Jack Kubinec

DeFi software firm 0x released an application programming interface, or API, that allows exchanges to abstract gas fees away from users. The so-called Tx Relay software was previously used in beta by platforms including Robinhood and Coinbase to enable “gasless swaps.”



Users still pay for gas with 0x’s API, but the software lumps the fee into the trade cost to reduce the number of failed trades. Tx Relay is emblematic of a larger shift from many developers toward intents-based systems that outsource some on-chain actions to protocols.



0x sells APIs focused on decentralized exchange (DEX) infrastructure. The San Francisco-based firm has notable venture ties, <a href="https://blockworks.co/news/0x-labs-get-70m-in-series-b-to-further-web3-dex-efforts">raising a $70 million Series B</a> in 2022 led by Greylock with participation from Pantera, Brevan Howard and Coinbase Ventures.&nbsp;



Robinhood’s crypto wallet <a href="https://0x.org/post/0x-labs-launches-tx-relay-api-in-beta-with-robinhood-wallet-as-first-partner">began</a> using Tx Relay API as early as March 2023. At the time, 0x said the software would make onboarding easier by obscuring gas fees and protecting users from maximal extractible value (MEV). Arbitrageurs making use of MEV can frontrun users’ transactions to profit off of things like price slippage.&nbsp;&nbsp;



Matcha, a DEX aggregator built by 0x, also used Tx Relay in its beta phase, as did Coinbase for its wallet. 0x <a href="https://0x.org/post/matcha-leverages-tx-relay-api-most-frictionless-trading-experience-in-defi?utm_source=blog&amp;utm_medium=blog&amp;utm_campaign=txrelayga">says</a> Matcha was able to reduce failed trades by 85% compared to competitors after rolling out Tx Relay-based “Matcha Auto.”



“Gasless swaps have helped us create a simpler trading experience, where users can focus more on trading and less on network fees,” Coinbase wallet production manager Claudia Haddad said in 0x’s <a href="https://0x.org/docs/tx-relay-api/introduction">documentation</a> on the API.



DeFi has lately seen a UX-focused shift toward <a href="https://ethresear.ch/t/a-decentralised-solver-architecture-for-executing-intents-on-evm-blockchain/16608">intents</a>-based systems, where users will say what trade they want to execute but not necessarily how the trade should happen. Instead of dealing with wrapped tokens or gas fees, users can <a href="https://x.com/SuperteamDAO/status/1749814784403652637?s=20">tell</a> a protocol to swap one token on one chain for a different token on another chain and let the software handle the rest.&nbsp;



The marquee DEX Uniswap dipped its toes into intents with the release of UniswapX.&nbsp; The protocol <a href="https://superscrypt.medium.com/uniswapx-moving-toward-intent-centric-swaps-f1660b7e1cb9">uses</a> an auction process to execute intent-based gas-free swaps.&nbsp;



Tx Relay is similar in consequence to intent-based systems, Theo Gonella, 0x’s director of product management, said in a direct message.&nbsp;



“[I]t’s basically an intent based system with one single solver (0x, which fetches best AMM prices and connects to leading DEX Market Makers),” Gonella wrote. Solvers are the entities that carry out user intents in a blockchain context.&nbsp;



Intents pare down the number actions users need to take on-chain. Obvious questions emerge as to who is <a href="https://x.com/cwgoes/status/1727721544854421880?s=20">handling</a> the intents and what they do behind the scenes — but many see intents-based systems as a necessity to make crypto user-<a href="https://x.com/JasonYanowitz/status/1748837858943648241?s=20">friendly</a>.



“Almost nothing about the current blockchain UX will be acceptable for broader adoption,” Kevin Weaver, backend engineer at blockchain platform Metropolis, said in a text. “As long as an intent is designed in a way that doesn’t introduce new trust assumptions, I’m a fan of doing whatever we can to smooth out the rough edges.”



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0x Labs debuts ‘gasless’ swap API used by Robinhood, Coinbase Wallet

Sebastian Sinclair

The US Commodity Futures Trading Commission has taken action against three DeFi firms for allegedly violating federal laws relating to digital asset derivatives trading.



In <a href="https://www.cftc.gov/PressRoom/PressReleases/8774-23">orders</a> dated Thursday, the CFTC charged Opyn, ZeroEx and Deridex with allegedly operating unregistered trading platforms and offering illegal leveraged transactions in digital assets. The CFTC announced both charges against and settlements with the three firms.



Specifically, the CFTC said ZeroEx’s DEX aggregator Matcha allowed trading of third-party tokens that offered 2:1 leverage on assets like ether (<a href="https://blockworks.co/price/eth">ETH</a>) and bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), in violation of federal regulations requiring such platforms to be registered.



In a <a href="https://twitter.com/matchaxyz/status/1699919425225523352?s=20">post</a> on X, formerly Twitter, Matcha downplayed the charges, claiming the tokens identified only constitute roughly “0.1% of Matcha’s trading volume since inception.”



“At 0x, strategic decisions are made with input from outside legal counsel. In this case, we are implementing additional processes after constructive dialogue with the regulatory agency,” Matcha said.



The regulator <a href="https://blockworks.co/news/cftc-risk-watchdog-crypto">previously warned</a> industry participants and projects in May it would be keeping a close watch on new crypto products and services while it beefed up its efforts to <a href="https://blockworks.co/news/cftc-ftc-sue-celsius">pursue cases</a> it found in violation of financial rules.



<h2 class="wp-block-heading">Cracking down on DeFi</h2>



Opyn and Deridex simultaneously have been charged for allegedly failing to register as a swap execution facility or a designated contract market, while also falling short in operating as a registered futures commission merchant. 



Opyn is accused of developing a blockchain-based trading protocol for its digital asset derivative token, oSQTH, without proper registration. Despite attempts to block US users, the company violated federal laws by allowing leveraged transactions and failing to implement a required customer identification program, the CFTC said.



Deridex is accused of illegally offering derivatives via perpetual swaps, a relatively novel idea with roots in the crypto industry. <a href="https://blockworks.co/tag/perpetuals">Perps</a>, commonly referred to in shorthand, operate much like futures contracts but lack an expiration date.



The charges on Thursday potentially expose the US DeFi sector to further crackdowns. Earlier this year, <a href="https://blockworks.co/news/ooki-dao-default-judgement">Ooki DAO</a> lost its court case against the regulator, opting <a href="https://blockworks.co/news/ooki-dao-default-judgement">not to fight it out</a>. Ooki was alleged to have violated certain laws by offering margined and leveraged commodities.&nbsp;



The case drew particular attention after the DAO was served via its <a href="https://blockworks.co/news/cftc-legally-served-ooki-dao-via-website-help-bot-court-rules">online chatbot</a> in an industry first.



“Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts,” CFTC enforcement director Ian McGinley said.



“The DeFi space may be novel, complex and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow US persons to trade digital asset derivatives.”



While the regulator has taken into account the companies’ cooperation, it has imposed reduced penalties: Opyn, ZeroEx and Deridex have been ordered to pay $250,000, $200,000 and $100,000, respectively. The CFTC has also mandated a cease and desist order against all three.



<h2 class="wp-block-heading">Agency’s actions inconsistent with own strategic plan&nbsp;</h2>



The regulator’s action sparked some criticism.



CFTC Commissioner Summer K. Mersinger <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/mersingerstatement090723">publicly disagreed</a> with the agency&#8217;s enforcement actions against the DeFi projects, advocating for public engagement instead.&nbsp;



She emphasized that such actions mark a substantial shift from the CFTC’s previous stance of seeking dialogue with DeFi market players. 



Mersinger also pointed out that the CFTC&#8217;s 2022-2026 strategic <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/mersingerstatement090723">plan</a> had earmarked DeFi for enhanced stakeholder interaction and regulation based on guiding principles.



“Yet, today’s actions do not promote responsible innovation — they shut it down, banishing innovation from US shores,” she added.



Shalini Nagarajan contributed reporting.



Updated Sept. 8, 2023 at 5:37 pm ET: Clarifies that the CFTC charges have been settled.



Updated Sept. 8, 2023 at 7:44 am ET: Added additional context.



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DeFi projects charged by CFTC over crypto derivatives

<div id="highlights-block_6269546ef4e67" class="highlights">
 <ul>
 <li>0x Labs said the fresh injection of capital will go toward its product and service offerings, including Matcha and the 0x protocol</li>
 <li>The protocol has been picked up by Coinbase and will power the major exchange&#8217;s NFT marketplace</li>
 </ul>
 
</div>



Decentralized exchange infrastructure provider 0x Labs has raised $70 million in fresh capital that it says will help further its products and service offerings.



Silicon Valley-based venture capital firm Greylock led the round, according to a <a href="https://blog.0x.org/0x-labs-raises-70m-series-b/" target="_blank" rel="noreferrer noopener">statement</a> on Tuesday. 0x Labs provides exchange functionality for tokenized assets including various cryptos, decentralized finance (DeFi) tokens and NFTs.



Several notable investors also participated, including Pantera Capital, Sound Ventures, A.Capital, Jump Capital, OpenSea, Coinbase, Brevan Howard, Reid Hoffman and actor Jared Leto. 



The San Francisco-based firm said it would use the funding to fuel &#8220;continued growth&#8221; in its token search engine Matcha, as well as 0x API, an aggregated multichain liquidity-as-a-service. Matcha, which launched in June 2020, was a major focus of the firm&#8217;s $15 million Series A led by Pantera.



Funding will also go toward 0x&#8217;s protocol which provides a peer-to-peer exchange of assets on the Ethereum blockchain as well as efforts to integrate new chains including Solana.



The <a href="https://blog.0x.org/coinbase-partners-with-0x-to-power-new-nft-marketplace/" target="_blank" rel="noreferrer noopener">protocol</a> has been picked up by Coinbase and will power the major exchange&#8217;s <a href="https://cms.blockworks.co/coinbase-unveils-its-social-nft-marketplace/" target="_blank" rel="noreferrer noopener">NFT (non-fungible token) marketplace</a> – released in beta last week to considerable fanfare.



0x currently supports seven blockchains: Ethereum, Polygon, Fantom, Avalanche, Optimism, BNB Chain and Celo.



Earlier this year, 0x Labs launched a set of NFT swap features, allowing users to exchange digital collectibles across multiple blockchains.



&#8220;We are still very early on the [decentralized exchange] adoption curve,&#8221; Greylock partner Sarah Guo said in the release. &#8220;0x Labs&#8230;is perfectly positioned to lead the Web3 charge as more and more value is tokenized and needs a standard to be moved and exchanged.&#8221;



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