0x Protocol Deep Dive: 6x Upside Based On Hybrid Utility and Governance Token Valuation

0x Protocol Deep Dive: 6x Upside Based On Hybrid Utility and Governance Token Valuation

Executive Summary

 

0x Protocol ($310M, ZRX token) is a decentralized exchange protocol, a piece of public infrastructure which decentralized exchanges are building front-facing consumer applications to enable the trustless exchange of ERC-20 tokens (Ethereum Tokens). Historically common shared infrastructure leads to virtuous network effects (TCP/IP, Ethereum) while also creating a standard platform for which numerous parties can use and build upon (decentralized exchanges, dApps).

 

0x is a marked shift from the centralized exchange model as the protocol enables the exchange of value without an intermediary that is subject to gaming, high fees and it seems a major hack every quarter. We envision a future where 0x’s protocol is used to exchange not only popular crypto’s but value itself (once the world’s $250T in assets are tokenized).

 

We are bullish on 0x as foundational updates to the platform are rolling out, including V2 of the platform that adds extensive new functionality and the coming launch of the 0x trade widget that eliminates complex hurdles for consumers to use the 0x platform.

Currently, governance or control over the platform by token holders and is not coded into the platform. 0x’s governance roadmap offers clear milestones that grant ZRX token holders incrementally more control over the platform, and as these updates are executed we expect the token value to gain more prominence.

 

We introduce a unique hybrid valuation model which ascribes value to the ZRX token both as a utility used to pay fees to relayers and as governance token. Our detailed valuation model leads to a token value of $3.42, or ~6x above the current price. While our model has numerous hard to quantify moving parts, we believe it advances our thinking of both the upside and downside of the protocol.

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Sources:

We would like to thank Chris Burniske of Placeholder Venture Capital and Itamar Rogel for their thoughts and feedback regarding our report.

Disclosures:

 Tom Shaughnessy owns the tokens of Ethereum, 0x and Polymath. By reading this post you agree to 51percent Crypto Research’s Terms and Conditions. This report is solely informational and is not investment advice.

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