0x Protocol

0x’s mission is to create a world where tokenized value can flow freely. To achieve that, we are
building the DEX infrastructure for the Internet. Our primary success metrics are number of users
transacting, $ volume, number of trades.

0x has been lead primarily by the 0x ‘core’ team that raised ICO in 2017. After bootstrapping the
effort, the team transitioned in 2020 to a for-profit entity called 0x Labs, pursuing its own business
objective while being the main contributor of the open protocol - with the intention of progressively
being ‘one of many’ contributors. In 2021 0x Labs deployed funds in a community Treasury entirely
controlled by ZRX holders. The ensemble of ZRX holders have been labeled as the “0x DAO” since. A
couple of groups were created out of the DAO Treasury, leading specific activities (projects, grants
programs).

0x governance is practiced by ZRX holders. 1 ZRX = 1 vote. ZRX can be delegated to 3rd parties. There are currently 3 types of votes: temperature check (min 1k ZRX to create one), ZEIP (protocol updates, no minimum voting required but operations are led by 0x Labs) and Treasury Votes (funding requests, 100k ZRX required to initiate vote, onchain binding).

There are no specific groups encoded in the system. As far as governance is concerned, ZRX voting
power is the only controlling factor. ZRX can be delegated to 3rd parties.

Protocol updates are coordinated by 0x Labs. The votes are run off chain, and displayed in the main
voting portal. If accepted, the proposals are executed onchain by a designated multi-sig that controls the contracts.

The Treasury isn’t controlled by any multi-sig. Its funds are controlled via onchain binding voting. Polygon foundation and Celo foundation contributed to the Treasury as 0x deployed on their network, with the intention of providing funds to support development in their corresponding venues.

A group funded by the Treasury called 0xEVE spun off (via onchain voting) in Q3 2021 with the purpose of running a investment program to grow the network. It is controlled by a multi-sig of individuals running the program. Some of them are retributed by the collected funds.

There are not mechanisms to add or remove groups, apart from the aforementioned multi-sigs. They have not been codified in the governance process.

An exception to that is the group of bootstrap delegates. This group of teams and individuals was
delegated voting power by 0x Labs in Q3 2021 to give them enough voting power to administer and
support the first steps of the DAO. The ZRX delegated can be modified at 0x Labs discretion. The group has not been changed yet, but we might be running refreshers based on activity and new applications.

Refer to previous question.

The project seeks to encourage the creation of technologies aimed at supporting the decentralized
exchange of assets. The removal of points of failure enabled by blockchains is the underlying requirement in the software developed. Apart from the hard technology, the project aims at growing the network of participants: applications with their users, and (when applicable) liquidity providers, in whatever form (professional firms, AMMs..).

In order to support these efforts, funding is necessary and was bootstrapped via ICO and by the business opportunities seized by the firms participating in the network. Special programs aimed at growing user participation can be designed and executed.

In 2019 0x launched a staking-based incentives system that aimed at distributing governance power to liquidity providers on a specific subset of the 0x network. Over 80M ZRX worth of voting power got
distributed to such participants (liquidity providers), allocating governance power to entities actively
involved in the healthy functioning of the network. ZRX holders were allocated rewards based on their
delegated voting power and the performance of the liquidity provider.

The model grew disconnected from the evolution of the network, which privileged other types of markets, and it’s been paused in October 2021. It is being redesigned.

In 2021 0x Labs deployed funds in a community Treasury entirely controlled by ZRX holders. The
ensemble of ZRX holders have been labeled as the “0x DAO” since. A couple of groups were created out of the DAO Treasury, leading specific activities (projects, grants programs).

The Treasury isn’t controlled by any multi-sig. Its funds are controlled via onchain binding voting. Polygon foundation and Celo foundation contributed to the Treasury as 0x deployed on their network, with the intention of providing funds to support development in their corresponding venues.

A group funded by the Treasury called 0xEVE spun off (via onchain voting) in Q3 2021 with the purpose of running a investment program to grow the network. It is controlled by a multi-sig of individuals running the program. Some of them are retributed by the collected funds.

Voting power should determine what’s legitimate or not. 0x Labs can ultimately weight in (hasn’t so far) with its voting power (~10-20% of entire supply) to sway votes that are considered harmful for the project goal.

We haven’t reached highly contentious votes so far. Temperature checks are somewhat subject to spam or not entirely relevant voting (like this), but they are not binding.

0x governance is practiced by ZRX holders. 1 ZRX = 1 vote. ZRX can be delegated to 3rd parties.
There are currently 3 types of votes:
• temperature check: min 1k ZRX to create one. Snapshot space here.
• ZEIP: protocol updates, no minimum voting required but operations are led by 0x Labs. Example vote.
• Treasury Votes: funding requests, 100k ZRX required to initiate vote, onchain binding. Example vote.

ZRX holders. However, the purely legislative of creating proposals was lead by 0x Labs (fwa ‘0x Core’ team). ZRX holders mainly showed support or veto-ed proposals. The interesting aspect of governance for smart contracts objects is that the act of voting is ‘Post Ante’ the proposal itself, which is the full code update itself. This creates asymmetrical risks in whatever party wants to embark in a complicated protocol upgrade, and why ‘temperature checks’ are useful to gauge early support.

In other words, an entity wants to make sure their work (which incurs costs, including auditing) will be
accepted by the community before starting it! Or other mechanisms to reduce risk could be introduced. Here’s a rough diagram from an internal document discussing the issue.

The Treasury is controlled by its own smart contract, that coordinates the votes. There’s no central party controlling it.

For protocol updates, 0x Labs controls a multi-sig that deploys the onchain protocol updates. It will be
transitioned to a model akin to the Treasury in the future. A security multi-sig might be introduced that has only ‘veto’ power or ability to stop temporarily operations in case of issues.

Nothing set at the moment.

Discussions are held in the public forum.

Yes, snapshot votes. Snapshot space here.

No

Nothing is off the table at the moment.

Generally speaking the need for extra security and decentralization slows down the deployment process by 4-6 weeks on average. This is because of the need of 3rd party audits (it would be seen as a conflict of interest if 0x Labs reviewed internally the code it developed), and security time locks

We might consider transitioning to a lighter delegation system utilizing GovernorAlpha. That remains to be designed.

If interested, we prepared a soft evolution of 0x DAO in this deck

https://docs.google.com/presentatio/d/1LJMoP_s42HTSKetxoL8Wu1283OyKpSFmbnYRkRG83GU/
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