Reject misreading and restore the most authentic side of the underestimated 0x
Editor's Note: This article comes fromChain News ChainNews (ID: chainnewscom)Editor's Note: This article comes from
Chain News ChainNews (ID: chainnewscom)
Chain News ChainNews (ID: chainnewscom)
, Written by Danial (@d4bba), Translated by LeftOfCenter, published with permission.
Danial said that the mainstream media’s reports on 0x are “frequently wrong.” Although 0x is growing rapidly, the data released by the media is not accurate, which leads to a serious underestimation of the development potential of this project. In fact, 0x’s adjusted API transaction volume is about 25%, which is its real transaction volume, which is about 2 times the unadjusted API transaction volume (~13%) reported in the media.
In addition, the income of 0x market makers released by some media is not accurate, because many fees on 0x are generated off-chain. The real data is that after adjustment, the on-chain fee income earned by 0x market makers in a single day can reach $510,000, ranking fifth after Bitcoin, Ethereum, Uniswap, and SushiSwap.
0x is also often misunderstood as only supporting the open order book mode, while 0x is actually a peer-to-peer protocol that aggregates multiple sources of liquidity and supports multiple aggregation modes including RFQ (multi-market maker price aggregation mechanism) . This means that as professional market makers in the traditional financial market enter the DeFi market, 0x will become the strongest competitor in this field. In contrast, the current revenue model of 1inch, which is temporarily leading in the DeFi aggregator track, is maintained by positive slippage income (or called spread surplus), thanks to the existence of cognitive differences, that is, large Some traders have not realized that quotation is not the final transaction cost, that is to say, 1inch does not provide the best transaction price. Once this cognitive difference is bridged, one of 1inch’s sources of income will be unsustainable. This is not A sustainable health gain model.
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0x and Matcha
If you want to analyze the value of 0x, you need to start from the decentralized aggregation platform Matcha. As Messari pointed out in an article, the ultimate value will be captured by transaction aggregation platforms like Matcha, however, Matcha is more than that.
The problem faced by many dapps is that there is no real user and market demand, so liquidity cannot be guided. This is exactly what 0x wants to solve - bootstrapping liquidity. To this end, the development team 0x Labs was established in 2017 and launched 0x, and then launched Matcha, a DEX aggregator that can provide the best decentralized transaction path, and is supported by its developer-specific product 0x API.
In most cases, 1inch provides the user with the obvious best offer. For example, when you have a transaction demand to exchange 10 ETH into USDC, at this time, 1inch may offer 1 ETH to exchange for 1,301 USDC, and Matcha’s offer may be 1 ETH to exchange for 1,299 USDC, most of them will definitely choose The former trades.
But in fact, if you choose the 1inch platform for this transaction, it may bring users higher transaction costs than Matcha. This is because the transactions on 1inch all contain hidden transaction costs, and this hidden cost is not displayed on the front-end quotation. Therefore, many users often pay higher transaction costs without knowing it.
The reason for this difference is caused by "positive slippage".
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What is "positive slippage"?
Simply put, when there is a difference between the quoted price and the realized price of a trading asset, and when the former is greater than the latter, a "positive slippage" will occur.
For example, when a user buys ETH, the price of ETH is $1,000. Due to network congestion, the market price of Ethereum has dropped to $995 at the time of final settlement, but the user still needs to pay $1,000 to buy one Ethereum. That is to say, The trader paid $5 more to buy ETH, and the $5 is positive slippage.
In fact, 1inch has generously admitted that it uses positive slippage to obtain benefits (called spread surplus), and converts these positive slippages earned into community benefits, which are distributed to protocol participants, and community members can vote to decide these benefits on their own How should it be allocated.complainIn other words, although 1inch has more beautiful quotations, these generated front-end prices are only estimates. Once positive slippage occurs, this transaction will no longer be cost-effective, and may even pay higher transaction costs than other platforms. It can be said that this is a hidden fee and a kind of banking behavior.
As one Twitter user once
complain
As mentioned above, in a 38 ETH transaction on 1inch, a positive slippage cost of 8ETH was generated. According to the on-chain transaction records released by it, 25% of the transaction was finally sent to the 1inch address. Get 30ETH.
That is, the larger the number of trades and the larger the trade size, the closer to 100% the probability of positive slippage in at least 1 trade. This means that a loss caused by a positive slippage will offset the benefits brought by the best quotation, and even cause users to suffer large losses.
For example, according to the front-end quotation data, 1 ETH on 1inch can be exchanged for 1,301 USDC, and 1 ETH on Matcha can be exchanged for 1,299 USDC. Finally, if 10 ETH is traded on 1inch, it can be exchanged for 13,010 USDC, and trading on Matcha can be exchanged for 13,021 USDC. In other words, the larger the transaction size, the greater the impact on users.
For 1inch, the revenue model maintained by positive slippage income (or called spread surplus) is still maintained so far because most traders have not realized that the quotation is not the final transaction cost, and needs to Consider hidden costs, once this cognitive gap is bridged (the best indicator to measure the performance of the aggregator is not the quotation on the surface, but the adjusted price, which refers to the actual transaction price after deducting the cost of fees, that is, the user’s One of 1inch's revenue sources will be unsustainable.
In contrast, Matcha, which was officially launched on April 16, 2020, aims to provide users with an easy-to-use decentralized trading experience, known as the "DEX version of Robinhood". Since its release, Matcha has grown rapidly, with 0xtracker data showing that both the number of transactions, transaction volume, and unique traders have grown rapidly.
How should 0x's true market share be calculated?
The above data shows that 1inch currently has an absolute advantage in the DEX aggregation market share, about 86%, while Matcha's market share is still far behind 1inch.
Data DisplayBut the above data is not the whole truth.
In fact, the above 1inch transaction volume data includes the transaction volume of ETH packaging tokens WETH and ETH, but Matcha's transaction volume data does not include this item.
Data Display
, ETH/WETH trading volume on the 1inch platform accounts for 20% of the total monthly trading volume. This means that, excluding the transaction volume of ETH/WETH, the monthly transaction volume of 1inch is much smaller.
In addition, 1inch's transaction volume data includes all integration sources. In contrast, Matcha is only one of the multiple integration sources of 0x API. As pointed out by 0x product manager Theo Gonella, the transaction volume data of 0x API and 1inch transaction volume Data comparison is a more sensible way to compare data.
According to the above method, we adjust the transaction volume data and compare them, and the following data can be obtained. Note that the market share of ParaSwap (about 1%) is not included in the three graphs.
The first picture is the market share of DEX aggregation platform without adjustment;
The second graph is the market share of the DEX aggregation platform after adjustment, which means that the ETH/WETH trading volume has been excluded from the data. At this time, compared with the unadjusted transaction volume of the first sheet, the ratio of the adjusted Matcha to 1inch transaction volume has increased significantly, and the growth momentum is clear.
The third picture shows the 0x API transaction volume and 1inch transaction volume, and excludes the ETH/WETH transaction volume. At this time, compared with the second adjusted comparison data, the ratio of 0x API to 1inch transaction volume is more big growth. That said, the inclusion of ETH/WETH volume data and the wrong way of comparing it greatly obscures the huge growth potential of Matcha/0x API market share. The data shows that as of January 2021, 0x API transaction volume accounted for about 25%, and 1inch transaction volume accounted for about 73%, which is about twice the unadjusted transaction volume (about 13%) reported in the media. The reality is that Matcha has just started, and 1inch has been on the market for more than a year.
0x market maker revenue is also underestimated
Additionally, 0x is often misinterpreted as old-school developer shit. CoinMarketCap calls Uniswap a "modern alternative" to 0x, but there is no evidence that Uniswap is more advanced than 0x, and Uniswap is not a replacement for 0x. In fact, Uniswap is one of 0x's liquidity sources. Uniswap and 0x are complementary rather than competing. As a Messari.io article puts it, “In short, aggregators compete for users, while AMMs compete for transactions.”
But even media such as Messari.io is not necessarily completely correct. In an article, Messari.io said that 0x is a company that does not manage DEX itself, but in fact, 0x manages Matcha, which Messari.io said The situation is as it was 6 months ago when the 0x Launch Kit was still available. Therefore, when mainstream media or platforms like CMC and Messari have such misunderstandings, it can be seen how likely this project is to be misread.
Another undervalued aspect of 0x is market maker revenue.
The website cryptofees.info, which counts transaction fee data, displays the average fee ranking for the current day and the last 7 days every day. But as 0 co-founder Amir Bandeali pointed out, these data do not apply to the 0x fee model, because many fees on 0x are generated off-chain.
After the correction, a larger market share figure can be obtained than before. The revised data shows that the on-chain fee income earned by 0x participants in a single day can reach 510,000 US dollars, ranking fifth after Bitcoin, Ethereum, Uniswap and SushiSwap, and about 32 times the value reported by CryptoFees as much.
0x uses a variety of liquidity sources, which is naturally suitable for active market making and AMM hybrid DeFi market
Finally, 0x is often misinterpreted as only supporting an open order book model. In fact, 0x is a peer-to-peer protocol, and its liquidity source is a collection of various liquidity models, including RFQ (multi-market maker price aggregation mechanism) and aggregation. This makes 0x multi-faceted and can be used by many types of traders and market makers.
Among them, Tokenlon, the largest relay party on the 0x protocol, adopts RFQ, and 1inch, in addition to aggregating third-party liquidity, is also accumulating its own private liquidity pool (Private Market Maker, PMM for short), or called dark pool. Those using the aggregation mechanism include Matcha, Zapper, MetaMask, and DeFi Saver.
This means that DeFi will have the potential to attract more professional market makers, and the demand for more competitive pricing will continue to grow.
