Loopring Monthly Update — 2020/02

Loopring.io is live - the first zkRollup DEX on Ethereum, zkSNARK prover optimizations result in $0.000124 total cost per trade, ETHDenver, and much more.

We apologize that this month’s report is a few days late. It’s just been a hectic end of month — in the best way possible! We hope you enjoy these updates.

R&D

Loopring Protocol

We’ve spent some time optimizing our ZKP prover with great results: the prover cost was reduced by 15x, significantly reducing our offchain costs per trade to just $0.000042 per trade, or $42 per 1,000,000 trades. We published a detailed article about these optimizations. [Recommended read for the technical folks and ZKP enthusiasts out there].

With these prover optimizations, the all-in cost to a settle a trade is now $0.000124, or just over one one-hundredth of a cent!

We plan to deploy the new prover into production within two months. The results of this optimization are a great encouragement to us. Before this, we always thought that generating zero-knowledge proofs would impose considerable cost pressure on our operation. After this optimization, it likely will not be the case anymore.

We will soon begin to optimize the code and process of another Trusted Setup to increase the protocol’s capacity in the middle of the year. We intend to support at least 64 million users per exchange in a minor upgrade — the protocol currently supports ‘only’ 1 million users per single exchange.

A big thank you once again to all those who helped us complete our initial Trusted Setup several months ago. For those who wanted to participate but didn’t get the tap on the shoulder last time, maybe expect an email mid-year :). Scroll to bottom of this page for the past and perhaps-future participants. And see here for the results/technical details of last time.

We have also deployed the smart wallet contracts to the Goerli testnet for testing our upcoming wallet app with built-in Loopring DEX.

Product

Loopring Exchange

We launched Loopring Exchange (beta1) on February 27.

https://loopring.io

This public beta has received a very warm response from the Ethereum and ZKP communities, which means so much to us. We appreciate that over 1,000 accounts signed up in the first weekend, and appreciate all the love on Twitter, Reddit, and across all the chat groups. It’s really motivated us and the highpoint of our 2.5 year history.

We had a little program that allowed the first 1,000 addresses to enter the exchange to become Lifetime Honor VIPs, enjoying the lowest trading fees on the platform forever more. Because it filled up much quicker than expected, we’ve extended it to the first 1,500, so 500 more spots (now about 400 left). More info on the Honor VIP program here. Besides the lowest fees, you also get this cool crown on your dashboard! [Maybe a low-key Etherean status symbol!?]

https://loopring.io/document/beta1

We have collected precious feedback from many users. A large percentage of users feel the trading speed is super fast, which resembles the experience of centralized exchanges. They also tell us how great it feels to trade on such an orderbook exchange without having to worry about the safety of their assets at all. This has been music to our ears, and is why we exist.

But we know there are a lot of things to improve in the user experience. For example, the withdrawal time is a bit too long and the communication of deposit processing is not very clear. Basically entering & exiting the zkRollup environment is where the UX hurdles are. Once on the exchange, users enjoy a blazing fast, enjoyable experience. Some reasons why these hurdles remain are explained in this brief thread. TL;DR: we need more users and more demand to fill up/prove batches quicker! We will continue to improve the application by releasing a major version every two weeks and pushing small versions to production daily.

If you want to list your ERC20 tokens on Loopring Exchange or suggest a project we should list, please reach us at exchange@loopring.io. For projects that push Ethereum’s ecosystem forward, we will try our best to minimize your liquidity costs. [We just need to make sure we can have some initial depth on the books for the new pairs].

Loopring Explorer

Due to the busy launch of the DEX product throughout February, the development of the Loopring Explorer (DEX Browser) temporarily slowed down.

In the meantime, you can check out related data and stats regarding Loopring Exchange on https://duneanalytics.com/loopring. This dashboard shows transaction count, deposits/withdrawals, block count, gas used, accounts created, and more. But to view volume stats, Dune Analytics can’t parse that without our library for which the Explorer is needed. We’d suggest checking the actual exchange at Loopring.io to get a sense of 24hr volumes on the pairs.

https://duneanalytics.com/loopring

Loopring Relayer

We completed the annual planning at the relay module level. The team will continuously optimize and improve the system from the three dimensions of “availability”, “ performance”, and “user acquisition”.

In February, our relayer team completed several system optimizations and successfully supported the launch of Loopring.io and WeDEX (wedex.io). The relayer now supports different transaction fees according to the user level. We also enhanced the gateway’s throttling functionality. At present, the relayer can support continuous 100 transactions per second; after the planned optimization, this throughput will be significantly improved. Recall, current max protocol throughput is 2,050 tps; relayer remains bottleneck.

We have improved the Merkle tree reconciliation function. Currently, it is a reconciliation of accounts, and subsequent verification of accounts and orders will be added. Our target is to reduce the reconciliation interval to less than one hour. Many centralized exchanges do not have reconciliation in place at all (such as the recently closed FCoin); the reconciliation in Loopring’s relayer is similar to the Alipay system, which ensures high internal and external data consistency.

We have also researched how to put our new prover in a “server mode” for continuous running to reduce proving cost. The work is still a work-in-progress but we are confident it will be done within two months. The new prover will greatly reduce the proving cost, which allows us to process user deposits and distribute user withdrawals much faster.

Loopring Smart Wallet

Loopring’s smart wallet is a mobile app designed specifically for the Chinese market to ease the onboarding of non-technical users to Ethereum and DeFi applications. The launching of Loopring Exchange verified our thought that many people in China are having trouble using Chrome + MetaMask. We believe our Smart Wallet will bridge the gap between these users and dapps, Loopring Exchange included.

We completed an internal audit and testing of the smart wallet contracts. The code has been deployed on Ethereum’s Göerli testnet. Our engineers are also working on the wallet backend and the mobile app. We are testing modules internally already, and aim to launch the first beta in May.

Operations

Around Town / In The News

Loopring’s Head of BD, Matthew Finestone, went to ETHDenver — which was incredible. With over 2,000 Ethereum enthusiasts and developers, it is difficult to describe the experience. It’s also difficult to imagine how such a passionate and talented community can be stopped in their pursuit of a better financial system, social institutions, internet, and basically everything.

Matthew gave two talks: one about Loopring protocol and our zkRollup performance stats, and one about the dxDAO (of which Loopring is a large stakeholder).

Here are some photos from the weekend.

As for the news section, honestly, we are so humbled for the attention some of the best curators, commentators, and leaders in the Ethereum space have provided of our launch and advancement, it is too numerous to list here. Just check out your favourite Ethereum news sources, especially from past week!

LRC Staking

The amount of staked LRC has exceeded 120 million LRC. Among them, our team members staked more than 29.5 million, the Loopring Foundation staked more than 46.5 million, and LRC token holders combined staked 44.8 million. We have decided to stake the subsequent 220 million LRC held by the Foundation every month as they are unlocked. More context on that can be found in this article.

To reward people for staking (especially before protocol fees pick up with increased volume), we will deposit 2 million LRC as a reward for all participants around May 1st. Of course, we will deposit these LRC into Loopring’s protocol Fee Vault. You can always keep track of the LRC balance in the vault address. These are the rewards that are paid out to stakers.

https://etherscan.io/address/feevault.lrctoken.eth

We strive to provide a convenient UI for LRC staking on Loopring Exchange before May 1. If this feature gets delayed, you may want to learn to interact with the staking address using Etherscan’s interface. It only takes a few minutes and two transactions with the smart contracts. Staking instructions can be found in the middle of this article.

As the first 90 day period since staking began is coming up soon, we will soon release a post instructing how to claim rewards. Again, it will be a simple transaction to the smart contracts on Etherscan.


Loopring is a protocol for building high-performance, non-custodial, orderbook exchanges on Ethereum using zkRollup. You can sign up for our Monthly Update, learn more at Loopring.org, or check out a live exchange at Loopring.io.

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Loopring Monthly Update — 2020/01

Welcome to the first Loopring Monthly Update! Of course, if this isn’t your first time reading a Loopring update, you know we’ve been doing Bi-Weekly updates for years. But with protocol maturity, we are slowing down to half-speed on updates. This is because Loopring v3 is in a working, steady state, and while we will never stop R&D and improving, our efforts will now tilt towards making scalable non-custodial exchanges on Ethereum ubiquitous. This involves pouring more energy into commercialization and productization, into the relayer (backend), and into DEX product (frontend). We are turning on the boosters in 2020! To stay up to date, please subscribe to receive this in your inbox at the end of each month.

A few notes about Loopring, the brand.

As we mention above and in our 2020 Roadmap, it’s time for us to start looking at productizing the protocol + technical progress. This is a theme we saw play out in the past with other protocols in our peer group — moving up the stack, to show what’s possible with the protocol, to bring value to the ecosystem & token, and in some cases to have a revenue stream alongside the free & open source protocol.

As such, we’ve previously announced that we (the Loopring team) will operate a few products built on top & alongside the Loopring protocol. We called them Hebaomeaning ‘purse’ in ancient Chinese. Hebao was going to be our DEX product name, and the name of our smart contract wallet — meant to onboard Chinese users onto Ethereum, DeFi, and Loopring exchanges.

The community has had a pretty outspoken and well-reasoned response that they’d like to see these products bear the Loopring brand, and keep it all under one umbrella. So, we have listened: the Hebao DEX and the Hebao Wallet will instead be called the Loopring DEX and the Loopring Smart Wallet.

Similarly, while the above 2 products pertain to front-end, user-facing applications, there is one more super important product/service, this time on the back-end: the Relayer. The Relayer is the back-end ‘handler’ of all the off-chain duties for a Loopring protocol DEX: hosting & matching orders, Merkle Tree updating, generating zkSNARK proofs, interacting with the smart contracts, and even achieving composability with Layer 1 Ethereum. A Relayer is a complex system in the context of a zkRollup exchange, and a large part of our team has been solely focused on building our Relayer implementation for a long time. We have called this, the Lightcone Relayer. In line with bringing everything under the Loopring name, we will instead call it the Loopring Relayer.

Of course, any exchange is perfectly able to build their own Relayer implementation to support their Loopring-based exchange, but we will also be offering ours as a ‘Relayer-as-a-Service’. This will be offered to would-be exchange owners, incumbent exchange businesses (centralized or decentralized), and other enterprises that require it. We firmly believe that this backend service + Loopring protocol can and will power some of the most important exchanges in the cryptocurrency world over the coming decades.

On with the show…

User Products

Loopring DEX

We have completed the design of the Loopring DEX — an exchange we will operate on the Loopring protocol. With the security & high performance power of zkRollups, we intend for this exchange to outcompete and win market share from the incumbent centralized orderbook exchanges. The design for the web app has been ongoing since the end of last year, and our current work is mainly testing and iteration. Our goal is to release the Loopring DEX in early March. The exchange will live at loopring.io.

Loopring Browser

We’ve also been developing the Loopring DEX browser. Through this tool, you can easily see various data and statistics from all exchanges built across the Loopring protocol. It decodes the batched transactions into their granular parts, and acts as an explorer for our zkRollup DEX protocol. On this browser, we will also integrate LRC Staking (which at the moment can only be done via interacting with the smart contracts directly), Withdrawal mode (which is what guarantees user assets with Merkle inclusion proofs in even the worst case scenarios), and other functions in the future. While initially planned to launch at same time as the Loopring DEX, due to the impact of the Spring Festival holiday and the corona virus, we decided to lower the priority of this project and go live with the exchange itself first.

Loopring Smart Wallet

DeFiPulse shows that the total amount of value locked in DeFi has tripled in 2019, with $875 million USD currently locked (in ETH terms, it increased by ~50% in 2019, with 3.2m ETH currently locked). We believe that 2020 will see even more of a DeFi explosion, with value locked and traded well into the several billions of dollars worth.

However, DeFi is still only experienced and enjoyed by early enthusiasts. Many products are Web-based only, and Metamask, the largest wallet on the Web, is still too difficult for ordinary users to learn and use. The general problems can be compounded due to limited accessibility for Chinese users. Loopring Smart Wallet, our smart contract wallet, is trying to solve this difficulty with a super simple and secure wallet directly aimed at on-boarding Chinese users onto Ethereum and DeFi. Naturally, Loopring DEXes will be the first DeFi product to be integrated into Loopring Wallet, but several saving, lending/borrowing and other DeFi dapps will be integrated as well.

The preliminary draft of the Loopring Wallet design has been completed. We established the initial code for the app based on the previous UpWallet code. The front-end and back-end interface definitions have also been completed. The front-end and back-end code are being developed in parallel, and we hope to launch the beta version at the end of March.

Business Products & Services

Loopring Relayer

In December 2019, we worked with WeDEX (a Shenzhen-based team building a DEX on Loopring) to service their exchange with our Relayer. With this initial integration, we settled the first real zkRollup transactions on Ethereum mainnet — close to 1 million of them!

Duneanalytics.com/loopring

This was a beta, meant primarily for testing the protocol & relayer in the wild and under heavy stress. We shared all the relevant data and stats in a deep dive post and several tweets.

The Loopring Relayer settled a total of 966,094 trades, and processed 1,307 deposits and 272 withdrawal requests. The average on-chain settlement cost per transaction is 5,000 gas, or 0.0000177 ETH. Based on Ethereum’s price of $140 at the time, the on-chain cost of each transaction settlement was $0.0025. This fee is one-tenth or one-hundredth of the cost of other decentralized exchanges currently. The off-chain cost (proof generation) was also $0.0025, so a total $0.005 settlement cost per trade. There are some near term optimizations that will cut this by 50%, and be $0.0025 total.

See all the data in this Recap

The WeDEX live testing (and the great reaction from the community) has inspired our team a lot. We have optimized the system based on the results and improved some functions, including:

  • launching WebSocket to improve the user experience;

  • launching a fee module to support tiered pricing (based on past 30d volume and LRC held);

  • improved the matching engine logic to make the experience consistent with centralized exchanges;

  • launching multiple optimizations related to zero-knowledge proofs to reduce overall costs (such as batching proof verifications);

  • completed a new version of the API (in beta) for market makers to access.

During the WeDEX tests, due to bugs and intended mis-operations (testing the disobeying of protocol rules), there were 3 ‘shutdowns’, with an average recovery time of 3 hours, and with all data being fully restored. Based on this, the team has strengthened the emergency operations capacity, and improved the LRC staking mechanism and release process. We will write a post about this in a follow-up. (Note, no matter if the above went ‘well’ or not, user assets would be safe, always, as long as Ethereum exists.)

Operations

The past month and a bit has honestly been our most exciting from an operations and awareness point of view. For that, we’d really love to thank the amazing Ethereum, ZKP, and of course Loopring communities (and many more). We feel as though 2.5 years of hard R&D work has begun to pay off with our deployment of the first zkRollup DEX protocol on Ethereum. And all this when ZKP scaling and Rollups have really entered the spotlight to drive Eth1.x forward. The positive feedback has really made us extra-motivated.

What We Did / Wrote

  • We integrated with Chainlink so DEX owners can stake LRC for economic security guarantees using faithful LRC/ETH and LRC/USD price feeds. We wrote all about it here,

  • Our Chief Architect, Brecht Devos, also had a video fireside chat with the Chainlink team.

  • We released a deep recap analysis of the stats & on-chain/off-chain costs from settling zkRollup trades on mainnet.

  • We wrote about what is required to keep composability between Ethereum layer 1 and layer 2.

  • Loopring was hosted by r/Ethfinance for an amazing AMA. What a strong community! Daniel, Brecht, and Matthew participated in the answering.

  • We built a Metamask plugin that allows for signing zkRollup transactions for exchanges built on Loopring in a really nice way. (Source)

Around Town / In The News

Who knew increasing throughput / reducing costs while maintaining Ethereum-level security guarantees would get people so excited! Some of our favourite newsletters, blogs, Twitter people and writers included us in their material this month :).

  • Some really good and informative pieces on Rollups were written that included Loopring’s ZK implementation: Ben’s Rollup Roundup, and Chris’s Scaling Decentralized Exchanges.

  • DEX aggregators Totle and ParaSwap listed LRC on their dapps. That rounds out the DEX aggregators where you can get LRC in the most convenient and cost-effective 1-click way.

  • Dune Analytics decoded our v3 smart contracts, making them the first ever Dashboard glimpse into the realm of ZK batched and proven transactions on Ethereum.

  • Dolomite, a DEX built on Loopring (v2, not v3 just yet), launched their limit order margin trading functionality, as well as listed several more trading pairs. Dolomite is now the most liquid orderbook DEX where you can trade LRC/ETH.

  • Loopring was invited to the “Creating the Times” award ceremony held by Jinse Finance in Beijing, and won the recognition as best technical service organization.

  • Loopring participated in the DeFi meetup held in Sydney, Australia, where CMO Jay Zhou presented zkRollup scaling and sat on the panel with great peers.

Jay at DeFi Sydney

LRC Staking

There are now over 48 million LRC that have been staked in the Loopring staking contract, representing almost 5% of circulating LRC. This came from a total of 178 wallet addresses, and began 6 weeks ago. More info in this thread. For a little bit longer, stakers can still enjoy the benefits of the ‘golden staking window’ — before the Loopring team stakes themselves. Those who want to participate should follow the instructions in this post.

Loopring stakers can currently check their staked LRC balances (and time left and rewards) by querying this contract with their address.

https://etherscan.io/address/stakingpool.lrctoken.eth#readContract


Thanks for reading if you’ve made it this far! We’ll see you next month. And if you’ll be at ETHDenver, we’ll hopefully see you there.


Loopring is a protocol for building high-performance, non-custodial, orderbook-based exchanges on Ethereum. You can sign up for our Monthly Update, learn more at Loopring.org, or check out:

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Loopring Bi-Weekly Update — 12/22/2019

The first DEX built on top of Loopring 3.0, WeDEX, is now live on Ethereum mainnet. On the first day of their beta launch, WeDEX successfully settled more than 20K trades, with Ethereum-level security guarantees — and this cost 1.4 ETH in gas total, at a gas price of ~5.2 gwei. To our knowledge, this is the first working DEX on Ethereum mainnet scaled with zkRollup!

Research & Development

Protocol

We created the first Loopring 3.0 DEX for WeDEX which is now live at:

0x7d3d221a8d8abdd868e8e88811ffaf033e68e108

Contract 0x7d3d221a8d8abdd868e8e88811ffaf033e68e108 is the first live DEX leveraging zkRollup for scalability on Ethereum mainnet. Certainly, it is the first one enforcing on-chain data availability.

Through this contract, you can find transactions that are the proven *batches* submitted to Ethereum. Within them, they contain the actual DEX activities: deposits, withdrawals, and trade settlements. Our upcoming open source DEX Browser is needed to discern the actual granular activity.

The stats & capabilities are exciting:

In the near future, we plan to help WeDEX complete the full lifecycle testing, including testing the Shutdown mode (operators proactively shut down the DEX) and Withdrawal mode (operators violate some protocol rules). In all cases, Loopring protocol ensures DEX users are able to withdraw their rightful assets.

On WeDEX, there are currently about 100 users invited for this first round of beta testing, which will last for one week. For this beta, the Shenzhen-based team is focused on serving Chinese language users, but will open their English language side at some point in January. Feel free to follow them on Twitter to stay tuned.

Products

We have also finished the smart contract implementation for Loopring’s smart contract wallet called “Hebao”, 荷包, which means purse in ancient Chinese. Hebao will be a standalone smart contract wallet, with very tight Loopring v3 integration for user onboarding. Next week we will start unit testing the contract. Our goal is to complete unit testing by the end of February. You can read more about Hebao in our recently published 2020 roadmap.

Lightcone Relayer

Lightcone is now serving WeDEX on Ethereum mainnet — running the exchange’s off-chain operations. We’ll continue to improve Lightcone’s reliability while WeDEX fixes UI issues.

Recall: a relayer is the party that handles all the off-chain & ZKP generation for a Loopring v3 DEX. Lightcone is the relayer implementation that Loopring has built, and is now capable of offering this Relay-as-a-Service for DEX owners.

We’ve also done more rounds of stress testing (30 TPS for 10 hours) and fixed several small issues found during the testing. So far the relayer is stable enough to continuously provide settlement service to WeDEX. We have also improved service monitoring and adjusted notification rules.

We formulated a specific R&D plan for the relayer team for the first half of 2020. Most development for its next version should be done before July 2020. You can read more about it in the roadmap.

Operations & Marketing

  • 12/3/2019 — Loopring and Guarda Wallet started the bounty campaign to help educate people about Loopring v3, DEX scaling and zkRollup.

  • 12/4/2019 — Loopring writes about ‘The Ultimate Non-Custodial Test’ and explains exactly what happens in the worst-case scenario: withdrawal mode.

  • 12/5/2019 — We released Loopring 3.0-beta 4 and its deployment and configuration on Ethereum mainnet! The Lightcone relayer has been integrated with 3.0-beta 4 to provide services for WeDEX.

  • 12/8/2019 — Loopring CMO, Jay Zhou, attended DAOfest in Shanghai and spoke about the governance of DEX protocols, and the dxDAO.

  • 12/9/2019 — LRC opened its Golden Staking Window. If you hold LRC and do not plan to sell within 90 days, you could consider taking advantage of this window (and LRC staking in general) to earn Loopring’s protocol fees.

  • 12/12/2019 — Loopring CMO, Jay Zhou, attended the 2019 China Fintech Shanghai Summit.

  • 12/14/2019 — Loopring CTO, Steve Guo, attended blockchain meetup in Shanghai, sharing the newest development of zkRollup.

  • 12/14/2019 — Loopring CMO, Jay Zhou, attended Startup Leadership meetup in Shanghai, and talked about the future trends of blockchain technology.

  • 12/19/2019 — We had a team reunion in Shanghai, since most of the team was in one place for the first time in a while!


Beginning January 2020, we’ll switch from bi-weekly to monthly updates. We believe that since protocol v3 is deployed, and because the relayer and DEX products (Hebao) are closed source it makes more sense. Also, in the process of productization, Loopring-based DEXes/Dapps (WeDEX, Dolomite, etc.,) will release information of their own, lessening our need for the same update frequency.


Loopring is a protocol for building high-performance, non-custodial, orderbook-based exchanges on Ethereum. You can sign up for our Monthly Update, learn more at Loopring.org, or check out:

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Loopring 2020 Development Roadmap

As each year draws to a close, Loopring releases the R&D roadmap for the coming year. This supports transparency and allows the community to obtain a greater understanding of the plan. Equally important, it forces us to think hard about the future and to reach consensus on the plan so that subsequent actions will be highly consistent and effective.

2020 Development Roadmap at a glance:

Product

  1. Hebao Wallet App

  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


Plan all you want, but the rapid development of blockchain technology — especially Ethereum — and its evolving ecosystem overpowers even the best and most concrete of roadmaps.

Take our 2019 roadmap for example: we ended up investing heavily in the R&D of a small part of the original plan, zero-knowledge proofs (ZKP). This small part has become the strongest competitive advantage of Loopring, and will likely continue to be for years to come.

While scalability was indeed the priority for v3 for the past year, and our ZKP work was already underway at the end of 2018, we didn’t know how our specific solution would take shape. From the 2019 Roadmap:

Our main goal with 3.0 is to reduce settlement cost by an order of magnitude, while also increasing the number of order rings per settlement by an order of magnitude. Significantly increasing the scalability of the protocol is front and center with 3.0.

We are incredibly proud that with protocol v3, we beat our goal by more than an extra order of magnitude, or 700x total, and without sacrificing Ethereum-level security guarantees. We believe our recently deployed v3 is the best high-performance orderbook DEX infrastructure available today.

This is due to the team’s continuous learning and improvement, and the ability to make flexible adjustments to the plan, so long as it maintains our principles.


Principles for Planning

In blockchain land, there is no lack of tempting ideas to make the world a better place. But if there are no principles for planning, decisions risk becoming unconstrained, and there will be endless and aimless paths. Jack Ma’s dream, for instance, is to “make it easy to do business”, and Alibaba will not engage in unrelated pursuits if it doesn’t support this guiding goal.

Loopring’s goal has been and will remain building infrastructure to power the secure, non-custodial exchange of cryptoassets. We will not deviate from our plan to make DEXes the obvious option for scalable orderbook trading on Ethereum.

With this goal in mind, we relied on the following guiding principles when making the 2020 plan.

1. Focus on doing one thing well

We believe that the various protocols and dApps on Ethereum will continue to become increasingly composable, gradually connecting to each other and forming an economic organism. We don’t believe that any team is capable of solving all the pain points or potential opportunities in the Ethereum ecosystem. Therefore, in the process of productizing the Loopring protocol, when some deficiencies make our efforts less perfect (such as cross-chain (in)capabilities), we need to be cautious in our judgment and wait for other teams to implement the best solution instead of rushing. We recognize the fact that we have limited capabilities, resources and time. Doing one thing and doing it right is imperative.

2. Do not reinvent the wheel

Highly related to the above. For example: Uniswap has achieved great success this year, which will entice some teams to do similar things, or even simply copy-paste. But an ‘upgraded’ version of Uniswap will not make a substantial contribution to the Ethereum ecosystem as much as Uniswap’s own progression may. Indeed, often it is degraded versions. We believe that doing such technology R&D is to reinvent the wheel. Loopring has always been at the forefront of our respective track, and will never be a laggard or copycat in terms of R&D. That is not to say that we don’t learn from and collaborate with our peers, which we most certainly do, and value. This point is more nuanced because, of course, following another’s track can be a source of inspiration to improve upon. We just believe there are some scenarios — wheel scenarios — where the ‘thing’ itself is simply the best solution for its intended purpose.

3. Believe in the value of users

We are slowly and thoroughly realizing the value and importance of users, especially for a DEX protocol. Technology alone won’t reflect our accomplishments; we need users. The value of the Loopring protocol, and that of LRC, depends on the core engineering team at the beginning; but in the middle and later stages, it will depend on our userbase, and those of our DEX operators. We have just reached that middle stage. Therefore, it’s time for us to plan for products, user acquisition, and the commercialization of our leading technology.


Products /2020

Steve Guo, Loopring’s CTO, will lead the design and development of our products and liquidity provision tools.

1. Hebao App

We are developing an Ethereum smart-wallet mobile app for non-technical users in the mainland of China to solve the user onboarding challenge. Most people in China don’t have access to Chrome and MetaMask, so this is a critical piece. We call it “Hebao”, which means wallet or purse in ancient Chinese (荷包).

The overall contract design has actually already been completed and is being reviewed. Hebao’s smart contracts are open-source. Smart contract testing and app development will start simultaneously in the first quarter of 2020.

The Hebao app will have the following functionality:

  • Support multiple guardians including hardware wallets, allow resetting of lost owner keys through guardians; support asset inheritance based on time locks/dead-man switch — when a wallet owner has not performed any on-chain behavior for a long time, the specified heir can claim the wallet as its new owner. Through these features and ENS integration, we hope that users will be completely free from managing exposed private keys and mnemonics.

  • Support meta-transactions; wallets can perform various Ethereum transactions and dApp activities without any Ether.

  • Provide in-depth integrations with Loopring protocol and mainstream DeFi protocols to enable users to securely trade and earn interest.

  • Integrate LRC staking to enable users to benefit from Loopring protocol fees.

  • Support WalletConnect standard, multi-signature wallets, address whitelist, one-click asset migration…

We have high hopes for Hebao’s ability to become a leading smart wallet in the country, and serve as an excellent entry & auxiliary to Loopring protocol.

2. Hebao DEX

The Hebao exchange will be built on top of Loopring 3.0. We will launch a beta in the first quarter of 2020. The web version is planned to be launched first and will support Loopring 3.0’s core functionalities as a high-performance orderbook DEX. It will be accessible via MetaMask and other wallet extensions.

Note: the Hebao App and DEX, as commercial, for-profit products, will be independently operated by Lightcone Technology Limited. The Loopring Foundation is one of the non-controlling shareholders of Lightcone Technology.


Protocol /2020

Brecht Devos, Loopring’s Chief Architect, will lead the development of the Loopring protocol.

1. Learn from Production

Protocol v3 is live on mainnet and will be used in production environments in late December 2019 with the WeDEX beta, a strong partner in Shenzhen. Having real exchanges on top of v3 running on Ethereum mainnet gives us extremely valuable data. We’ll discover if there are any bottlenecks that can be avoided, and learn if there are any useful features that are missing. We’ll learn how the protocol behaves on Ethereum mainnet in realistic scenarios. All this data will ensure that the protocol (and the relayer) will be even better for future releases.

2. Improve Composability

Protocol v3 has brought a massive increase in scalability and a massive decrease in costs for non-custodial trading on Ethereum, to the tune of 700x improvements from v2. As explained in multiple articles, this is achieved by us using the zkRollup design, a layer 2 solution. However, layer 2 solutions necessarily make it more difficult to interact directly on-chain. The more operations you do off-chain, let alone in a zkSNARK, the harder it is to interact with other smart contracts on-chain. From a UX point of view, this is great (apparent immediate finality), but this can have less desirable consequences in that it limits the composability of Loopring exchanges with other smart contracts on Ethereum. Our aim is to improve this significantly by making it possible to do additional on-chain logic for user requests when needed.

Here are a few concrete examples of what this will make possible:

  • Allow exchanges to implement custom on-chain functionality for users (like tapping into on-chain liquidity pools, lending pools)

  • Allow exchanges to do faster withdrawals.

  • Allow exchanges to build exchange wallets that act similarly to a standard Ethereum wallet. Anything you can do on a normal Ethereum wallet you will be able to do on your exchange wallet.

  • Support general meta transactions so users need not interact with Ethereum themselves if they don’t want to.

3. Make Loopring Customizable and Upgradeable

All exchange functionality in v3 is currently bundled in a single contract. This contract can be upgraded, but this potentially modifies the complete exchange. Even if an exchange would only like to add a single feature or do a small modification, the complete exchange would be different. This limits code reusability and makes it difficult to maintain a single codebase for all exchanges built on Loopring.

Thus, we want to make the exchange contracts more modular. Exchanges will be able to choose which functionality they want to support and simply add those modules to the exchange. If an exchange wants to create some custom functionality, they can easily do so by creating a much simpler smart contract and adding it to the exchange, while keeping all the other exchange logic untouched. This not only simplifies the protocol design, but it also means more code can be reused which has numerous benefits.

4. Research and Development of Zero-Knowledge Proof Systems

In the last couple of months, there has been an immense amount of new developments in zero-knowledge proofs. ZKPs are of course the core of protocol v3. In protocol v3 we use the Groth16 proof system on the BN254 curve. This system provides the smallest proofs (just 256 bytes!), has cheap proof-verification on-chain, and has quite fast proving times. The proving times largely dictate the off-chain costs of the protocol so they are very important. The biggest drawback of Groth16 is the necessary circuit-specific trusted setup (for which we held a ceremony in November). Each time we modify the logic inside a circuit, no matter how small the change, we need to do a trusted setup for the circuit. This limits us in how fast we can take new exchange functionality into production. For each trusted setup we also need help from participants in the Ethereum community. So a trusted setup not only takes a significant amount of time to organize, but also requires external people willing to spend some of their time to help us.

In contrast to Groth16, new proving systems like PLONK or STARK do not need a trusted setup for each circuit independently. However, they also have different proof sizes, proving times and proof verification costs on-chain. The way the circuits are programmed also often differs from Groth16, which means that operations efficient in Groth16 are not necessarily efficient in a different proving system and vice versa. Strong progress is also being made with recursive ZKPs in proving systems like HALO which is certainly a very interesting and promising direction.

Picking a new proving system (which is production-ready) is no trivial task. New zero-knowledge proofs developments will no doubt keep coming in 2020 and we’ll continue to follow them closely. We hope to switch to a new proof system without circuit-specific trusted setup, faster prover times and increased scalability.

5. Smart Wallet Integration

We’ll develop, open-source, and deploy contracts for our smart wallet. Our priority is the integration with Loopring 3.0 so the app will make DEX user on-boarding much easier, especially for those in China lacking access to Chrome or MetaMask. Integration with other DeFi protocols will follow. The smart wallet integration will also entail making LRC more front of mind, and its staking mechanics much more user-friendly.


Relayer & Backend /2020

Hoss Ma, Loopring’s Chief Scientist, will lead the development of the Lightcone relayer.

1. Lightcone 3.0

The research and development of the Lightcone relayer will be the top priority of 2020. Recall, the relayer (aka ‘operator’) is what handles all the off-chain components, which, in protocol v3, is substantial — including the ZKP handling. It is a tremendous engineering feat to construct a reliable and efficient relayer in the context of v3. Lightcone is our internal relayer we have been building for over one year. While any Loopring DEX is free to build and operate their own relayer, they can also use Lightcone’s relayer-as-a-service.

The current version, Lightcone 2.0, will very soon provide services for WeDEX and Hebao. In 2020, we will start the development of the next major Lightcone version — 3.0. We will redesign the Lightcone API and publish related documents. We hope that third parties (dApps, wallets, aggregators, etc.) will be able to use this documentation to easily integrate with any DEXes being supported by Lightcone.

Lightcone’s services can be consumed in a modular way. For example, when Dolomite, a DEX built on Loopring v2, will upgrade to v3 at some point in 2020, they will use Lightcone for the batching & ZKP proving, but will use their own order-matching engine that they’ve already developed.

We hope to improve the automatic deployment, monitoring, and alarm systems to ensure that the ‘relayer-as-a-service’ concept of Lightcone is better implemented. Ultimately, we plan to support 2 to 4 Loopring v3 exchanges in 2020. The performance and availability of Lightcone relayer will be further improved, reaching the following technical capabilities:

  • Single relayer cluster will not perform more than 3 rollbacks & the total loss of assets for operators and exchange owners due to hacking does not exceed $15,000 combined. [Note: this $ figure is for the operator’s assets/gas; the users’ assets are of course 100% secured by the protocol].

  • Online recovery completed within 4 hours;

  • Relayer’s availability exceeds 98%;

  • Single relayer cluster TPS is not less than 200 transactions per second [The highest throughput of Loopring 3.0 is 1,400 trades per second; currently, Lightcone is the performance bottleneck].

Lightcone also plans to support more protocol features, including:

  • Offline withdrawal requests. This can increase the withdrawal speed and reduce user withdrawal fees;

  • All three LRC staking mechanisms to help LRC holders maximize returns;

  • Stop-limit orders, other advanced order types, OTC trading

We also plan to enhance our data operations and analysis capabilities to provide better decision support for DEX operators. We will further improve the elastic computing framework for ZKP generation, and strive to reduce the generation time and cost. All the while, the relayer engineers will also be committed to providing feedback to our protocol engineers to improve the protocol’s design and implementation.

In general, the research and development of the Lightcone relayer is our major focus. The team is fully aware of the importance of a well-implemented relayer for the commercialization of the Loopring protocol, therefore we will ensure sufficient investment of resources. The fact is, building a v3-compatible relayer represents a monumental effort, and thus, we must ensure our solution is ready off-the-shelf for would-be DEX owners to employ. We imagine Loopring+Lightcone powering some of the most successful, high-performance non-custodial orderbook exchanges on Ethereum.

2. DEX Browser

We will open-source and launch a DEX Browser for Loopring 3.0. The DEX Browser will provide data query services (mainly account balances and trading history) for each exchange built on top of Loopring 3.0. It is basically a block explorer, making Loopring DEX activity knowable and searchable through our ZKRollup construction.

Super importantly, this tool will also provide users with “withdrawal services”: in case any exchange is closed (their website is completely offline and their operators are unreachable), all users’ assets can always be reclaimed through such a withdrawal portal. The ability for users to claim their assets even in the worst emergency situations is one of Loopring’s most powerful features, made possible by the protocol’s enforcement of on-chain data availability. Note: even if our DEX browser was down, funds are always accessible by interacting with Ethereum itself. Any third party can also provide a UI to make the claim process (which involves generating a Merkle inclusion proof) simple for users.

3. Hebao’s Backend

We’ll also develop a closed-source backend for the Hebao app for coordinating user activities. The backend, of course, never takes custody of users’ assets.


Operations /2020

After more than two years of research and four versions of protocol development, we now have some audacious objectives.

Our goal is that by the end of 2020, the average daily trading volume of Loopring DEXes will be 50 times that of Ethereum’s most voluminous DEX, Uniswap. We imagine this would be driven by 2 to 4 DEXes on Loopring Protocol 3.0 and the Lightcone relayer.

While this may seem overly optimistic, the volume we hope to capture is not an apples to apples comparison with Uniswap: Loopring is for high-performance orderbook trading, Uniswap is more for simple swaps. As described in our recent post, Trading vs Swapping are different niches — with different user intent — and so a more fair analogue would need to include some centralized exchange trading volume figures. Binance, for instance, a leading CEX offering the scalable orderbook experience Loopring v3 approximates, currently does over $1 billion daily volume on average.

LRC Staking for Protocol Fees (Type 1)

Calculated at 50 times the daily trading volume of Uniswap, $1.5 million, our daily average trading volume by the end of 2020 would be $1.5m*50 = $75 million. Monthly, that equates to $75m* 30 = $2.25 billion. With the current protocol fee set to 0.05% (for both parties of a trade), the monthly fees accrued would be $2.25 million.

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. If LRC price remains unchanged ($0.025), a 30% protocol fee burn would burn 27 million LRC per month — ($2.25m * 0.3)/$0.025 = 27m. And 63m LRC , 70%, paid to stakers. Of course, if the price appreciates due to trading volume taking off, the fees for burning would translate into fewer LRC burned. On the other hand, a lower price will mean bigger burn.

Our expectation is to burn 10 to 25 million LRC by the end of 2020.

LRC Staking by DEXes for Economic Security (Type 2)

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. (See here for a list of protocol parameters / slashing costs.)

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. Of course, this reliability relates to service performance / execution guarantees — user funds are 100% Ethereum-level secured by the protocol.

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. Needless to say, any and all projects are free and welcome to build on Loopring’s open source protocol (smart contracts and ZKP circuits), but LRC at stake can help discern between serious operators, and those less so.

It is hard to estimate at this time how much LRC will be slashed from this mechanism.

LRC Staking for Protocol Fee Reductions (Type 3)

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.

Disclaimer: Please note the above goals are just that, goals. They depend on several factors, both endogenous and exogenous to our efforts, including systemic factors such as the general adoption of DEX trading & DeFi, regulation, progress of competitors, and more. Needless to say, we do NOT guarantee any figures and the above does not constitute investment advice for purchasing LRC. We simply wish to illustrate the mechanics of staking with some examples.

Change update frequency from Bi-Weekly to Monthly

As the development of the Loopring protocol has achieved a very important milestone in v3’s deployment, and because the relayer and DEX products are closed source development, beginning January 1, 2020, Loopring Foundation will switch from bi-weekly updates to monthly updates. We believe that in the process of productization, Loopring-based DEXes will release operational information of their own, lessening Loopring’s need for the same frequency of updates.


Summary

If you’ve been paying attention to Loopring’s bi-weekly updates throughout 2019, you will find that the focus of those updates and this 2020 roadmap are highly consistent. This shows that after two years of exploration, Loopring has gained significantly more confidence in our R&D direction and achievements.

It also shows that the new decade will bring a new phase for Loopring — out of the lab and into real usage. 2020 will mark the beginning of Loopring’s productization. Initial products focus on the large, nascent China market, but balances a global, borderless view.

We’d like to end by sincerely thanking our community, and the Ethereum, DeFi and ZKP communities for tremendous support and progress. The Loopring Foundation will continue to devote itself to powering the highest-performing non-custodial orderbook exchanges on Ethereum. We truly hope and believe that our hard work and your patience will both pay off.


Loopring is a protocol for building high-performance, non-custodial, orderbook-based exchanges on Ethereum. You can sign up for our ̶B̶i̶-̶W̶e̶e̶k̶l̶y̶ Monthly Update, learn more at Loopring.org, or check out:

Twitter ⭑ Reddit ⭑ Telegram ⭑ GitHub ⭑ Discord ⭑ YouTube ⭑ LinkedIn

Loopring Bi-Weekly Update — 12/01/2019

Loopring v3 launches this week! It will be Ethereum’s first zkRollup DEX protocol enforcing on-chain data availability.

The last two weeks have been super exciting for us: Loopring 3.0 beta4 will finally complete deployment early next week. Loopring will be Ethereum’s first zkRollup DEX protocol enforcing on-chain data availability. We are ready to roll!

  • We have received a strong security audit report for our smart contracts and circuit code from SECBIT Labs.

  • Our zkSNARK trusted setup MPC has included a sufficient number of participants, where we are comfortable generating the initial keys for use.

  • The Lightcone relayer is getting ready. It will support WeDEX, a partner who will very shortly launch the first Loopring 3.0 DEX as a public beta.

Loopring is having an offsite early December to brainstorm our 2020 R&D roadmap and finalize some details, the next bi-weekly will therefore be postponed by one week to the 22nd of December.

Research & Development

Loopring Protocol

Our phase 2 trusted setup ceremony has made a lot of progress. We are now at a total of 15 participants, which includes people of highly respected Ethereum projects and beyond. You can see the list of non-Loopring participants near the bottom of this post. We also created a small contest on Gitcoin, and Gitcoin has selected a winner who will participate in our trusted setup. We are creating the first set of proving and verification keys for the initial protocol v3 release on mainnet. As always, you can follow the progress of the ceremony here.

With the imminent release of protocol v3 on mainnet in mind, we created a small utility contract to delay operations on-chain. Some of our smart contracts are configurable, and if we would allow specific protocol parameters to change immediately, that could pose a security risk to users. This utility contract solves this by first forcing the operation to be visible to anyone on-chain for a certain amount of time before the actual change can be applied.

Smart Wallet

We have decided to develop a smart wallet mobile app for people in the mainland of China. We’ll provide more information regarding this app in our upcoming 2020 R&D roadmap which will be released in the coming weeks. Stay tuned.

Significant progress has been made on our smart wallet implementation, with most of the core smart wallet functionalities implemented: token transfers, social recovery, locking, transfer limits, meta transactions, etc. We expect to finalize the design before the end of the year, which will also mark the start of the smart wallet mobile app development. The smart wallet can stand alone, but will ultimately also be a very smooth gateway into some Loopring-based DEXes, and related functionality such as LRC staking.

DEX Frontend

WeDEX has cloned our DEX frontend codebase and continue their development. For further WeDEX updates, please follow them on Twitter.

Going forward, we’ll share progress with their team in the development of our smart wallet products.

Lightcone

The refactoring of the Lightcone relayer has made a lot more progress, and it is now close to completion. The current test coverage is over 90%. The system performs well when the multi-pod concurrent throughput is about 50 trades per second. We encountered some logical and performance problems during the stress test, including inconsistent states after recovery from failures of the matching engine; concurrency issues caused by parallel consumption of Kafka messages; JVM parameter configuration errors, Docker resource parameter configuration mismatch, etc. Most problems have been fixed already, and some are still under investigation. We expect the relayer will be ready next week.

Lightcone’s primary data storage services, including MySQL database and Redis, have switched to using AWS’s native offerings to ensure higher availability and better performance.

The Lightcone-to-WeDEX data synchronization mechanism has also been established with a delay of merely 500 milliseconds, which meets WeDEX’s quasi-real-time requirements.


Operations & Marketing

  • 11/19/2019 — Loopring CMO, Jay Zhou, attended DAO Step Two in Shanghai, talking about the futures and trends of DAO.

  • 11/20/2019 — SECBIT Labs delivered its Security Audit Report for Loopring Protocol 3.0 beta3. After careful review of the most up-to-date codebase, we believe all findings from SECBIT have been addressed.

SECBIT’s audit conclusion

  • 11/22/2019 — LRC was made available on VCC Exchange, powered by Bittrex in Vietnam, supporting LRC/BTC trading pair.

  • 11/23/2019 — LRC was listed on Pionex, an exchange designed for cryptocurrency trading bots, supporting LRC/BTC and LRC/ETH trading pairs.

  • 11/24/2019 — Loopring proposed in the dxDAO to slash 20% of our reputation stake in view of flattening the distribution. It passed.

  • 11/26/2019 — Loopring CTO, Steve Guo, delivered a blockchain workshop at Tongji University in Shanghai.

CTO Steve explaining our zkRollup at Tongji.

TL;DR; DEXes on Ethereum have hit their stride and are showing strong signs of life. Recent growth has mostly been concentrated in on-chain, curve or reserve based DEX models. With advances in layer 2 such as zkRollup, the next cycle will see scalable & secure orderbook DEXes take root on Ethereum, allowing for true non-custodial trading, not just swapping.

  • 11/29/2019 — We are thankful that 12 people outside our organization contributed to Loopring’s zkSNARK trusted setup MPC thus far. They are Koh Wei Jie from Ethereum Foundation, Anton Buenavista from Kyber Network, Garrett MacDonald from Tuku, Vany Serezhkin from INSOLAR, Francois Proulx from dfuse, Guo Yu from SECBIT Labs, Felix Leupold from Gnosis, Arnaud Schenk from AZTEC Protocol, Manuel Garcia from Protofire, Chris Wessels from Consensys, James Prestwich from Summa, and Li Weichao from VITE Labs. Their contribution hashes are available here. We are truly grateful for their contribution and pledge to contribute to other projects’ SNARK setup MPC in the future.

  • 11/29/2019 — PPIO publishedCode Talks: Application of Zero-Knowledge Proof Technology in the Blockchain Industry, from a presentation of Loopring CTO, Steve Guo.

  • 12/1/2019 — WeDEX has recruited 66 beta testers from the community.


Loopring is a protocol for building high-performance, non-custodial, orderbook-based exchanges on Ethereum. You can sign up for our Bi-Weekly Update, learn more at Loopring.org, or check out:

Twitter ⭑ Reddit ⭑ Telegram ⭑ GitHub ⭑ Discord ⭑ YouTube ⭑ LinkedIn

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