Loopring Monthly Update — 2020/01
|Matthew Finestone||Feb 1|
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 Hebao, meaning ‘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…
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.
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
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!
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.)
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.
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 :).
Our progress was documented in Anthony and Eric’s EthHub Weekly (lotsofthem actually!), Camila’s The Defiant, Ryan’s Bankless, Even 3mostclicked in Evan’s Week In Ethereum! (Our first hat trick). Loopring was also included in 10 Dapps To Celebrate in 2020 by Will, and DeFiPulse’s 3 DeFi DApps Starting 2020 Off Strong.
Of course, there were a few highlights and shoutouts from folks we really look up to who know a thing or two about zkRollups on Ethereum!
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
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.
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.