We like to think that Loopring’s core research and development in 2019 will be reflected in two broad buckets: innovation + focus.
Innovation: maintain a high degree of attention and respect for new advancements in blockchain, and strive to absorb and adopt new technologies to continuously improve and optimize the Loopring protocol.
Focus: give up non-core research and development of technology and products, focusing on our strengths and strategic projects.
“What is now proved was once only imagined.” — William Blake
1. Improve Protocol 2.X
We will continue to develop the Protocol 2.X series and build out additional functionalities. Some new features have already begun (or even completed) development. In rough order of priority, these designs include:
For automatically converting a portion of non-LRC fees into LRC for burning, we have considered and begun work on two options:
- DutchX integration, which is effectively completed, although we need clarification on a few details and possibilities.
- Our own auction model called Oedax, which is still in conception, and may have important use beyond the fee burning use case.
These auction mechanisms make sense for non-LRC conversion/burning because they allow for trading in (otherwise) illiquid pairs, at discrete intervals. Basically, they can help ensure all tokens can trustlessly be converted into LRC, and also help with price discovery.
Security Token Support (ERC1400 support)
Done, for now. Awaiting further specification and modification of ERC1400 standard. We will continue to update the implementation to support changes to the standard. The standard itself may only be fully specified in Q2 ‘19.
Lower burn rate for users (and ring miners) if they lock LRC
In the new fee model, anyone can ‘lock down’ the burn rate ascribed to their trades by locking LRC. This can be done by users, and by ring miners. After locking LRC, the burn rate for their trades will be reduced, resulting in more profitable trades (or keeping more fees in the case of ring miners). The schedule for X amount of LRC locked = Y amount of burn rate reduction has not been specified yet.
This actually has been implemented for users already, but was removed to reduce gas usage and because more testing was needed to understand the behavior. We still need to implement it for ring miners as well.
Note: this should not be confused with projects being able to lock down the burn rate ascribed to their token, which has indeed been specified and implemented (see chart here).
Implementing interceptor contracts will allow the protocol to be more flexible and extensible. Different interceptors act as modules to leverage logic in different use cases. For example, an interceptor can be used to check identity (KYC checks), or to give ‘brokers’ finer control over how they can deploy a user’s token balance.
We continue to explore how community governance of the Loopring Protocol will be implemented. Governance will, among other things, allow for the configuration of parameters such as burn rates attached to different tokens, how much LRC should be locked for those burn rates, etc. It will also govern the general upgradeability of future protocol releases, and potentially specify which features should be prioritized (like this list!).
A basic voting contract has been written, but governance considerations require a lot more thought, specifically around voting designs to avoid plutocracies, and what kind of direct results voting needs to have.
2. Research and Development for Loopring 3.0
Beyond extending and enhancing Loopring 2.0, we have also already begun development of Loopring Protocol 3.0. The overall design of Protocol 3.0 has changed from 2.0, but the idea still centers around orderbook-based DEXs with orders communicated/matched off-chain and settled on-chain.
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.
Due to the rapidly evolving technology and potential fluidity of the Ethereum platform in the coming years, Loopring 3.0 has some experimental attributes which are at once exciting and uncertain. We hate to keep a few of the finer details under wraps, but it just doesn’t make sense to reveal in the current state. We will continue to disclose relevant details in a timely manner based on the progress of research and development. We have some protocol developers who are now focusing exclusively on 3.0, and at the forefront of DEX scaling technology.
3. Side-chains and Cross-chains
We plan to deploy Loopring 2.0 to the ‘Loopring Chain’, an application specific side-chain exclusively used for Loopring protocol orders.
The Loopring Chain is an Ethereum compatible, public side-chain, and will allow ERC20 tokens to be exchanged between the two chains 1:1, without trust. This application-specific chain will allow us to increase throughput, reduce cost, and have other custom-fit features for non-custodial trading.
We plan to empower LRN as the main fee payment and utility token of the Loopring Chain, and act as its only governing token. LRN will exist in the form of a native digital currency on the Loopring Chain, but will continue to exist in the form of NEP5 on NEO, and even ERC20 on Ethereum. LRN can be converted 1:1 through the three forms at any time. In the future, we will bridge more public chains, and LRN will exist on these public chains in their respective standards. This will make it so no further LRN (nor LRC) will need to be issued, as the existing tokens will effectively be wrapped for each corresponding standard (kind of like Wrapped Ether, WETH).
When moving LRN from NEO to Loopring Chain for example, the LRN on NEO will be deposited into multi-signature contracts, and remain locked, while a corresponding amount will be minted on Loopring Chain, and vice versa the other way. The multi-sig contracts and execution of Loopring Chain will be administered by an open set of operators (participants equivalent to miners, nodes, etc.) which we will release further details on.
It should be noted that although the Loopring Chain will be used solely for Loopring protocol orders, it is still a public chain: the LRN token distribution and chain governance rights will remain decentralized. Also please note that this does not mean departing from Ethereum in any way; we will always build on Ethereum.
The ‘bones’ of Loopring Chain have actually been in the works for some time and are nearing completion. Specific considerations are still to be determined, however. We will announce further detail and progress on the Loopring Chain and LRN — and open it up to community feedback — in the first half of 2019.
4. Explore new trading models
We plan on publishing a blog post or a small whitepaper to explain to the community a new trading model that we have been exploring. We refer to it as Oedax for the time being, and unlike the rest of Loopring, this model is not orderbook-based. We believe that Oedax is quite innovative and is complementary to the Loopring protocol model. It will be helpful within Loopring’s current architecture, but also capable of standing on its own. In the very near future, we will publish the concept, collect feedback from the community, and then decide whether to develop the corresponding dApp based on the core project’s progress and resources.
“Learn to be a specialist, not a sage.” — Cheng Shuo
In addition to investing in protocol innovation and new development, we will invest all the rest of the R&D resources in the Relay, Mobile App, and Loopring.js code bases. In other words, we will abandon the development and operation of non-core products, including all web products (Loopr, Circulr, and H5Dex). However, we will still encourage and reward community members and third-party groups for upgrading and maintaining these non-core products, and consider investing LEAF funds for companies that commercialize these products.
Our 2nd generation relay/ring-miner, Lightcone, remains to be the top priority for Loopring in the first half of 2019. We have been working hard to improve the relay system architecture, matching performance, market depth, transaction activity, and other aspects — all in the hopes that DEXs don’t seem as ‘DEX-y’ in the future, and that we become the first fully non-custodial exchange to approximate centralized exchange performance. This is a very hard problem while remaining as decentralized as possible, but we have made significant progress. Once complete, we will provide free API services for all ecosystem partners to be able to share our performance and liquidity, and will fully open Lightcone to select partners.
2. Mobile App
On the product level, we have decided to focus on mobile, as we believe that is what product teams and users most care for, and that is where we can help make the greatest difference. Our front-end priority is thus the development of both iOS and Android apps. We will maintain open source and continuous updates to the app’s core trading module. At the same time, in order to improve UX and increase user stickiness, we will provide more functionality within the mobile wallet, aside from improving trading functions.
Although we will cease development of web-based products (most of which were set out to be reference implementations in the first place), we will still keep Loopring.js code base open and updated to help web-based products integrate the Loopring protocol for any token trading functionality. Loopring.js will soon upgrade to support protocol 2.0 and remain compatible with the 1.5 series.
“Life is like riding a bicycle. To keep your balance, you must keep moving.” — Albert Einstein
Although Bitcoin turns ten years old in two days, blockchain technology and the decentralization of value (and value exchange) has in some senses just begun. The bear market of 2018, we believe, did more good than harm in progressing the meaningful projects and teams, and acting as a noise-dissipator. Decentralized exchange usability and usage, like anything worth pursuing, takes time. It is not enough to just be ‘decentralized’, as most users simply do not care. We must compete with the legacy, centralized solutions on their terms if cryptocurrency adoption will truly take root. In 2019, we expect the DEX landscape to remain competitive, but also that the best DEXs will start to pull away from the pack. We are excited to put ourselves and the Loopring protocol to the test.
We find it quite ironic that two of the most popular crypto-memes — which are in some sense at odds with each other — #HODL and #BUIDL, together represent the indispensable qualities a successful team must possess: persistence and innovation, respectively. We believe the Loopring team has a healthy dose of both qualities: being simultaneously stubborn about what we believe in, but always open to learn, improve, and grow.
Wishing everyone a very healthy and happy 2019!
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