets for these asset classes. However, we are also excited by how crypto networks and protocols are enabling the issuance of completely new, digitally-native assets. 0x is the critical exchange layer of this crypto financial stack that dramatically lowers the costs and barriers to create entirely new assets. This is resulting in a Cambrian explosion in experimentation of financial assets that will usher in a more robust, equitable financial system. The following ideas should give some inspiration about what is possible to build using the DeFi stack.

FORDEX ?

FOREX volume represents trillions of dollars a day in traditional fiat markets. With the massive explosion of over 50+ stablecoins and many more localized and compliant instruments like Onramp’s AUD/ETH token, a single-purpose relayer could quickly become the de facto destination to convert to local currencies, hedge against volatility, or even implement arbitrage strategies should certain assets lose their peg. With billions in stablecoin trading volume occurring everyday, the opportunity for both monetization and market growth are certainly there. Bonus points for leveraging the forwarding contract to ease access to stability.

What’s Old is New Again ???

Who doesn’t want the ability to access a piece of the world’s most valuable art, real estate, or land? With Fungible Non-fungible tokens this is possible. As outlined by this ETHSF devpost, leveraging ERC-721 tokens to represent any unique physical or digital asset, teams can then issue ERC-20 tokens that represent a piece of the anchor NFT. The prospective opportunities here are diverse. From simple fractional ownership of Crypto Kitties, to complex schemes like leveraged, compliant fractional ownership of a new skyscraper development in Hong Kong. This framework can be used to unlock a new way for issuance and secondary trading of these assets similar to Fundrise or Roofstock. Bonus points for creating a permissioned liquidity pool or a secondary marketplace for fractional assets issued by compliance platforms like Harbor. Double bonus for adding Set, Dharma, or dYdX for additional layers of indexing, leverage, or derivatives.

BitDEX ??

Want to trade dYdX sETH tokens at 100x leverage or short a Set bundle of assets? Look no further than BitDEX! While BitMex has become the standard for centralized margin trading for BTC futures, there’s a massive opportunity for teams to provide leveraged exposure to thousands of assets, markets, and geographies. Get there before BitMex gets the trademark.

2020 Election Relayer ??

Considering how fake news and state actors ran amok in 2016, now is the time for the wisdom of the crowd to be our guide. Secured by having some skin in the game, combining Augur election markets with the 0x Launch Kit in an approachable UI would give the world an accurate prediction of how the chips will fall in 2020. Ahead of the midterms, ~$1.6M was staked on the outcomes of the House and Senate races. It wouldn’t be surprising to see 1000x that in November 2020. Bonus points for going global and testing this concept with elections outside the US.

Bill Splitting ?

Everyone can agree that using Venmo is a miserable experience. Nobody cares that you bought “flowers” from your friend at 12am on Saturday. Plus, on and off ramps out of the Venmo product show how massively inefficient traditional banking rails are. Instead, split bills with friends and get paid in the token of your choice. Don’t have the token needed to pay back your friend? Use 0x and networked liquidity to exchange into the requested token. Who knows, you might even be able to pull off a cheeky arbitrage.

Relayer For Social Good ?

As the world becomes tokenized, the asymmetrical advantage of the geographic lottery will be reduced. Kiva and other micro lending services have done wonders for individuals across the world by providing access to credit / capital to build basic necessities like access to clean water, housing, or crops. By using 0x Launch Kit + Dharma and a user interface that is accessible by individuals in emerging markets, a team could help bring increased efficiency and access to more geographies across the globe.

DEX Can Be CEXy ?

Over the last year, several teams leveraged mirroring centralized exchange order books in a DEX environment as a means of pairing the current liquidity of CEX with peer to peer, non-custodial trading. Although centralized exchanges currently dominate the majority of trading volume, in the long run, decentralized exchange will emerge as the standard for moving tokenized value across the world. As a way to maintain business continuity, easily expand asset class support, and access a global market, centralized exchange teams could use 0x to begin piloting and monetizing non-custodial trading to front run the inevitable shift.

Subscribe and Save! ???

Consume all the shows, pre-prepped meals, and music you want with the currency of your choice. By offering a universal model for subscriptions paid in crypto, a team could bring a better, low-fee payment option to subscription businesses across the world. The subscription contract would generate a 0x order that automatically deducts a certain amount of ETH from an Ethereum address on a recurring basis. Bonus points for leveraging a stable asset conversion to hedge against volatility.

Your Friendly Neighborhood Relayer ?

While we’ve seen massive adoption and development of relayers based in the US and a growing number in Asia, we believe there’s still untapped market opportunity for teams to address local markets across the world. Localization is likely the next step in the progression of locale-focused markets, though the implication are likely much broader than this. People in emerging markets need access to first-world financial infrastructure and relayers can provide these services to the people that need them the most.

Compliance & Infrastructure

While the original meme for decentralized exchange was pseudo-anonymous and permissionless peer-to-peer trading, we believe a compliant trading environment and robust set of trading infrastructure is needed to bring meaningful institutional-grade trading into the DEX ecosystem. Below are a few ideas to help DEX grow up.

Comply or Dai ???‍

With the launch of Wyre’s KYC Token + Dai fiat onramp and others like it to come shortly, the foundational elements exist to begin creating both compliant and liquid trading for any tokenized asset class. Any team looking to build a relayer that requires compliance in local jurisdictions should consider this a default feature of their tech stack. Start with a 0x extension contract to begin creating your compliant relayer today.

Market Maker Bündle ??

While speaking with dozens of market makers from crypto and traditional equities, some of the basic challenges that market makers face when building their tech stack to supply liquidity to decentralized exchange can be broken down into a few key pieces:

• Node Management — the ability to monitor order state
• Historical Price Snapshots — to build backtesting environments and pricing models
• Relayer Specific APIs — standardized endpoint to make it as easy for MMs to plug into a DEX as it is to plug into a centralized exchange
• Custody Solutions — Rolling your own custody or working with a best-in-class custody solution to sign DEX orders via a multisig wallet

A team (or series of teams) could help provide consulting and implementation services to prospective market makers by bundling together several of these solutions, thus lowering the barrier to entry to liquidity providers new to decentralized exchange.

Roll your own custody ??

With the launch of v2.0, 0x orders can now be signed with any custom signature scheme. As a result, it’s now possible for market makers, funds, and security conscious individuals to enable trading via contract wallets secured by multiple signatures. Gnosis Safe is one starting point, also be sure to checkout the hackathon project Ethstonia Identity.

Custody Bundle ?

Blockchain is a feature, not a product. For many dApp developers, exchange and custody are the last thing teams think about. When presented with the choice, there’s a spectrum of options from self-sovereign hardware wallets to delegated custody solutions like Bitski. While each choice has tradeoffs, finding the one that works best given your security requirement should be the primary consideration. What’s great is that bundling together custody + exchange is straightforward with 0x. Today, 0x supports order signing for Trezor, Ledger, Metamask, Bitski, and many other custody solutions.

Dark Pool Relayer ??

Many teams are working on building their own decentralized exchanges or protocols focused on dark pools, private exchanges that allow large amounts of assets to be bought or sold without exposing these movements to the public and disturbing the market. Fundamentally, you can view dark pools as just special cases of counter-party finding and orderbook management that can still easily use 0x as the trade settlement layer. An “opaque relayer” could obfuscate their orderbook and provide just-in-time quotes for crypto assets to emulate the experience of using a dark pool.

Special thanks to Will Warren, Tom Schmidt, Blake Henderson, Matt Taylor, and Jacob Evans for feedback and input on this post.

Disclaimer: This post does not provide or substitute for legal advice. When operating a relayer, there are a host of legal requirements to consider. Please consult your own legal counsel. ? Jason Somensatto