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DeGate DEX Launches Mainnet Beta

2023 May 3rd

DeGate launches mainnet beta with a deposit cap and a program to recover eventual user losses.

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Even though the exchange is immutable, we haven’t verified the program whose computation is being proven. In the case of bugs or backdoors, funds could be lost.

DeGate is an app-specific ZK rollup that enables a trustless, fast and low-fee decentralized order book exchange, helping users to trade easy and sleep easy. DeGate smart contracts are forked from Loopring V3.

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Risk Analysis

Sequencer failureState validationData availabilityUpgradeabilityProposer failure

State validation

ZK proofs (SN)

ZK-SNARKS are zero knowledge proofs that ensure state correctness, but require trusted setup.

Data availability

On chain

All of the data needed for proof construction is published on chain.



The code that secures the system can never change.

Sequencer failure

Force via L1

Users can force the sequencer to include a withdrawal transaction by submitting a request through L1 with a 0.01 ETH fee. If the sequencer is down for more than 15d, users can use the exit hatch to withdraw their funds. The sequencer can censor individual deposits, but in such case after 15d users can get their funds back.

Proposer failure

Use escape hatch

Users are able to trustlessly exit by submitting a Merkle proof of funds.


Validity proofs ensure state correctness

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.

  1. Operator - DeGate design doc

Zero knowledge SNARK cryptography is used

Despite their production use ZK-SNARKs are still new and experimental cryptography. Cryptography has made a lot of advancements in the recent years but all cryptographic solutions rely on time to prove their security. In addition ZK-SNARKs require a trusted setup to operate.

  • Funds can be stolen if the cryptography is broken or implemented incorrectly.

  1. Operator - DeGate design doc

All data required for proofs is published on chain

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.

  1. Introduction - DeGate design doc


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.

  • MEV can be extracted if the operator exploits their centralized position and frontruns user transactions.

  1. ExchangeV3.sol#L341-L348 - DeGate source code
  2. LoopringIOExchangeOwner.sol#L98-L101 - DeGate source code

Users can force exit 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.

  • Users can be censored if the operator refuses to include their transactions. They can still exit the system.

  1. Forced Withdrawals - DeGate design doc


Regular exit

The user initiates the withdrawal by submitting a transaction on L2. When the block containing that transaction is proven the funds become available for withdrawal on L1. Finally the user submits an L1 transaction to claim the funds. This transaction does not require a merkle proof.

  1. Withdraw - DeGate design doc

Forced exit

If the user experiences censorship from the operator with regular exit they can submit their withdrawal requests directly on L1. The system is then obliged to service this request. Once the force operation is submitted if the request is serviced the operation follows the flow of a regular exit.

  1. Forced Request Handling - DeGate design doc
  2. ExchangeV3.sol#L392 - DeGate source code, forceWithdraw function

Emergency exit

If 15d 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.

  1. Forced Request Handling - DeGate design doc
  2. ExchangeV3.sol#L420 - DeGate source code, withdrawFromMerkleTree function


The system uses the following set of permissioned addresses:

DefaultDepositContract Owner 0x2028…da52

This address is the owner of the following contracts: LoopringIOExchangeOwner, LoopringV3, DefaultDepositContract. Can add or remove block submitters. Can change the forced withdrawal fee up to 0.0000000000006048 ETH. Can change a way that balance is calculated per contract during the deposit, allowing the support of non-standard tokens.

BlockVerifier Owner 0xd8C6…2e0F

This address is the owner of the BlockVerifier contract.

Actors who can submit new blocks, updating the L2 state on L1.

Smart Contracts

The system consists of the following smart contracts:

ExchangeV3 0xe636…4eD5

Main ExchangeV3 contract.

LoopringIOExchangeOwner 0x6B93…aE83

Contract used by the Prover to submit exchange blocks with zkSNARK proofs that are later processed and verified by the BlockVerifier contract.

DefaultDepositContract 0x814d…d1dA

ERC 20 token basic deposit contract. Handles user deposits and withdrawals. This contract can store any token.

LoopringV3 0x4d70…c458

Contract for setting exchange fee parameters.

BlockVerifier 0x1c60…4C9e

zkSNARK Verifier based on ethsnarks library.

TVL is calculated based on these smart contracts and tokens:

Generic escrow 0x814d…d1dA