0x Protocol

0x is an open, permissionless protocol allowing for ERC20 tokens to be traded on the Ethereum blockchain. 0x protocol is a pluggable building block for DApps that require exchange functionality on the Ethereum blockchain. The 0x protocol mitigates the security issues faced by centralized exchanges by enabling fast decentralized transactions.

0x uses state channels to move transactions off the main blockchain by making participants send signed messages between each other. After the microtransaction is complete, the result is published to the main blockchain and gas fees are applied.

The main drawback of 0x protocol's state channels is the need for participants to be online during state channel transaction, security deposits, and the many on-chain transactions required to set up the state channel. This makes it inefficient for one-time transactions.

Another issue with 0x is the fact that the Ethereum network transaction speeds make it not ideal for decentralized exchanges. The high latencies often interfere with price fluctuations, forcing traders to execute orders that they would have opted out of were latencies lower.