0x: An open protocol for decentralized exchange on the Ethereum blockchain

The problem the paper names

An on-chain order book writes every cancel and every quote to the base chain. That is expensive and public in the wrong ways. A fully custodial exchange avoids the cost and concentrates the risk. 0x splits the quote from the settlement.

What the design proposes

• Makers sign an order that names the assets, the price, the expiry and a taker policy.
• A relayer stores and serves orders. The relayer does not, in the core protocol, hold the assets.
• A taker submits a matching order to the settlement contract, which moves tokens if the signature and the allowances are valid.

How the mechanism is specified

• Cancels and fills have to be handled so a maker is not double-spent. The paper specifies on-chain state for the parts that must be authoritative.
• Relayers can charge under their own scheme. The protocol does not set their business model in stone.
• Later 0x versions and NFT extensions are not the 2017 text.

What this page does not treat as proven

• Off-chain orders are only as live as the API that serves them. The paper does not remove liveness risk. It moves it.
• Allowance and signature phishing are user-safety problems adjacent to the design.
• This is not an automated market maker. It does not invent a price. It transports an order.

Why a venture studio still reads it

Still the right diagram when a venture says 'we are non-custodial' but keeps the order book on a server. 0x forces the next sentence: what exactly is signed, and what exactly hits the chain.