I’ve been discussing with Matt from the Loopring team on the launch of their Layer 2 ZK-Rollup exchange : https://loopring.io/#/. I must tell you that this is, in my opinion, a game changer for DeFi, so I immediatly thought about an Index Coop / Loopring collaboration !
The idea of DeFi on L2 is no doubt amazing. Here are some concerns/comments:
I like L2 and also the idea of taking advantage of their liquidity mining rewards.
Education - I played around with Loopring new wallet about a week ago and it was relatively confusing. I think that to most people, the concept of porting assets to L2 is not straightforward. If we do L2 liquidity mining, we have to put a lot of effort into education.
What are the mechanics? LPs have to port ETH and DPI to Loopring L2 and stake on their AMM? With rewards in say LRC and INDEX also sitting on L2? Can we build UI for that on Index Coop?
I didn’t try their wallet yet since it’s only available on Android phones. I think that there are still few glitches, which explains why they didn’t launch the LM program yet. What I did try was to trade and pool my funds on their AMM directly on their exchange (via web browser), and it was amazing.
The main differences with L1 AMM (via the exchange website) are :
You need to deposit funds on L2 first (like a CEX)
You don’t need to use your wallet anymore once you’re on L2
You need to withdraw funds from L2 if you want to use them somewhere else on L1 (like a CEX, but without any fee)
If we split 50/50, and keep the same incentives (in $$) as Loopring does alone, it could be something like 200K LRC and 7500 INDEX per cycle (14 days). So it’s quite small compared to what we’re doing currently on Uniswap, which might be an issue if both pools are incentivized at the same time. Few LPs might move to Loopring.
Thanks for bringing this up Etienne. And thanks for the comments from others. It is something on our minds as well. I think DPI would do very well on Loopring’s L2. Let me address some of the questions that came up, and a few thoughts of my own.
(This is Matthew from Loopring btw :).
The topic of education, or if there is a learning curve to get aboard. It’s a good question, and one we’ve worked on all year as our rollup’s been live. I’d argue this has been completely solved by Loopring’s L2 in our recent protocol v3.6 upgrade. Actually, especially in terms of being an LP, I believe it is far easier and cheaper than becoming one (or ceasing to be one) on L1.
For a brand new user who has never heard of L2, it is actually completely abstracted now. Just a single deposit, which simultaneously ‘activates’ your L2 account. 64k gas.
Visit exchange [dot] loopring [dot] io, deposit ETH, you are aboard.
Please check out this 25 second clip to see that live: https://twitter.com/finestonematt/status/1337244285138300929?s=20.
Getting further assets (DPI) aboard is indeed just a matter of another deposit transaction. [Or swap your ETH for DPI on L2 (gas-free, instant), and don’t even bother to do another deposit from L1.]
Then, becoming an LP is just a single gas-less (free), instant transaction.
Please see this 50 second clip: https://youtu.be/u_rzR0APENQ.
First 20 seconds show a swap (also gas-free, instant), then 20 second mark shows me adding liquidity. [Removing liquidity is also a single, free, instant tx].
Even better: ‘staking’ your LP shares is unnecessary. If we were to institute a DPI-ETH liquidity mining campaign, any DPI-ETH LPs would automatically be mining - no extra staking step. This is because the mechanics work just by the relayer taking snapshots of the AMM pool (and LP shares) at certain points. No need to claim either. Everything handled by the relayer on L2. More details in the liquidity mining post Etienne shared.
Besides all the above, which I hope shows that it has become trivial & cheap to get on L2 - and then an actual improvement to do everything else once on L2 (swap, add/remove liquidity, ‘stake & claim’) - here are the real reasons why I think DPI-ETH is worth Index Coop incentivizing on Loopring’s L2 AMM.
It makes the Index Coop more inclusive. LP’ing, staking, claiming, is often only attractive to whales, or certainly precludes the littlest of us (DeFi participants). Paying $5 to add liquidity, $5 to stake, $5 to claim, $5 to unstake means we (the industry) are not catering to the people who may want/need DeFi the most. [I am making up gas costs here, but as an INDEX miner myself, I do believe that is not a stretch given recent gwei prices]. As you see from the above, besides paying 40k-60k gas to deposit an asset once, you will never preclude gas-conscience (less wealthy) folks from taking any action at all. Adding $1 of DPI, $1 of ETH becomes perfectly reasonable. As does buying $1 of DPI for a newcomer. This is a very nice message for any project, but Index Coop especially.
Loopring is more than just a protocol, and more than just the exchange.loopring.io web app. The Loopring Mobile Wallet has become the core of our product strategy. It is our mobile smart contract wallet with our zkRollup baked in (for gas-free & instant transfers, AMM swaps, etc). It is Android only for now, and downloadable at loopring.io. [iOS hopefully in early 2021]. Having DPI and INDEX feature prominently in a mobile app that several thousand users are checking daily, is a good look, imo. It just puts the project much more top of mind than being on any other AMM.
[verto, I’d invite you to check it out again now please, to see if some of the confusing steps may have been solved. It is only a few weeks old, but going through rapid improvements every day.]
The question of adoption, traction is a good one. But please allow me to say: Loopring is the leading L2, and has nearly 10,000 users aboard. (duneanalytics com / loopring). We were the first rollup on Ethereum, have been running for exactly one year on mainnet, but I’d venture to say, we have really only just got started. The launch of protocol v3.6, the AMM, the new exchange, and especially the wallet - all happened in the past two weeks! I think our current position is very strong, but I expect we hit an inflection point very soon.
Shanghai-based. Most of our team, and many of our users, are in the Chinese market. I believe spreading the Index Coop word there is attractive to many of you/us.
Although I say that L2 has become so easy to get on/off, there is still a sense of it being a different environment. Rightfully so. We fully expect Loopringers to ‘live their DeFi life’ on our L2. There will be fewer and fewer reasons to get off. Users will live on L2 in the future. Having DPI - a broad index - as a super liquid instrument on Loopring’s L2 effectively means it become thee asset to consider for a user’s DeFi exposure. i.e., it is unlikely that all of DPI’s constituent assets will become as liquid on L2 as they are on L1. But if DPI is deeply liquid, it becomes the product of choice for DeFi exposure on L2.
Thanks all. I hope this is somewhat helpful.
As the LM post says, we are waiting until end of December to launch liquidity mining. I believe Index Coop should consider allowing the current extended incentive campaign on Uni to expire (Jan 7th), and kick off an incentivized pool on Loopring’s L2. It is time to let the owl fly.
PS: It only allowed me 2 links, so i turned others into [dot] format.
I am both a DPI/INDEX holder as well as a loopring wallet user - so I really like this idea, and would love to see collaboration that benefits both projects.
Matt mentioned their Loopring mobile wallet as being core of their product strategy - if we want this to be part of the narrative then I would recommend that we wait until the wallet launches on the app store/play store before proceeding. We shouldn’t be encouraging our users to install APKs on their phones.
@verto0912 and @ncitron and I have been pushing this forward over the last couple of weeks and we have secured funding from the Growth working croup to run a trail with 2000 INDEX distributed to LP’s on loopring in the next 14 day phase.
There will also be some LRC incentives for traders on loopring (I’m not sure of the exact details, I’m expecting it to be fully explained in a forth coming looping blog Loopring Protocol – Medium )
IF (big if) our understanding of the market is correct, we’ll expect that the market will settle with ~$1 M liquidity.
I’ve proposed some KPI’s for the experiment (% non incentivised tokens on L2, #number of L2 holders, etc) and once agreed, these will be shared.
The mobile app is still not on google play (no apple app yet), so we will be focusing on the standard web implementation.
This is a great news. I really like the idea of making DPI accessible to anyone at really low cost. This way, small fishes can finally access all their prefered DeFi tokens at really low cost thanks to Loopring tech!
Also seems like the loopring wallet is on google play now, but not ios yet.
Anyway I also had a go with the web exchange and that seemed pretty straightforward to use as well. Somemight prefer it as it doesn’t require creating a new wallet.
After we agreed the funding I had a few ideas for some KPI’s for the programme as we can judge whether it’s a success or not [Note, these haven’t been discussed with others, but I think they are realistic].