Loopring's zkRollup L2 solution aims to offer the same security guarantees as Ethereum mainnet, with a big scalability boost: throughput increased by 1000x, and cost reduced to just 0.1% of L1.
Funds can be stolen if…
Users can be censored if…
MEV can be extracted if…
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.
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.
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.
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.
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.
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.
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.
If enough time 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.
The system uses the following set of permissioned addresses:
- Loopring MultiSig 0xDd2A…9c97 (MultiSig)This address is the owner of the following contracts: LoopringIOExchangeOwner, ExchangeV3 (proxy owner), BlockVerifier, AgentRegistry, LoopringV3. This allows it to grant access to submitting blocks and upgrade ExchangeV3 implementation potentially gaining access to all funds in DefaultDepositContract.
- MultiSig participants 0x3b1d…d5f1 (EOA), 0x4cbb…0185 (EOA), 0x55d7…8268 (EOA), 0xb89c…c33e (EOA), 0x51b8…6e0d (EOA), 0x1f28…b3d1 (EOA)These addresses are the participants of the 4/6 Loopring MultiSig.
- Block Submitters 0xdd4b…fdC0 (EOA), 0x7961…A6C7 (EOA), 0x2b26…ab46 (EOA), 0x4774…A3aE (EOA), 0xE6b0…f095 (EOA), 0x53dD…E234 (EOA), 0x212e…0A1A (EOA), 0x238b…3843 (EOA), 0x3243…68f2 (EOA), 0xbfCc…7C42 (EOA), 0xA921…48Fc (EOA), 0xeadb…c834 (EOA), 0xB1a6…36AB (EOA), 0xeDEE…D9e5 (EOA)Actors who can submit new blocks, updating the L2 state on L1.
The system consists of the following smart contracts:
- Main ExchangeV3 contract.
- LoopringIOExchangeOwner 0x153C…8512Contract used by the Prover to submit exchange blocks with zkSNARK proofs that are later processed and verified by the BlockVerifier contract.
- DefaultDepositContract 0x674b…Bd3fERC 20 token basic deposit contract. Handles user deposits and withdrawals. This contract can store any token
- LoopringV3 0xe56D…0C71Contract managinging LRC staking for exchanges (One Loopring contract can manage many exchanges).
- BlockVerifier 0x6150…01efzkSNARK Verifier based on ethsnarks library.
- AgentRegistry 0x39B9…ea14Agent rergistery that is used by all other Loopring contracts. Currently used are FastWithdrawalAgent, ForcedWithdrawalAgent, DestroyableWalletAgent and a number of LoopringAmmPool contracts.
The current deployment carries some associated risks:
- Funds can be stolen if a contract receives a malicious code upgrade. There is no delay on code upgrades (CRITICAL).