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Will 0x Fork Hydro Protocol Become a Major Competitor?

2 mins
Updated by Adam James
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In Brief

  • In an attempt to focus on liquidity issues, Hydro will be building its own network.
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In an open statement, one of the relayers of project 0x (ZRX) has confirmed it will be forking the 0x network.
The 0x project is a network which aims to provide the infrastructure for decentralized exchanges to operate. Relayers are protocol layers built on top ofthe  0x network that usually host an order book and provide order matching and liquidity. In an environment of a decentralized exchange, someone still has to match buy and sell orders.

Similar Endgame, Different Strategies

The name of the relayer forking the 0x network is Hydro and the team will continue working towards the same goal — but from a different angle. The Hydro Protocol has been powering the DDEX decentralized exchange, which has the second highest number of transactions after IDEX. The reasoning behind this decision is the divergence in visions of the 0x and Hydro teams. Recently, 0x has widened their scope of activity to improve the user-facing side of the protocol. 0x went on to cover non-fungible tokens (NFT), instant exchanges and started to focus on working on governance-related issues. On the other side of the spectrum, Hydro feels like there are more urgent and basic issues that need to be tackled before moving to pastures new. Tian Li, one of the team members, has highlighted that there still are problems with order collision and poor liquidity. Furthermore, the Hydro team questions the utility the ZRX token is providing to the network activity. While 0x is trying to gain traction from the demand side, Hydro wants to fix the issue plaguing decentralized exchanges on the supply side. The liquidity issue is a well-known problem among the developer community and as Antonio Juliano, founder of the dYdX project, wrote about the current lack of it on 0x relayers.

Healthy Competition

The lack of focus on primary issues has led to Hydro “forking” the code, however they have re-written a large portion of the codebase, according to their statement. As a result, Hydro Protocol will now become a competitor of the 0x Protocol. The number one priority for Hydro will be to solve the liquidity issue on decentralized platforms. In the end, competition is healthy and the crypto developer community seems to take this decision as a positive for the ecosystem. The winner, in this case, will certainly be the user. While there definitely are people with different opinions, could it be that 0x is under pressure to deliver tangible results? The 0x token (ZRX) has been recently listed on Coinbase and was the first ERC-20 token to be listed on the platform. The performance of the token has been lackluster — losing almost 70 percent of its value (in USD) since the listing. What do you think? Will more competition lead to better results in development? Is 0x guided by the money men that invested in the project? Let us know your thoughts in the comments below. 
Image courtesy of Twitter, Etherscan.
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Christian Gundiuc
After finishing his studies in International Business Administration at the Frankfurt School of Finance & Management, Christian started working at a real estate development company. Upon discovering Bitcoin and the cryptocurrency space, he switched his focus to learn, analyze and write about all things digital.
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