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Glossary

Ring Miners

November 21, 2023 - Around 4 mins mins to read

Ring Miners play a crucial role in the Loopring protocol, an Ethereum-based decentralized exchange and payment system. But what exactly are ring miners and what do they do? Let’s dive into the details.

The Loopring protocol operates differently from traditional order books and automated market maker (AMM) mechanisms found in most decentralized exchanges. Instead, it utilizes a unique consensus mechanism that involves ring miners. The primary function of ring miners is to facilitate order execution by filling orders before they can be completed or canceled.

In return for their services, ring miners are rewarded with LRC tokens, the native cryptocurrency of the Loopring protocol. Additionally, they may receive a slip-margin from the order amount as a service fee. This incentivizes ring miners to actively participate in the protocol and provide liquidity to traders.

Ring miners carry out their activities by executing orders using order rings, which allow for multiple trades to be linked together. By linking these orders, ring miners can optimize liquidity and obtain better split margins or service fees. It’s important to note that there are two types of rewards that ring miners can receive.

The first type of reward is the Loopring (LRC) token. When creating an order, users specify the maximum number of LRC tokens they are willing to reward to the ring miner as a service fee. This encourages ring miners to seek out orders with higher potential rewards and execute them efficiently.

Another type of reward for ring miners comes in the form of split margins. Split margins are deducted from the total amount of a specific order, and the user can specify the portion of the margin that can be claimed by the ring miner. This flexible compensation system allows ring miners to choose between fees and margins, depending on their preference and market conditions.

The compensation system within the Loopring protocol ensures that ring miners receive adequate financial rewards for their services. It operates on an incentive mechanism that motivates miners to find the best exchange rate deals and optimize order execution. By doing so, ring miners contribute to maximizing the value users receive when trading their cryptocurrencies.

The Loopring smart contract plays a vital role in the execution of order rings. When a ring miner completes an order ring, the smart contract defines how to fill it. If the smart contract is able to execute the order on either side of the trade, it will perform a direct transfer from the smart contract to the user’s wallet. This process ensures secure and efficient order matching within the Loopring protocol.

Order rings enable ring matching, a unique feature that distinguishes Loopring from other decentralized exchanges (DEXs). For example, let’s consider an imaginary order on the Loopring network. Karen wants to exchange 2 HNT for 10 ADA, Mark wants to exchange 21 VET for 1.5 OMG, and Dane wants to exchange 20 ADA for 40 VET. Ring miners would use ring matching to combine these dislocated orders into a single order ring. Karen would trade her HNT with Mark, Mark would trade his VET with Dane, and Dane would trade his ADA with Karen. This ensures that everyone receives their desired coins after the ring order is approved by Loopring’s smart contracts.

In case there are any leftover amounts from the orders, Loopring’s order sharing feature comes into play. These leftover amounts are filtered into another order ring until each incomplete order is added up to a complete order. This mechanism ensures efficient utilization of liquidity and minimizes potential loss for users.

In conclusion, ring miners are essential participants in the Loopring protocol, contributing to the efficient execution of orders and providing liquidity to traders. Their role is to fill orders before they can be completed or canceled, and they are rewarded with LRC tokens and slip-margin service fees. By utilizing order rings and ring matching, Loopring maximizes liquidity and offers a unique decentralized trading experience.

Author

Coincu

Glossary

Ring Miners

Ring Miners play a crucial role in the Loopring protocol, an Ethereum-based decentralized exchange and payment system. But what exactly are ring miners and what do they do? Let’s dive into the details.

The Loopring protocol operates differently from traditional order books and automated market maker (AMM) mechanisms found in most decentralized exchanges. Instead, it utilizes a unique consensus mechanism that involves ring miners. The primary function of ring miners is to facilitate order execution by filling orders before they can be completed or canceled.

In return for their services, ring miners are rewarded with LRC tokens, the native cryptocurrency of the Loopring protocol. Additionally, they may receive a slip-margin from the order amount as a service fee. This incentivizes ring miners to actively participate in the protocol and provide liquidity to traders.

Ring miners carry out their activities by executing orders using order rings, which allow for multiple trades to be linked together. By linking these orders, ring miners can optimize liquidity and obtain better split margins or service fees. It’s important to note that there are two types of rewards that ring miners can receive.

The first type of reward is the Loopring (LRC) token. When creating an order, users specify the maximum number of LRC tokens they are willing to reward to the ring miner as a service fee. This encourages ring miners to seek out orders with higher potential rewards and execute them efficiently.

Another type of reward for ring miners comes in the form of split margins. Split margins are deducted from the total amount of a specific order, and the user can specify the portion of the margin that can be claimed by the ring miner. This flexible compensation system allows ring miners to choose between fees and margins, depending on their preference and market conditions.

The compensation system within the Loopring protocol ensures that ring miners receive adequate financial rewards for their services. It operates on an incentive mechanism that motivates miners to find the best exchange rate deals and optimize order execution. By doing so, ring miners contribute to maximizing the value users receive when trading their cryptocurrencies.

The Loopring smart contract plays a vital role in the execution of order rings. When a ring miner completes an order ring, the smart contract defines how to fill it. If the smart contract is able to execute the order on either side of the trade, it will perform a direct transfer from the smart contract to the user’s wallet. This process ensures secure and efficient order matching within the Loopring protocol.

Order rings enable ring matching, a unique feature that distinguishes Loopring from other decentralized exchanges (DEXs). For example, let’s consider an imaginary order on the Loopring network. Karen wants to exchange 2 HNT for 10 ADA, Mark wants to exchange 21 VET for 1.5 OMG, and Dane wants to exchange 20 ADA for 40 VET. Ring miners would use ring matching to combine these dislocated orders into a single order ring. Karen would trade her HNT with Mark, Mark would trade his VET with Dane, and Dane would trade his ADA with Karen. This ensures that everyone receives their desired coins after the ring order is approved by Loopring’s smart contracts.

In case there are any leftover amounts from the orders, Loopring’s order sharing feature comes into play. These leftover amounts are filtered into another order ring until each incomplete order is added up to a complete order. This mechanism ensures efficient utilization of liquidity and minimizes potential loss for users.

In conclusion, ring miners are essential participants in the Loopring protocol, contributing to the efficient execution of orders and providing liquidity to traders. Their role is to fill orders before they can be completed or canceled, and they are rewarded with LRC tokens and slip-margin service fees. By utilizing order rings and ring matching, Loopring maximizes liquidity and offers a unique decentralized trading experience.

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