0x is an open protocol for decentralized exchange on the Ethereum blockchain. It is intended to serve as a basic building block that may be combined with other protocols to drive increasingly sophisticated dApps. 0x uses a publicly accessible system of smart contracts that can act as shared infrastructure for a variety of dApps, as shown in Figure 1. In the long run, open technical standards tend to win over closed ones, and as more assets are being tokenized on the blockchain each month, we will see more dApps that require the use of these different tokens. As a result, an open standard for exchange is critical to supporting this open economy.
0x protocol token (ZRX) is utilized in two ways:
1) to solve the coordination problem and drives network effects around liquidity, creating a feedback loop where early adopters of the protocol benefit from wider adoption.
2) to be used for decentralized governance over 0x protocol's update mechanism.