What Are Ring Miners?
Loopring is an Ethereum-based exchange and payment protocol that implements a novel consensus mechanism.
To avoid traditional order books and the AMM mechanisms that govern liquidity pools, Loopring employs network participants known as ring miners.
Enabling Efficient Order Execution
Ring miners facilitate orders by filling them before they can be completed or canceled.
Those who work as ring miners are paid a service fee through LRC tokens, Loopring protocol’s native token, or a slip-margin from an order amount.
Ring miners are critical components of the Loopring network.
Their activities revolve around executing orders with the help of order rings to gain a service fee.
Two types of rewards ring miners receive:
Ring Miners on Loopring
The first is the fees in the form of the Loopring (LRC) token generated by the platform.
In this case, the user who creates an order specifies the maximum number of LRC tokens to be rewarded to the ring miner as a service fee.
Ring miners are also awarded through split margins, which are deducted from the total amount of a specific order.
While placing an order, the user can also specify the portion of the margin that can be claimed for a specific order.
Choosing between fees and margins is up to the ring miners.
Loopring Compensation System
The compensation system in Loopring is intended to help ring miners receive adequate financial rewards for the services they deliver during the order ring.
It is based on an incentive system so that miners seek out the best exchange rate deals to obtain better split margins or service fees for themselves.
Finding the perfect trading deals also ensures that users receive the most value for their traded cryptocurrencies, making it a promising win-win situation for both parties involved.
Enabling Efficient Ring Matching
The Loopring smart contract defines how to fill an ordered ring when a ring miner completes it.
If the smart contract can execute the order on either side of the trade, it will perform a direct transfer from the smart contract to the user’s wallet.
Order rings also make ring matching possible.
Ring matching completes orders by linking them and securing multiple trades through multiple users.
Order rings distinguish Loopring from other decentralized exchanges (DEXs) such as Waves or Bancor.