0xProject ICO Raises $24 Million For a Decentralized Exchange, Sends Infura and MetaMask Down Crashing

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The 0xProject opened their ICO yesterday with 80% of the tokens, amounting to around $20 million, sold in its first few hours so attracting what appears to be considerable interest.

The token sale model is unique and trials, for the first time as far as we are aware, a new method of conducting an ICO to ensure the greatest possible access.

It appears the project required registration of the ethereum address prior to the ICO commencement through an e-mail account, while also limiting participation to around $2,000 worth of eth per address.

There were some attempts to circumvent those limitations, but the project seems to have largely achieved their aim with some 10,000 token holders taking part while the ICO still had space on its second day for around $4 million more of investment. Which sold out, with the max cap of $24 million now reached.

Zex token holders distribution.

Only 50% of the tokens are being sold, so the graph above shows the majority is being held by the project and advisers, with the cap increasing on the 2nd day, which is probably shown above by some of the bigger small addresses.

The rest is then distributed in what appears to be a fairly wide manner so giving everyone the opportunity to participate. That sent demand for ethereum transactions skyrocketing yesterday and today, with Infura and MetaMask struggling under the load.

“We are experiencing huge traffic volumes due to the 0xProject sale. Please be patient as we work to maintain our expected service levels,” Infura, a node infrastructure provider said. While Metamask, a browser plugging eth wallet, stated:

“We’re seeing historic usage currently (~300k balance lookups per second), so people are having trouble loading our token list.”

However, ordinary eth users didn’t report any problems, probably because ethereum’s capacity has been increase by miners through increasing the gas limit. Which might need another increase at this point.

So it’s not clear whether this method of ICO-ing has any drawbacks. It appears to be a far better way than the 30 second bot races we have seen in previous ICOs which accumulate the tokens in the hands of the few.

It is also a method we have previously suggested as it seems simple, so maybe we’re having some unintentional bias, but – although there probably was some “cheating” – it appears to have worked without any significant drawback. So perhaps other ICOs will copy it.

Ethereum’s current transaction levels.

The ICO was to fund a decentralized tokens exchange, similar to etherdelta. We probably aren’t able to describe the underlying system better than the Cornell Team, which has undertaken a review of this project. So we’ll just provide the whitepaper’s summary.

They describe it as an exchange with off-chain order relaying where relayers can create their own liquidity pools and charge transaction fees on volume. That is combined with on-chain settlement and publicly accessible smart contracts that any dApp can hook into.

They further suggest there would be a DAO like decentralized governance mechanism to upgrade the exchange, but don’t provide details on how this would work exactly.

The Cornell team says decentralized exchanges in general and 0x in particular has some specific drawbacks as well as disadvantages that apply to etherdelta too. They further point out cross-token exchanges aren’t achievable by 0x as a much more complex system, similar to OmiseGo, would be required. But they suffer from the general drawbacks too.

However, centralized exchanges aren’t necessarily better, they say, but there are trade-offs with problems notable as volumes or exchanged value increases, which is why they think both would remain somewhat limited.

There might be solutions to those problems, but whether 0x can achieve them is not clear. They are advised by Fred Ehrsam, a co-founder of Coinbase who left the centralized exchange without quite saying what he was planning to do next, but to us it seems he is focused on helping and perhaps funding ethereum based projects.

They have also seemingly attracted some VC investment from Fenbushi Capital, Pantera, and others, so perhaps they’re able to address the analysis of the Cornell team by improving the protocol. But whether they can or will, only time can say.

 

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