Loopring (LRC)

Loopring

Type	Decentralized exchange and protocol
Total supply	1.374.956.262

One of the first Ethereum L2 DEXs

Basics

• Based in: China
• Started in: 2017
• Launched in 2-2020
• Block explorer went live in November 2021
• From EthHub #91 (9-12-2019):

"Loopring v3-beta4 has been deployed to the Ethereum mainnet. Even though this version is called a “beta”, the team believes that it’s production-ready"

• A protocol and decentralized automated execution system utilizing zkSNARKs to bring 'highly scalable', non-custodial trading. It trades across the crypto-token exchanges, shielding users from counter-party risk and reducing the cost of trading

History

• As their CEO once stated (9-2019) in an AMA:

"I used to have a CEX called coinport. So I know all the frustrations a CEX owner has. I wanted to create a solution for myself and ended up with a whitepaper and an ICO. But the latest version is based on Vitalik’s ZK Rollup idea."

• From their Telegram channel: There was an older version of the Loopring token which is now deprecated / useless. All old LRC holders automatically got the new, upgraded token in their wallet May 2019.

Audits & Exploits

• Loopring had some of its Smart Wallets compromised. The attack exploited wallets with only one Guardian, specifically the Loopring Official Guardian. (9-6-2024).
• Loopring's Medium post discloses a maximum bug bounty of 50 000 LRC. At the time of writing (15-9-2022), LRC is at 0.43 cents, totalling a reward of 21,500$ of static bug bounty reward.
• From L2beat (13-10-2022):

"Funds can be stolen if…

1. the cryptography is broken or implemented incorrectly,
2. a contract receives a malicious code upgrade. There is no delay on code upgrades (CRITICAL).

Users can be censored if…

1. the operator refuses to include their transactions. They can still exit the system.

MEV can be extracted if…

1. the operator exploits their centralized position and frontruns user transactions."

• Scored 82% on DeFi Safety (15-9-2022):

"As per the SLOC, there is 491% testing to code (TtC). Although no code coverage test was found for Loopring V3, they have a very rigorous testing suite. There are no test reports in Loopring's repositories. Loopring has not undergone any Formal Verification. Loopring protocol has multiple audits performed before deployment. Their audit list can be found here."

• Previously scored 86%(7-10-2021):

"Two audits are public. The first audit was completed before the code was shipped, the second was completed shortly after, but started beforehand. In these audits all recommendations were acted upon and changed were made."

• Previously scored a 88% (19-3-2021).
• Loopring had a 3 month bug bounty period that has now expired, meaning there is no bug bounty currently offered. The value of the aforementioned Bug Bounty was around 300k for the most critical of finds (7-10-2021).
• Had their Loopring Wallet audited (2-8-2020).
• Had a code audit (20-11-2019) by SECBIT (from China) for V3, which was overall positive. SECBIT had also audited Loopring 2.0’s smart contract code and performed formal verification.

Bugs/Exploits

• On November 4, 2022 Loopring was targeted with a DDoS attack.
• StarkWare found a vulnerability (7-5-2020) in Loopring’s frontend where passwords were being hashed to only 32 bit integers.
• From their blog (14-5-2020):

"Our frontend used to generate these account keys based on users’ passwords, but as pointed out by StarkWare and other friends on Twitter, such brain-password based solutions are bad. We have implemented a new approach to generating and managing account keys on the client-side"

Governance

Admin Keys

• From L2beat (13-10-2022):

"ZK-SNARKs require a trusted setup to operate. The system has a centralized operator. The operator is the only entity that can propose blocks. A live and trustworthy operator is vital to the health of the system. Force exit allows the users to escape censorship by withdrawing their funds. The system allows users to force the withdrawal of funds by submitting a request directly to the contract on-chain. The request must be served within a defined time period. If this does not happen, the system will halt regular operation and permit trustless withdrawal of funds. If enough time passes and the forced exit is still ignored the user can put the system into Withdrawal Mode, disallowing further state updates. In that case everybody can withdraw by submitting a merkle proof of their funds with their L1 transaction.

The system uses the following set of permissioned addresses:

1. Loopring MultiSig 0xDd2A…9c97 (MultiSig) This address is the owner of the following contracts: LoopringIOExchangeOwner, ExchangeV3 (proxy owner), BlockVerifier, AgentRegistry, LoopringV3. This allows it to grant access to submitting blocks and upgrade ExchangeV3 implementation potentially gaining access to all funds in DefaultDepositContract.
2. MultiSig participants0x3b1d…d5f1 (EOA), 0x4cbb…0185 (EOA), 0x55d7…8268 (EOA), 0xb89c…c33e (EOA), 0x51b8…6e0d (EOA), 0x1f28…b3d1 (EOA) These addresses are the participants of the 4/6 Loopring MultiSig.
3. Block Submitters0xdd4b…fdC0 (EOA), 0x7961…A6C7 (EOA), 0x2b26…ab46 (EOA), 0x4774…A3aE (EOA), 0xE6b0…f095 (EOA), 0x53dD…E234 (EOA), 0x212e…0A1A (EOA), 0x238b…3843 (EOA), 0x3243…68f2 (EOA), 0xbfCc…7C42 (EOA), 0xA921…48Fc (EOA), 0xeadb…c834 (EOA), 0xB1a6…36AB (EOA), 0xeDEE…D9e5 (EOA) Actors who can submit new blocks, updating the L2 state on L1."

• From DeFi Safety (15-9-2022):

"The relevant contracts are identified as upgradeable by a Super Administrator here as well as in the codes such as here. Loopring's ownership is clearly indicated as a MultiSig admin right here. Named as a "Withdrawal Mode", Loopring has a function disabling all functionalities of the exchange, which can be found here. This function somewhat operates as a pause control function for the AMM. Their last recorded test was made 9 months ago prior to the writing of this review. Loopring has no Timelock documentation readily available in their repository or documentation."

• From DeFi Safety (7-10-2021):

"Admin control information was found at the bottom of the Loopring website. You can view it at https://loopring.io/#/document/risks_en.md.

a) All contracts are clearly labelled as upgradeable (or not) -- 10% -- Only the upgradeability of the smart wallet contract is described.

b) The type of ownership is clearly indicated (OnlyOwner / MultiSig / Defined Roles) -- 30% -- Multiple guardian, MultSig, and Controller roles are described.

c) The capabilities for change in the contracts are described -- 10% -- Only the smart wallet contract has its capabilities for change described.

A "withdrawal mode" is detailed, and it operates as a pause control function for the AMM. The last test was performed around 2 months ago at https://github.com/Loopring/protocols/blob/master/packages/loopring_v3/test/testExchangeWithdrawalMode.ts.

How decentralized is it?

• From (9-2019) an AMA:

"Loopring is more a “non-custodial centralized exchange protocol”, but we all call it DEX protocol because user asserts are held by the users themselves. In the future, the centralized component, relayer, shall also be decentralized. By then, we will have a more decentralized protocol. As of now, when you look around, all DEXes have centralized components except EtherDelta and the like, but their performance is bad."

• According (31-12-2019) to 0x: "It is better characterized as a non-custodial exchange. It relies on a centralized operator/process to decide which trades go into the next batch, which is not permissionless, censorship resistant or fault-tolerant."
• “Loopring does not require members to send tokens to exchanges for custody. Tokens always remain in their blockchain addresses during the whole transaction life cycle Members can even transfer their tokens around after orders are submitted - Loopring will automatically adjust trading amount at the initial price. Loopring protects members from threats such as exchange bankruptcies and DDOS.”
• The following comes from a post (29-10-2019) by competitor Komodo (which is the creator of AtomicDEX), so should be read sceptically:

"Loopring is not exactly a decentralized exchange. Rather, similar to the 0x project, it’s a modular protocol for building DEXs on multiple blockchains. The Loopring website simply calls it “the protocol for decentralized token exchange.” Using a wallet interface (Metamask, for example) integrated with Loopring, you can create orders and sign them with your private key, which allows the Loopring protocol to withdraw funds at the time of trade execution. In other words, funds aren’t withdrawn until the order is matched, thus you have control of funds even after placing an order. 

Relayers host order-books and look for orders to share with other relayers to pool liquidity. Loopring provides a consortium blockchain to enable liquidity sharing but it’s at each relayer’s discretion to use this blockchain, or whether to even share liquidity with other relayers at all.

Loopring enables something called the UniDirectional Order Model, which can match 16 trades at a time, in comparison to single buy/sell order matching like most other exchanges. Loopring calls it “order-ring.” These order-rings get processed by ring-miners through a resource-intensive process called ring-mining. The Loopring protocol incentivizes ring-miners and relayers for network participation. When orders are matched, ring-miners sign the orders and send them to the Loopring protocol for settle transaction settlement. Loopring protocol smart contracts also verify different aspects of this order-ring and settle trades on-chain.

Loopring is currently available only for the Ethereum ecosystem, though it can also be implemented on any public blockchain with smart contract support. While this seems like a feature, it can also be a drawback, as it may result in users having to pay a number of gas fees in a number of different currencies just to complete a single trade. This isn’t a flaw with the Loopring protocol as much as it is one of the limitations of smart contract platforms in general but, regardless of where the fault lies, it makes Loopring and other smart contract based DEX protocols somewhat inconvenient and costly."

Loopring DAO

• From their blog (14-10-2022):

"LRC voting, powered by Snapshot and The Graph, is now live on vote.loopring.io. Loopringers are able to vote using the sum of their LRC balances on Ethereum L1 as well as Loopring L2.

We’ve already seen the active participants in the DAO grow substantially over the past weeks, and we are very excited to continue to ramp up more transparency and autonomy within the DAO over the coming months."

• From their blog (27-1-2021):

"The Loopring DAO is set to launch in Q3. LRC token voting will be using Snapshot, a token voting tool that suits the purposes perfectly. We want to be completely forthcoming about the following facts.

1. Since protocol fees are collected by the relayer on L2 and then paid out according to the methods described in this post (and ultimately by the methods decided by the DAO), there is a level of faith involved in how the relayer will reward these protocol fees. Note: distributions are 100% verifiable on-chain — a crucial property of a rollup — so there is zero possibility of any tricks.
2. Certain parameters are simply unable to be controlled by the DAO for practical reasons. For instance, the L2 transaction fee itself must be set by Loopring, which has a handle on the legacy and Ethereum-based costs of running the relayer."

• From EthHub (1-2-2021):

"The LRC token that powers the Loopring ecosystem will be getting a total revamp and will be able to capture protocol fees and be used in governance."

• Is working towards a DAO.

"Smart contract updates will (9-2018), in part, be governed by token holders to ensure continuity and safety, and to attenuate the risks of siphoned liquidity through incompatibility.

However, LRx token owners are not the only stakeholders to consider in steering the protocol’s direction: relays/ringminers, wallets, developers, and others are an integral part of the ecosystem and their voice must be heard. In fact, given that these agents need not hold any LRx to perform their respective roles (since traditional makers/takers and market-makers are nonexistent, initial token reserves are not mandatory) we must allow alternative methods for their interests to be respected. Furthermore, ”simple” token based voting, both on-chain and off, is an imperfect salve for disagreement, as low voter turnout and token ownership concentration pose risks. Thus, the goal is to implement a governance model that is built in layers, and rests on a shared knowledge that some set of decision-making processes is the norm. This can be facilitated by coordination institutions that offer signals from a diverse set of participants, and, perhaps, from pre-established protocol focal points. As this comes to fruition, the Loopring Foundation will inevitably evolve from protocol developers into protocol stewards."

Treasury

• From their blog (27-1-2021):

"Protocol fees are paid to 3 types of participants: a) liquidity providers, b) insurers, c) Loopring DAO, in an 80/10/10 proportion, respectively."

Token

Launch

Loopring Protocol Trusted Setup Participants

• From their website (as of 1-2020):

1. Brecht Devos / Loopring
2. Steve Guo / Loopring
3. Koh Wei Jie / Ethereum Foundation
4. Anton Buenavista / Kyber Network
5. Garrett MacDonald / Tuku
6. Vany Serezhkin / INSOLAR
7. Francois Proulx / dfuse
8. Guo Yu / SECBIT Labs
9. Daniel Wang / Loopring
10. Felix Leupold / Gnosis
11. Arnaud Schenk / AZTEC Protocol
12. Manuel Garcia / Protofire
13. Chris Wessels / Consensys
14. James Prestwich / Summa
15. Li Weichao / VITE Labs

Utility

• For now (9-2019) the token is used for staking: "LRC is now used as a stakable token. It can be staked by anyone to earn part of the protocol fees on the network, and is also staked by DEXs for extra economic security guarantees."
• Token will be used (9-2018) for fee's and governance. "Smart contract updates will, in part, be governed by token holders to ensure continuity and safety, and to attenuate the risks of siphoned liquidity through incompatibility."
• From Bankless (2020 Q3 report): "A portion of trading fees are distributed to LRC holders."
• From EthHub (1-2-2021):

"The LRC token that powers the Loopring ecosystem will be getting a total revamp and will be able to capture protocol fees and be used in governance."

• From their blog (27-1-2021):

1. "Loopring protocol fees come from transaction volume (economic activities) on Loopring Layer-2 (L2) and are also distributed on L2.
2. The initial protocol fee parameter will be set to 20% of the L2 transaction fee. With the current relayer settings, this means 2 bps (0.02%) for AMM swaps, between 0.8 bps to 4.6 bps (0.008% to 0.046%) for orderbook trades, and $0.01 for transfers.
3. Protocol fees are paid to 3 types of participants: a) liquidity providers, b) insurers, c) Loopring DAO, in an 80/10/10 proportion, respectively.
4. Protocol fees accrued in tokens other than LRC and ETH will be sold on our L2 for LRC and/or ETH; all protocol fees are distributed in LRC and/or ETH.
5. Protocol fees will be paid on a monthly basis.
6. Changes to parameters in the future will go through a forthcoming Loopring DAO."

Token Details

• From the whitepaper:

"LRx is our generalized token notation. LRC is the Loopring token on Ethereum, LRQ on Qtum, and LRN on NEO, etc. Other LRx types will be introduced in the future as Loopring is deployed on other public blockchains... LRx tokens have a fixed supply, and in the cas of LRC, certain percentages are frozen from the Loopring Foundation, and allocated to community-purposed funds [21]."

Tech

• Whitepaper (8-9-2018) can be found here.
• Code can be viewed here. From DeFi Safety (15-9-2022):

"The protocols repository, as an instance of Loopring's development history, has a total of 3450 commits and 36 branches, showing a meticulous maintenance of their code. They definitely keep their code in the loop(ring)."

Implementations

• Built on: Ethereum
• Consensus mechanism:
• Algorithm:
• Virtual Machine:
• Development language:

Transaction Details

• Capacity (TPS):
• Latency:

How it works

• From L2beat (13-10-2022):

"Each update to the system state must be accompanied by a ZK Proof that ensures that the new state was derived by correctly applying a series of valid user transactions to the previous state. Once the proof is processed on the Ethereum blockchain the L2 block is instantly finalized. All the data that is used to construct the system state is published on chain in the form of cheap calldata. This ensures that it will always be available when needed."

Upgrades

• Team Loopring has released (7-2019) v3 of their protocol, designed to address DEX scalability with the use of zero-knowledge proofs (we've recently seen Starkware releasing a design for this called Starkdex, using STARKs rather than SNARKs). Almost all data and computations are moved off-chain, with only the Merkle tree root being stored on-chain. The team claims it can scale 660 trades/sec without on-chain data availability at the cost of <$0.01 per trade.
• From Formal Verified (21-8-2020):

"Details of the Loopring 3.6 protocol upgrade have been released Some major upgrade’s key features include allowing senders to transfer Ether/tokens to any Ethereum address without the need for the recipient to register as well as introducing ‘universal blocks’ that are not dedicated for specific types of transaction, minimising deposit and withdrawal times. Additionally, custom deposit contracts can be written by exchanges to put user funds to work in a wide range of DeFi dApps. The upgrade is anticipated to launch in Q4 2020.

There are too many features in the pipeline to cover but they all essentially try and to one of three things: (1) minimise costs/wait times for users (2) increase the flexibility in how deposits, withdrawals, transfers are processed (3) eliminate friction between L1 and L2. What’s important is that the combination of all of these features improves the usability of Loopring as a protocol."

Staking

• From their 2020 roadmap blog (17-12-2019):

"Of Loopring’s protocol fee:

• 70% will be rewarded to LRC stakers;
• 20% will go to the Loopring DAO (to be built);
• 10% will be burned.

Until our DAO is live, the 20% allotted for it will either go to LRC stakers or be burned. Our expectation is to burn 10 to 25 million LRC by the end of 2020.

In addition to staking for the protocol fee distribution, LRC is also used by DEX owners as a bond for economic security. The locked LRC is partially or completely slashed when a DEX violates protocol rules, such as failing to submit a proof for a committed block on time, or having a reversion. Note, this economic security is only ‘in play’ until the zkSNARKs are submitted, which provides final, cryptographic proof. 

The amount of staked LRC thus reflects a DEX’s likelihood or disincentive to violating protocol rules. The more LRC locked, the more reliable a DEX should be. Similarly to how this signal informs users, it also informs Loopring in terms of which teams / DEXes are making the most significant commitment to the ecosystem — leading us to be more inclined to support DEXes that lock substantial LRC. This support comes in the sense of potential ecosystem grants (LEAF), and willingness to support their DEX with Lightcone relayer, among other technical assistance. 

The final type of LRC staking is for lowering the protocol fees on a specific DEX. This LRC would be staked by exchange owners, market makers and high-frequency traders, to realize reduced protocol fees on said venue. While it is exchange owners who need to pay protocol fees for all orders to settle, other stakeholders/users of a DEX would be incentivized to stake there if it meant protocol fee reduction was passed through via lower trading fees.

We envision that via staking types 2 & 3, exchanges and market makers will lock in no less than 50 million LRC by the end of 2020."

• From this blog (31-7-2019):

"LRC is becoming a stake-able token, to be used in 3 types of staking:

1. Anyone can stake LRC to earn part of 70% of the protocol fees of all exchanges built on top of Loopring. (20% will fund the Loopring DAO and the remaining 10% will be burned).
2. An exchange owner needs to stake LRC for economic security & reputation.
3. LRC can be staked to lower the protocol fees on a specific exchange by an exchange owner, market makers and high-frequency traders.

There is the introduction of a protocol fee. The protocol fee is applied proportionally on any token transferred in a trade over the Loopring protocol. This means that each leg of a trade — across all exchanges built using the protocol — pays the (small) protocol fee. The protocol fee can be configured to be any percentage from 0.001% up to 0.255%, in increments of 0.001% (0.1 bps).

This fee is completely abstracted from the end-user (trader). A trader just pays ‘regular’ trading fees, specified by the DEX they are on. The DEX is the party who pays the protocol fee. Thus, these are totally decoupled, and the trading fees may even be smaller than the protocol fees.

Fees don’t need to be paid in LRC, and there is, in fact, no benefit to paying fees in LRC. The protocol fee is applied to the token being bought, on the amount bought. As such, while clearly important to the protocol, the protocol fee is itself quite detached from the intrinsic value of LRC.

You can read more about the fee model and see examples in depth here, but just note it has the following properties:

1. A different protocol fee can be used for maker orders and taker orders.
2. Rebates (negative fees) can be given to incentivize trading (to market makers).
3. Traders pay fees in tokenB, the token they are buying.
4. The maximum trading fee a DEX can charge is 0.63%.
5. DEXs pay protocol fees in tokenB as well.
6. The maximum protocol fee is 0.255%.
7. Market orders are supported (as are more exotic order types).
8. Any price improvement is kept by the trader." 

• From this blog (31-7-2019):

"In Loopring 3.0, LRC plays a big role, and it mostly comes down to staking. Fittingly, there are 3 types of staking in 3.0. The first type of staking is ‘global’, meaning it is protocol-wide. The other two types are ‘local’, or per DEX.

1. Protocol Pool Staking (Global)

Anyone can stake LRC to get a part of 70% of the protocol fees of all exchanges.

• Who: Anyone
• How much: Any amount, user receives an amount proportional to the amount staked, and how long it is staked.
• How long: Each token needs to be staked for at least 90 days.

Protocol fee pool distribution

• 70% to LRC stakers
• 20% to the yet-to-launch Loopring DAO
• 10% burned

Given that protocol fees are calculated and collected on any token as an amount of the token being bought, the ‘mixed bag’ of non-LRC tokens and ETH will be auctioned off for LRC before they are burned or distributed to stakers and our DAO.

2. Exchange Owner Staking (Per Exchange)

The exchange owner needs to stake LRC for reputation & extra safety. We will enforce a minimum amount of LRC for creating an exchange and a minimum amount for still being able to commit new blocks. Part of this stake, until the minimum stake amount is reached, can be burned when blocks are reverted (~50,000 LRC) or fines are paid for token distribution.

• Who: The exchange owner
• How much: ~250,000 LRC minimum for an exchange with data-availability, & ~1,000,000 LRC minimum for an exchange without data-availability. The exchange owner can add to this stake any time they want.
• How long: stake is only withdrawable when the exchange is shut down correctly, returning funds safely to users, otherwise it will be slashed.

The point of this type of staking is to guarantee the exchange owner has something to lose if he violates the protocol rules. Note, the protocol is non-custodial no matter what — staking simply ensures optimal behaviors, such as speedy processing of requests, and no trade reversions.

3. Exchange Protocol Fee Reduction Staking (Per Exchange)

LRC can be staked to lower the protocol fees. Exchange owners need to pay protocol fees for all orders to settle, but both the taker and the maker protocol fees can be lowered.

Here are the initial parameter values and how low they can go with staking:

 Taker: 0.050% -> 0.025%

Maker: 0.025% -> 0.0% 

• Who: The exchange owner, but the exchange owner will let anyone else stake for this using a custom contract: traders/wallets/market-makers/…
• How much: Lowering the taker protocol fee to 0.025%: 2,500,000 LRC; Lowering the maker protocol fee to 0.0%: 1,000,000 LRC
• How long: No duration imposed by the protocol, can be done in the exchange’s custom contract.

The amount staked by the exchange owner for reputation (see staking #2) is added to the amount staked here for the protocol fee reduction calculation with a 2x factor. We want to incentivize the exchange owner to lock up as much LRC as possible in the exchange to ensure a proper shutdown for its users. This is much more important for exchanges without on-chain data-availability."

• For the most recent and more detailed fee schedule, check out this link (27-2-2020).

Staking 'Golden Window' and Founders Staking

• From this blog (12-2019):

"Loopring Foundation will stake even more LRC in February 2020. But before we do that, we would like to give LRC token holders a chance to stake LRC before us, so they may take advantage to accumulate more points per token. We call the period from now to the end of January the golden staking window.

"Starting February 2020, though, the LRC we stake will not come from LEAF, but the allotment of the Loopring team itself. This portion, representing 20% of the total supply, was locked for 2 years — from inception of LRC until September 2019. Two months ago, it began vesting on a monthly schedule, which lasts 2 more years (1/24th vested monthly). However, we have not and will not be withdrawing the vested LRC to sell it — we are locking it further in the v3 staking contracts, a testament to our faith and commitment to the protocol and LRC holders.""

Liquidity Mining

• From Yield Farmer (9-1-2021):

"To bootstrap usage of this new exchange, the Loopring team is currently incentivizing liquidity providers (LPs) with an L2 liquidity mining campaign. Of the +1.3B LRC in existence, the project’s team allocated 1.2M LRC to reward the LPs of three Loopring Exchange v2 pools: LRC/ETH, ETH/USDT, and ETH/WBTC. This means 400k LRC has been set aside for each pool as things stand, and these rewards are run across multiple 14-day cycles. After one cycle is done, another one can be approved and even be extended to add support for more pools."

Interoperability

• As of late 2019 only for Ethereum ERC-20 tokens.
• 3.6 upgrade is meant to bring composability with other DeFi Dapps (21-8-2020).

Other Details

Ecosystem Participants

• From their whitepaper (8-9-2018) which can be found here. An overview of the network participants:

"Wallets: A common wallet service or interface that gives users access to their tokens and a way to send orders to the Loopring network. Wallets will be incentivized to produce orders by sharing fees with ring-miners (see below). With the belief that the future of trading will take place within the safety of individual user’s wallets, connecting these liquidity pools through our protocol is paramount.

Consortium Liquidity Sharing Blockchain/RelayMesh: A relay-mesh network for order & liquidity sharing. When nodes run Loopring relay software, they are able to join an existing network and share liquidity with other relays over a consortium blockchain. The consortium blockchain we are building as a first implementation has near real time order sharing (1-2 second blocks), and trims old history to allow for faster download by new nodes. Notably, relays need not join this consortium; they can act alone and not share liquidity with others, or, they can start and manage their own liquidity sharing network.

Relays/Ring-Miners: Relays are nodes that receive orders from wallets or the relay-mesh, maintain public order books and trade history, and optionally broadcast orders to other relays (via any arbitrary off-chain medium) and/or relay-mesh nodes. Ring mining is a feature – not a requirement – of relays. It is computationally heavy and is done completely off-chain. We call relays with the ring-mining feature turned on “Ring-Miners”, who produce order-rings by stitching together disparate orders. Relays are free in (1) how they choose to communicate with one another, (2) how they build their order books, and (3) how they mine order-rings (mining algorithms).

Asset Tokenization Services (ATS): A bridge between assets that cannot be directly traded on Loopring. They are centralized services run by trustworthy companies or organizations. Users deposit assets (real, fiat or tokens from other chains) and get tokens issued, which can be redeemed for the deposit in the future. Loopring is not a cross-chain exchange protocol (until a suitable solution exists), but ATS enable trading of ERC20 tokens [18] with physical assets as well as assets on other blockchains."

Oracle Method

• From DeFi Safety (15-9-2022):

"There are no proper Oracle documentation in the Github nor the Loopring documentation, but a Medium article provides the source of the protocol's oracle being Chainlink. Frontrunning is addressed in Loopring's Github repository; Withdrawal mode and conditional transactions are functions used to mitigate frontrunning by controlling new block submissions. [Same goes for Flash loans]."

• Will employ Band Protocol to provide price data for the exchange (2-9-2020).

Compliance

• From (9-2019) an AMA:

"The option to KYC or not is NOT a Loopring Protocol decision actually. We provide the tech – but an actual DEX product will decide how to run their business in their jurisdiction, and can easily add KYC into it. Or they can choose not to. Completely up them. Dolomite.io, for example, is based in the US, builds atop Loopring, and enforces KYC."

Their Other Projects

BAMM

• From their blog (6-4-2021), as part of their upcoming plans:

"Bounded Automated Market Makers, or BAMM, is an enhanced AMM design to improve AMM capital efficiency with very little extra implementation complexity. For each pool, the BAMM algorithm concentrates all liquidity to a small segment on the curve. The length of the segment can be configured per pool but is universal to all liquidity providers (LPs)."

Ethport

• From EthHub (27-4-2021):

"Ethport is a solution to help with fragmentation between layer 1, layer 2 and centralized exchanges."

Loopring Pay

• From their announcement (6-6-2020):

"You can send ETH and ERC20 tokens instantly, for free, and with the same 100% Ethereum security guarantees Loopring always upholds. Right now this basically feels like an ‘internal transfer’ on the Loopring Exchange, but we will build more slick, payment-focused flows into our forthcoming Loopring Wallet. Further, other wallets and apps will able to use Loopring protocol or APIs to enable scalable Ethereum-based payments as well. Note: all transactions on Ethereum cost something. Loopring’s just cost very, very little thanks to our zkRollup tech. It can cost us a mere $0.00006 per transfer. That’s why we can afford to offer free transfers to users. This can change to a low fee in future."

Loopring Swap

• Loopring Swap (14-9-2020) is an interface that sits on top of Loopring’s layer 2 DEX which offers gas-free trading.

Rails

• From the announcement (24-9-2020):

"Rails is a layer-two payment solution that can transfer ETH and ERC20 tokens between users instantly and gas-free. Rails uses the Loopring zkRollup and Loopring Relayer API to facilitate the non-custodial transfers at near-free costs. DXdao is responsible for hosting and managing the front end, while Loopring takes care of all of the protocols and mechanisms that make it possible.

Rails’ release is just the starting point, with many plans for additional features soon, such as supporting gas-free swaps. For now, Rails is limited to executing gas-free transfers between users and dApps that are registered on Loopring’s zkRollup. In the upcoming Loopring v3.6 release (circa December 2020), users will be able to transfer assets to any Ethereum address, not just those already on the rollup."

Roadmap

• Can be found [Insert link here].
• From their 2020 roadmap blog (17-12-2019):

"Product

• 1. Hebao Wallet App (will launch a beta in the first quarter of 2020)
  2. Hebao DEX

Protocol

• 1. Learn from v3 in Production
  2. Improve Composability
  3. Make Loopring Customizable & Upgradeable
  4. R&D into other ZKP systems

Relayer & Backend

• 1. Lightcone 3.0
  2. DEX Browser
  3. Hebao Backend

Operations

• 1. Volume Goals
  2. LRC Staking"
  • The roadmap of 2019, which they claim they have full filled can be found here.

• • From (9-2019) an AMA:

"In the long run, we are interested in even decentralize the relayer infrastructure by providing a dual-blockchain DEX solution which we are still researching and may need a lot of words to explain. Not a sidechain though."

• Is working on EthPort, which would make it composable with Layer 1 (1-7-2021).

Usage

• Loopring has processed (Dune Analytics 23-3-2020) over 230,000 transactions. One week later it doubled to over 500K.
• From their blog (2-5-2020):

"Loopring Exchange has settled more than 840K trades since our launch two months ago, corresponding to around $14M in volume. Our realized throughput is much higher than all other Ethereum DEXes, while only paying a small fraction of the gas cost per trade. This is what zkRollup was meant for! We currently have only 1,600+ users, but the number is growing slowly but steadily."

• Loopring to passed 1 million trades on its zk rollup in just 3 months of being live (25-5-2020).
• There are now over 5000 accounts on Loopring's zkRollup (9-9-2020).
• Hit $1B in trading volume (17-5-2021).

Projects that use or built on it

• Gitcoin will use it (11-9-2020).

DEX's on Loopring

• First DEX went live (21-12-2019) using Loopring. WeDEX is the first working DEX on the Ethereum mainnet to use zkRollup technology in order to scale.

"In their first 8 hrs, they processed 24,461 trades w/ 13,540,468 LRC of volume (2301 ETH)

For context, past 24 hr trade count on Uniswap is 2,517 and 0x 3,471

While not apples to apples (WeDEX incentivizing beta w/ rewards), it nonetheless shows what's possible w/ ZK!"

• Dolomite – a leading DEX built on Loopring v2. Dolomite is a place to trade LRC/ETH, ETH/DAI, and more from your own wallet. A portion of fees get turned into LRC and burned.
• Loopring Exchange went live (27-2-2020):

"This is the user-facing product we have built on our own Loopring protocol, and we consider the exchange a public beta. This Beta1 is based on the Loopring protocol v3.1.1. Loopring Exchange is the first publicly accessible zkRollup exchange on Ethereum mainnet. It is 100% non-custodial, inheriting Ethereum-level security guarantees while capable to perform at a throughput 1000x greater (and 600x cheaper settlement cost) than the current state of the art layer-1 DEXes.

We cannot list any security tokens. To start, we are listing 4 trading pairs:

ETH-DAI, ETH-USDT, DAI-USDT, LRC-ETH."

Weirdly enough they claim to be the first, even though WeDeX (see above) launched earlier.

From their quarterly report (1-7-2021):

"$1billion traded on Loopring v3.6 exchange. Three major ATHs were also reached, including $260M in TVL, $50M in daily trading volume, and record-breaking Google searches. We have now surpassed 21k Loopring L2 accounts. See all stats here."

Competition

• DEXs in general, and specifically other L2 DEXs like StarkWare based DEXs and DEXs about to launch on Optimism (17-5-2021).

Pros and Cons

Cons

• From (9-2019) an AMA:

"We still have some challenges:

1) we need to dig into ZKP and implementations, right now we use some open-source libs (libsnark, eth snark, etc),

2) we need to find better ZKP curves and may do recursive verifications,

3) we need to reduce the proof generation cost by another magnitude to stay competitive."

• What could be considered a con or a pro:

"We give DEX owners full control, Loopring doesn’t own any part of a DEX. They need to figure out how to do the bootstrap."

Team, Funding, Partners

Team

• A team of about 20 people (all most all Asian) on their website (1-2020). An update on it can be found here (22-7-2021).
• Daniel Wang; Founder and ex-CEO, moved on to build Taiko
• Jay Zhou; Co-founder, CMO
• Brecht Devos; Chief Architect
• Steve Guo; CTO
• Lightcone Technology Limited. The Loopring Foundation is one of the non-controlling shareholders of Lightcone Technology.

Advisors

• Johnston Chen; Loopring Co-founder & Former COO, Founder of WeDEX
• Xuefeng Li; CTO of Zhongan Technology
• Yuhang Guo; Council, China Blockchain Application Research Center
• Hongfei Da; Founder of NEO and Ontology
• Terence Lam; CEO, Loopnest Blockchain Accelerator
• Alex Cheng; CTO of VipKid, Senior VP of Baidu, Director at Google
• Yin Cao; Founder, Energy Blockchain Lab
• Xiaohu Guo; CS Professor, University of Texas
• Yipeng Guo; President, Guangzhou Development Fund

Funding

• Backed by TokenCapital, ChainFunder, ICO, Racew, Fintech Blockchain Group, NEO Council, QTUM Foundation, Sequio DB
• Is listed as one of the investors in Fortuna (as are NEO and QTUM)

Partners

• Are partnering (9-2019) with WeDEX in China, UpDEX in HongKong, Dolomite in the US, and TokenMarket in EU.
• Partner with Nebulas
• Part of the WBTC community (still as of 8-2019)
• Chainlink and Loopring collaborate on Oracles for zkRollup DEX Protocol (28-12-2019)
• Is a member of the Ren Alliance (19-6-2020).
• Is part of the Global DeFi Alliance, created by Huobi (15-9-2020).
• Works on Rails together with dxDAO (24-9-2020) which Loopring has been a member from since its start.
• Participated in the DeFi Alliance’s accelerator program (18-9-2020).
• Became a member of the Asia DeFi Alliance (1-11-2020).
• Founded L2² together with DeversiFi (22-12-2020).
• Has 'strategic integrations' with Deeper Network, WePiggy and OpenOcean (1-7-2021).

(:

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