What are Ring Miners?
Let's find out Ring Miners meaning, definition in crypto, what are Ring Miners, and all other detailed facts.
Ring Miners work within Ethereum’s Loopring program where they are in charge of ensuring that each exchange is successfully completed.
Before we dive into the term, let’s define what Loopring entails. In essence, Loopring is an exchange and payment layer based on a consensus mechanism that runs on Ethereum. However, Loopring does not involve traditional order books or the automated market maker (AMM) mechanisms that generally control liquidity pools. Furthermore, Loopring is different from other decentralized exchanges (DEXs) because it offers ring orders.
In order for Loopring to function properly, participants that ensure orders are completed successfully are essential.
This is where ring miners come in. They fill orders before they’re canceled or completed. Loopring recruits ring miners from the network participant pool. Generally, they receive compensation (service fee) in Loopring’s native tokens (LRC).
Why do ring miners do this? Ring miners carry out this role and fill orders to receive specific rewards. They can choose between two different reward types:
- Service fee in the form of Loopring (LRC) native tokens. The maximum number of these tokens that a ring miner can receive depends on the user who makes an order and is then able to specify the exact number of native tokens to be received;
- Split margins. Similarly, the user who has made an order can specify how much of the margin can be claimed for it.
These rewards act as an incentive for the service the ring miners provide. This way ring miners themselves search for the most advantageous rate deals to get the best rewards. Moreover, this incentive system makes sure that its users also receive the best value for their exchanged digital assets. Therefore, it’s quite favorable for Loopring.
When a ring miner completes a ring order, smart contracts execute it. In cases where a smart contract is able to fill the order on both sides of the transaction, it will send a direct transfer straight to the user’s wallet.
Ring-matching can be implemented with the use of ring orders. Ring-matching links multiple orders together thus securing multiple trades through multiple users.
Have a look at an example to see ring miners in action. Let’s say that there are three users who want to make an order on Loopring: Lucas, Simone, and Kit. Lucas wants to trade 4 HNT for 12 ADA, Simone wants 30 VET for 3 OMG while Kit wants a deal of 30 ADA for 60 VET. This is where ring miners come into play. They use a ring-matching system to merge all of these orders into one order ring. In this situation, the only order that is actually filled belongs to Lucas. What remains is handled by Loopring’s order sharing. This means that the remainings are filtered into a different order ring until every incomplete order is joined with the complete order.
Once the program’s smart contracts confirm the ring order, every participant of said order will get whatever virtual asset they initially came for.