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Key Takeaways

The 0x Protocol is a decentralized infrastructure platform that enables peer-to-peer exchange of digital assets without intermediaries.

The platform combines off-chain order relay with on-chain settlement to improve efficiency and reduce gas costs.

Developers can use the 0x API suite to access combined liquidity sources and seamlessly integrate decentralized exchange features into their applications.

What Is 0x Protocol?

The 0x Protocol is a decentralized infrastructure platform that supports the peer-to-peer exchange of digital assets. Developed by 0x Labs, the protocol serves as an open standard for building applications that enable token trading without relying on centralized intermediaries.

The 0x Protocol provides an aggregated liquidity network and a suite of APIs that simplify the discovery, routing, and settlement of trades across different blockchains. The platform’s developer tools connect liquidity from multiple decentralized exchanges (DEXs) and market makers on EVM-compatible networks. This enables you to access competitive prices and facilitates the integration of decentralized exchange features into applications.

How 0x Protocol Works

The 0x Protocol uses a hybrid architecture that combines off-chain order management with on-chain settlement.

Off-chain order relay

The 0x Protocol keeps order creation and discovery off-chain to improve efficiency. A Maker creates an order that includes details such as the trading pair, price, amount, and expiration time. 

The order is then signed with the Maker’s private key, confirming its authenticity without immediately broadcasting it to the blockchain. These signed orders are shared through the 0x relayer network, which helps reduce gas fees and limit on-chain congestion.

Relayer network

Relayers maintain off-chain order books and distribute available orders to potential traders. They act as marketplaces for liquidity discovery and can be independent platforms, wallet integrations, or components within trading applications. 

Relayers never hold user funds, and they only facilitate order matching and earn fees for their services. All token swaps are executed through the protocol’s smart contracts.

On-chain settlement

When you fill an order as a Taker, the trade is settled on-chain through the 0x Settler contracts. The smart contract verifies the order’s signatures, checks its validity, and swaps assets between the Maker and Taker in a single transaction. 

Each trade is atomic, meaning it either completes fully or not at all. This structure helps maintain security and transparency while reducing the number of on-chain operations.

The 0x swap process usually consists of the following steps:

Order creation: A Maker creates a 0x order in JSON format, specifying the trade details, including the token pair, price, and amount.

Maker signature: The Maker signs the order using their private key, cryptographically committing to the trade terms without broadcasting it on-chain.

Order sharing: The signed order is shared off-chain via relayers (who host order books) or sent directly to Takers who might fill the trade.

Aggregation: The 0x API collects and aggregates liquidity across multiple on-chain and off-chain sources to find the most efficient execution route and best price.

Order submission: The Taker selects the order, signs it, and submits it on-chain with the desired fill amount.

Settlement: The 0x Settler smart contract verifies both Maker and Taker signatures and performs an atomic swap of the assets, completing the trade securely on-chain.

The 0x API Suite

The Swap API

The Swap API enables developers to integrate token swaps into their applications with a single connection. It aggregates liquidity from multiple sources, including DEXs and private market makers, to find the best available price.

The API’s smart order routing system can split a single trade across multiple platforms to maximize returns. Once a route is chosen, the API returns a ready-to-sign Ethereum transaction, allowing you to execute trades quickly and securely.

The Gasless API

The Gasless API enables developers to offer gasless approvals and swaps, removing the need for users to hold native tokens for transaction fees. The API streamlines the trading process by automating approvals, allowances, and swaps. This helps prevent failed transactions caused by insufficient gas, making the user experience smoother for new Web3 users.

The Trade Analytics API

The Trade Analytics API provides developers with a clear view of all trades executed through the 0x Swap and Gasless APIs. The API organizes trading data into structured insights, helping teams understand how users interact with their apps and how trades perform over time. With this information, developers can make more informed product decisions, enhance user experience, and create more effective trading tools.

Use Cases

0x Protocol’s architecture and developer tools make it suitable for many applications across the Web3 ecosystem, including:

Exchanges and marketplaces: The protocol supports DEXs, NFT marketplaces, and over-the-counter (OTC) platforms by providing the underlying infrastructure for token swaps and order matching.

Wallets and interfaces: Crypto wallets, dashboards, and token screeners can integrate 0x APIs to offer seamless in-app swaps.

Data analytics: The 0x Trade Analytics API supports real-time dashboards and multi-chain analytics tools that visualize trading activity and liquidity trends.

Automation: AI agents, bots, and smart contract wallets can use 0x to automate on-chain transactions, from executing trades to managing portfolios.

Liquidity provision: Market makers and liquidity providers can connect to 0x through its APIs to contribute liquidity across on-chain order books and automated market makers (AMMs).

The ZRX Token

The ZRX token is the native token of the 0x Protocol, and it’s used within the ecosystem for multiple purposes, including:

Staking: Holders can stake ZRX with market makers to earn rewards, aligning incentives between liquidity providers and the protocol.

Governance: ZRX holders can participate in governance through the 0x DAO, voting on proposals related to upgrades, fees, and treasury management.

Network utility: ZRX can be used to pay trading fees to relayers, which are nodes that host order books and facilitate decentralized trading.

Closing Thoughts

The 0x Protocol acts as a foundational infrastructure for decentralized token trading, connecting liquidity across multiple networks through a unified framework. Its hybrid model, which combines off-chain order management with on-chain settlement, enhances efficiency while maintaining transparent and cost-effective transactions. Through its APIs for swaps, gasless transactions, and analytics, the protocol enables developers to build user-friendly decentralized finance (DeFi) applications.

Further Reading

What Is Cross-Chain Interoperability?

What’s the Difference Between a CEX and a DEX?

What Is a Trading API and Is It Worth It for Traders?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Tron is an EVM-compatible Layer 1 blockchain that uses the Tron Virtual Machine (TVM) to run smart contracts and decentralized applications (DApps).

The network uses a Delegated Proof of Stake (DPoS) consensus mechanism to enable quick and low-cost transactions.

TRX, the native token of the network, supports transactions, smart contracts, governance, and decentralized finance (DeFi) activities across the Tron ecosystem.

What Is Tron?

Tron is an EVM-compatible Layer 1 blockchain that uses the Tron Virtual Machine (TVM) to power smart contracts and decentralized applications (DApps). Tron was initially launched as a decentralized network for sharing content. Over time, it has developed into a broader ecosystem that includes decentralized finance (DeFi) and stablecoins. The network’s native token, TRX, is used to pay for transaction fees, execute smart contracts, and participate in network governance.

History

Tron was founded by Justin Sun, a Chinese entrepreneur who previously worked with Ripple. In 2017, the Tron Foundation was established in Singapore to guide the project’s development. TRX was first launched as an ERC-20 token on Ethereum during the project’s initial coin offering in August 2017. In 2018, Tron released its own mainnet, and the TRX tokens were migrated to the new blockchain.

Since its launch, the Tron network has processed more than 12 billion transactions. Tron’s global presence has been noted through its selection by the US Department of Commerce to record GDP data on its blockchain.

How Tron Works

Delegated Proof of Stake (DPoS)

The network uses a Delegated Proof of Stake (DPoS) consensus mechanism. In this model, TRX holders stake their tokens to gain voting rights, which are then used to elect 27 Super Representatives (SR). These SRs are responsible for validating transactions, producing blocks, and proposing governance updates. The process is cyclical, with elections held regularly to ensure accountability. In return, both SRs and voters receive TRX rewards as an incentive for participation.

System resources

Tron transactions are powered by three system resources: Bandwidth, Energy, and Voting Rights. 

Bandwidth: measures the size of a transaction in bytes.

Energy: measures the computational cost required to execute smart contracts on the network.

Voting Rights: obtained by staking TRX, are used to participate in governance by electing SRs.

If a user lacks sufficient Bandwidth or Energy, they must burn TRX to complete a transaction. This resource allocation model helps regulate network usage and prevents malicious contracts from overconsuming resources.

Tron Virtual Machine (TVM)

Tron supports DApps through the Tron Virtual Machine, which is largely compatible with the Ethereum Virtual Machine (EVM). This compatibility enables developers to migrate Solidity smart contracts to Tron with minimal changes, although recompilation is still required.

Like the EVM, the TVM maintains the blockchain’s state, ensuring consistency across all nodes. The main difference lies in its resource model, where Energy replaces Ethereum’s gas as the unit of computation.

Use Cases

Stablecoins 

Tron’s transaction speed and low costs have established it as a popular network for stablecoin activity, particularly for Tether (USDT). In March 2025, the network introduced a feature that allows users to pay transfer fees in USDT instead of TRX. This is enabled through a GasFree wallet, which requires a one-time activation fee of 1 USDT. After this, each transfer incurs a fixed charge of 1 USDT, paid directly in USDT.

It’s worth noting that community governance approved a 60% reduction in energy fees in August 2025, lowering transaction costs across the network. As of August 2025, the network hosts over $78 billion in USDT supply, distributed across millions of accounts, with approximately 2 million transfers taking place daily. This scale has made Tron a central platform for global stablecoin transactions and one of the primary networks for USDT issuance and transfers.

Decentralized finance (DeFi)

Tron has emerged as a prominent platform for DeFi applications. Protocols like JustLend, a lending and borrowing service, and JustStable, a stablecoin platform, are developed on the network. Tron’s low transaction fees make it suitable for stablecoin transfers and yield farming.

Non-fungible tokens (NFTs) and gaming

The network supports the creation and trading of non-fungible tokens (NFTs) using standards similar to Ethereum’s ERC-721. Tron also supports blockchain-based games and digital collectibles.

Criticisms and Controversies

Tron’s governance model, which relies on validators known as Super Representatives, has raised questions about centralization when compared to networks with broader validator participation. The project also faced early allegations of incorporating material from Ethereum and InterPlanetary File System (IPFS) into its whitepaper without proper attribution. 

The network’s founder, Justin Sun, has been a prominent and sometimes polarizing figure, noted for his aggressive marketing approach. Despite these criticisms, Tron continues to support a large user base and consistently records high transaction volumes.

In 2025, Tron expanded its Super Representative pool to include new infrastructure providers such as Nansen, Kiln, and P2P.org. This introduced more institutional participants to the network, aiming to enhance operational security and address some of the criticism related to governance.

TRX Token

The TRX token is the native utility token of the Tron ecosystem. It’s used across Tron’s protocols and ecosystem for a variety of purposes, including:

Transaction fees: TRX is required for sending payments and interacting with smart contracts.

Resource allocation: By staking TRX, users obtain Bandwidth and Energy, which are consumed by transactions and smart contract operations in place of direct fee payments.

Governance: TRX holders gain voting rights through staking, allowing them to elect Super Representatives and participate in the decision-making process.

Ecosystem utility: TRX can serve as collateral in DeFi protocols, a medium of exchange in NFT marketplaces, and a settlement asset for stablecoin transfers.

Token supply 

TRX operates on a combined model of issuance and burning. New tokens are created at the protocol level through block rewards, with each block currently providing 8 TRX to the producing Super Representative and 128 TRX distributed as voting rewards. 

At the same time, TRX is burned when users pay for network resources such as Bandwidth and Energy. This dual-track mechanism balances inflationary issuance with deflationary burning, resulting in a supply model that adapts dynamically to network activity.

Closing Thoughts

Tron has become a major network for stablecoin transfers, with low fees and fast settlement times encouraging broad adoption. Beyond payments, it supports applications in DeFi, NFTs, and gaming. The network’s governance model remains a topic of discussion, reflecting the trade-off blockchains often face between decentralization and efficiency at scale.

Further Reading

Blockchain Layer 1 vs. Layer 2 Scaling Solutions

What Is the GENIUS Act and Why Does It Matter for Stablecoin Users?

What Is the Solana Virtual Machine (SVM)?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.