Loopring Launches First Ethereum DEX for Scaling as Opposition Mounts Against ProgPow
The open-source protocol for building decentralized exchanges (DEXes) on any public blockchain that offers smart contract support has announced the beta launch of the first Ethereum DEX using zkRollups for scaling.
Apart from being the first publicly accessible zkRollup exchange on Ethereum mainnet, Daniel Wang’s Loopring introduced a 100% non-custodial exchange up to Ethereum-level security guarantees with a throughput 1000x capability which is greater than the current state of the art layer-1 DEXes.
It is as fast as using a centralized exchange but with no KYC and lower trading fees allowing traders to trade directly from their Metamask or hardware wallet, Loopring’s founder, Wang, writes. No personal data of any kind to be collected: an Ethereum address is all you need.
The zkRollup has been touted to be a high potential scaling method as it enables transactions off-chain while just minimal data is submitted on-chain.
The launched beta version DEX has a capacity limitation for one million users to reduce prover cost but could be increased to accommodate 64 million users once set cap gets near to increase prover cost by 10–15%. Its relayer can currently support 100 trades-per-second (TPS) consistently – the Loopring protocol can support 2,025 TPS – future features include implementing fast withdrawals and peer-to-peer layer-2 transfers/payments.
The long-term goal is to offer a smart wallet as a mobile app and seamlessly integrate our DEX backend into the smart wallet, they say. That is, a smart wallet combined with a DEX function that will provide users both a better experience and security guarantees.
It differs to conventional DEXes in some ways though. It charges fees for processing account registration, password-reset, deposits, and withdrawals to prevent Sybil attacks. Otherwise, attackers can bombard the relayer by registering many accounts to deplete the DEX’s one million users capacity or creating tons of tiny deposit/withdrawal requests to purposely waste our resources in the cloud generating proofs. It can also only upgrade to a new protocol that’s 100% compatible with the current version. So, moving from a million to a 64 million users DEX will require this launched beta version to end for a brand new DEX to start with a no-risk migration of user’s trading assets.
It only supports Ether and ERC20 tokens on Ethereum – no built-in support for Bitcoin or other cryptocurrencies – with a plan to support other cross-chain solutions like WBTC and/or tBTC in the near future. Its maximum delay of processing deposits and withdrawals could be up to two weeks in the event its cloud-computing provider suffers data center failure.
While this is a big boost to the Ethereum network which has been going through some transformation of late, the exchange’s launch arrives with the argument over the implementation of ProgPow which seeks to make mining more decentralized by preventing miners with ASICs from monopolizing mining power.
Designed to be ASIC-resistant and strongly favor GPUs – and may raise the gas costs on some operations, the ProgPoW mining consensus change proposal was initially planned to be included in the proposed Istanbul upgrade that could see Ethereum sustain up to 2,000 TPS afterwards.
As the EIP-1057 is still being considered for activation to replace eth1’s proof-of-work algorithm, Ethhash, with ProgPoW, some stakeholders have expressed their opposition saying they do “not support the inclusion of ProgPoW into any hard fork in the current circumstances.” Their reasons include that it’s been suggested that ProgPoW offers no clear benefit to Ethereum’s transition to PoS and may centralize hashpower which may not serve the intended purpose to disincentivize adversarial miner tactics.
The EIP-1057 is also considered to have failed to achieve consensus within the Ethereum community after two years of debate which, if its implementation is forced through, “would only widen current rifts, negatively impacting Ethereum and its community for years to come.”