The bZx protocol is an open protocol for decentralized exchange on the Ethereum blockchain, it facilitates a peer-to-peer margin lending, shorting, and leverage of ERC20 tokens. The bZx protocol is not a decentralized exchange! It is a protocol to build on top of a decentralized exchange. The token is used secondary for paying fees and primary as governance mechanism for protocol upgrades. The potential for decentralized exchanges is huge. The bZx protocol fits into the existing 0x-relay infrastructure and can be just as big as 0x if not bigger because of their token model which has a sink in the form of the guarantee fund. The derivatives markets are massive and literally every person in the ecosystem can benefit from extracting the time value of their money. There are already groups working to build on top of the bZx protocol. This protocol will be part of the emerging security token stack, which is one of the most valuable coming applications.
The team has built deep connections across the ecosystem including 0x, Augur, Maker, KyberNetwork, MelonPort, Coinbase. They are currently being integrated by +6 relays including Starbit, SharkRelay, Amadeus, BambooRelay, OpenRelay, and Instex. They are engaged in talks with RadarRelay to integrate the protocol. The protocol is also integrated with KyberNetwork and serves as a liquidity bridge between the 0x and KyberNetwork ecosystems. They are already live at BambooRelay now.
The team has privately revealed that they have talked extensively to Joey Krug, and that he would like the protocol to be integrated with the Augur UI much like Airswap. Joey Krug believes their protocol to be superior to the competition (e.g., dYdX). In the coming weeks they will be going live with Augur integration on the testnet. Joey Krug recently retweeted this. The protocol will be used to support margin trading for Augur scalar markets. The Ocean X (built on 0x) has ties to Goldmans Sachs, which aims to open a cryptocurrency trading desk at Wall Street in the coming months. They are in talks to use bZx for their relay. Melonport intends to use the protocol to allow its asset managers to go leveraged short and long in the coming months. They have a partnership with MakerDAO and their upcoming margin loan tokens will be considered as collateral for multi-collateral CDPs. These margin loan tokens could form the backbone of the Maker stablecoin infrastructure as they will allow you to profit on your cryptos even as they are locked up in CDPs. This alone is massive if you can imagine every single CDP being collateralized using tokens minted from their protocol. They have a similar partnership with ETHLend as margin loan tokens has application to any protocol that requires collateral, and the ETHLend CEO Stani Kulechov is on their board of advisors. Alexander Khoriaty of district0x is also one of their advisors, hinting at a possibility of a future district0x partnership. They are currently in talks with district0x for their oracle marketplace to become the next district0x district. They've announced partnerships with liquidity providers like WhaleLend which will seed the protocol with millions in loan liquidity. Sergey Nazarov recently contacted the team to initiate a partnership between bZx and ChainLink. Wyre and BBOD have also reached out to form partnerships. Future integrations with Totle, Fetch, Airswap, and Bancor are reported to be down the line.
Like ZRX, the token will get listings on many exchanges due to its utility. The long-term prospects of the token are huge due to the novel token model. The token acts a lot like ZRX, but the design of the protocol allows for a token sink in the form of the guarantee fund. Lender assets are protected by a passive, pragmatically controlled fund that slowly accumulates a small amount of fees earned on interest. That fund will eventually be diversified into ETH and BZRX token, causing the fund to act as a sink. This is a major advancement on the ZRX token model which only accrues value through being a medium of exchange and governance mechanism, both of which are far worse at accruing value compared to a genuine token sink.
