The challenge of having more transparent, lower fees in DeFi has always been a thorn for users. Also, it’s been hard to find reliable protocols to trust and depend on for seamless investments.
The need for a lasting solution to these challenges is a major ‘push’ behind the unceasing emergence of new projects and their native tokens. One of such projects that is a step ahead of the rest is the Loopring.
The Loopring exchange is a leading non-custodial platform for trading crypto. It is an Ethereum built protocol that offers lower gas fees, high throughput, and order book exchanges and is super secure. The project aims to streamline the building of DEX and ensures that assets are easily exchanged among many possible platforms.
This article reviews Loopring. It contains the information that will assist beginners or anyone curious to know about the protocol.
This Loopring review also explains the technology, the founders, and team members of the project. It also contains the analysis and prospects of the Loopring token.
Loopring is not a DEX itself. It is a DeFi protocol operating on the Ethereum blockchain. It facilitates DEXs using ring-sharing and order matching technologies. Loopring allows for a cross-exchange of assets among various exchanges.
In a nutshell, Loopring helps developers build a non-custodial order book with high throughput on Ethereum using ‘zero-knowledge proofs.’
Loopring doesn’t just stand like another DEX. It pools orders from all possible exchanges and fills them. This process is done by matching these orders with order books from all other exchanges participating in the Loopring platform.
The protocol ensures its exchanges can offer faster settlements for all trades. The trades are confirmed elsewhere using zkRollups and not on the ETH Blockchain like other DEXs.
Loopring makes use of multiple cryptos in addition to its native crypto LRC. It allows both centralized and decentralized exchanges to partake in the Loopring platform.
With this, all exchanges can access increased liquidity from as many blockchains as possible. It allows investors to get the best price without the need to compare with different exchanges.
The Loopring platform allows the integration of other smart contract platforms like NEO and Ethereum, which are already integrated. The project team planned to integrate more platforms after their development project on the ‘core of the Loopring DEX’.
The Loopring Foundation launched the LRC token during their ICO (initial coin offering) around August 2017. They further deployed the protocol itself on the Ethereum mainnet in 2019 December.
Loopring, with its unique features, wants to improve in the areas where the Centralized exchanges are seen to be lacking. Those areas include;
Security: The crypto assets of users are open to security risk as their private keys remain with the exchange authorities of the centralized exchange. This can result in well-documented and frequent attacks to hack the server storing millions of funds in USD. Looping aims to reduce this risk by returning the control over the assets to the users by depositing them in the centralized exchanges.
Transparency: Users of centralized exchanges are also facing transparency risks. Every exchange cannot always be honest concerning asset freezes, bankruptcy, and potential shutdown, etc.
Some exchanges are less transparent in lending user’s assets to unauthorized parties or even using them while in their custody. Loopring wants to settle this challenge by eliminating the custody. The users no longer need to move their tokens for custody to ‘exchange based’ wallets.
Loopring ensures that the user’s tokens remain in their blockchain address as the trading transactions are processed. It discourages conditions where users can’t get access (locked out) to their assets. Instead, it allows them to transfer tokens once their order submission is complete. It also takes care of automatically changing the number of orders during settlements.
Liquidity: The process of liquidating dividends in centralized exchanges makes it difficult for new exchanges to enter the market. Exchanges possessing the highest trading pair will record more traffic as users will always choose them. They are seen everywhere on a platform compared to competitors.
Also, exchanges with larger ‘order books’ are more favored for the trading pairs offered due to ‘bid-ask spreads. The Loopring aims at initiating competition to disrupt the preferential selection existing in the market. It wants to share division via offering an ‘open sourced’ solution to favor broader participation.
More so, Loopring with its software allows any decentralized exchange to be independent and join the decentralized exchange network for liquidity sharing with others.
The present CEO and founder of Loopring Foundation are Daniel Wang. He is an entrepreneur, and a software engineer who currently resides in Shanghai, China. He is a computer scientist with a bachelor’s degree from the Science & Technology University in China. Daniel also holds a master’s degree in computer science at Arizona State University.
He initially established a crypto service firm, Coin Port Technology Limited, around 2014. Daniel, during that period, was not happy with the challenges associated with the decentralized model and attempted to offer a solution. Though he concluded that these problems are unsolvable as they are inherent, he then insisted on developing the Looping network with his team.
Daniel has held several executives and managerial positions in reputable technological companies. He was the vice president and co-founder of Yunrang and the formal technical lead and software engineer at Google. Daniel Wang has also worked as the senior director of Engr recommendation, and search and ads system with the e-commerce giant in China. The members of his team are Johnston Chen and Jay Zhou.
Jay Zhou is the CMO of Loopring. He is among the key founders of SJ consulting and has worked with PayPal at the Risk Operation Unit. Jay Zhou was previously an employee of Ernst & Young. Johnston Chen is the COO of the team. He acquired a lot of experience during his engagement with reputable companies like 3NOD and Ernst & Young.
Steve Gou is another core member of the team, the Loopring CTO. He assists Brecht Devos, the Chief Architect of the project.
The Loopring team developed another project in addition to Loopring. This is known as the ‘Loopring Ecosystem Advancement Fund’ LEAF. The LEAF was developed to aid investments in blockchain technologies and give rewards to people who contributed to the project. Loopring has competitors such as the 0x and the Kyber Network, but the Loopring team proclaims that they are meant for different uses.
Kyber’s ‘market-making protocol gives liquidity at a set price with a specific timeframe. This is unlike Loopring, which relies on its ring order and matching tech in powering its 3rd party MAAS (matching-as-a-service) system.
Similarly, the 0x gets its liquidity sourced from existing exchanges on its network. But the Loopring does the same from any connected exchange in its network. However, the Loopring protocol has deployed the ZKR (zero-knowledge rollups).
It is a version of guaranteed ‘Rollups’ that are more personalized. The foundation claimed it could process more than 2,000 transactions in a second. The Loopring has its own currency LRC and supports several other cryptos.
Loopring allows traders to control their funds locked in the smart contract when ‘orders’ are placed. The main value proposition of Loopring is the ‘cutting-edge cryptography’ integrated into the platform.
The ZkRollups that Loopring uses are considered as a good advocate because they adopt the zero-knowledge proofs mechanism. This is a process where a computer program is allowed to claim data without sharing it. For instance, a ZK proof can allow the government agency to that one is above the age limit of accessing a website without disclosing his real date of birth.
With this same pattern, zkRollups collates transfers in hundreds and merges them into one transaction. This makes trade take place in a fast and cheap manner outside the Ethereum blockchain. These transactions then settle on the chain with the zero-knowledge proofs confirming the accuracy of the off-chain transactions.
In addition, the Loopring network uses an ‘automated execution system’ running on Ethereum and allows users to cross-exchange and trade their various assets. Firstly, Loopring pools orders are received on its network.
It then communicates these orders to zkRollups built on Loopring platform off-chain through order books from various exchanges. The looping protocol that is free then enables the decentralized apps to carry out the exchange.
Loopring exchange users, while initiating a trade on the Loopring exchange, transfer their funds first to a ‘smart contract’ managed by the Loopring network. The Loopring exchanges will then move all computation required to complete the transaction off the Ethereum blockchain. They are information like user histories and account balances.
Loopring then allows the transactions to settle back on the ‘Ethereum blockchain to finish the transaction between users. The trades execute in batches to increase speed up to 2,000 trades in a second and reduce cost.
Each batch is added with zero-knowledge proofs to the Ethereum blockchain, where anyone can reconstruct the trades that happened off-chain. This technique boosts the user’s confidence in the genuineness of the transaction and its security. The users are sure that unwanted parties cannot tamper with them.
Both centralized and decentralized exchanges can use the Loopring platform in creating liquidity through other exchanges. Investors can also access a wider price range in the crypto market while choosing the most suitable. However, Loopring is built on different smart contracts that do various tasks. For instance;
Registration Contracts: They are service managers to token deposits and exchanges that use the Loopring platform.
Mix-Matched Contracts: They are used to monitor prices, volumes and manage order status in the loop to maintain communication with other ‘smart contracts.’
Stats Contracts: This contract determines the prices between pairs of tokens and the volume of exchange.
Order Contracts: Their function is to ensure order cancellations and database maintenance.
Loopring combines the features of both centralized & decentralized crypto exchanges to develop a protocol that can eliminate inefficiencies while enjoying their unique benefits.
They manage orders in a centralized form and then settle the transaction on a blockchain. The Loopring platform offers their trade-in batches combining up to 16 orders instead of using 1:1 trading pairs. The protocol targets increasing order execution efficiency and enhance liquidity in DEXs.
LRC is the Loopring currency used for major operations on the network. The total cap volume of LRC supplied is 1.395 million tokens.
20% out of this is allotted to the Loopring DAO (Decentralized Autonomous Organization). This will be spent by the users of Loopring in the future. 70% are shared among users staking LRC, and the remaining 10% are burned.
Any user who wants to operate a DEX on Loopring must have at least 250,000 LRC locked up in his wallet. This allows the operator to initiate an exchange that will use its ‘on-chain data proof. An operator in the absence of this feature must stake (lock-up) one million LRC.
Secondly, LRC helps to ensure that the Loopring network is used properly. Exchange operators may have their deposited LRC confiscated by the Loopring platform if they do not know how to operate the exchange properly.
These confiscated LRCs will be shared with users who have decided to lock up their LRC. Apart from this, users can decide to stake their LRC and earn part of the trading fees charged by the protocol.
The Smart Contracts governs the issuance of the LRC coins in the Loopring protocol. The primary and basic method one can earn LRC is through ‘ring mining’.
To enhance liquidating in the Loopring platform, orders are not strictly matched in just two pairs. The protocol mix and match like 16 orders for various cryptos in a ring-like manner known as an ‘order ring.’
Loopring protocol nodes are given LRC tokens as a reward for creating an ordered ring from the combinations of the individual orders. And also for maintaining trade history, announcing orders to different relays on few occasions, and maintaining the order book for the public.
Today, the LRC price is $0.285 with $33,696,647 as of its 24-hour trading volume.
Image Credit: CoinMarketCap
The LRC token has a maximum supply of 1,374,513,896 LRC coins with a volume of 1,225,423,784 LRC coins circulating.
The Loopring token is listed and traded on many exchanges like Coinbase Pro, CoinTiger, Bilaxy, Binance, Huobi Global, OKEx, Bithumb, DragonEX, and FTX.
The exchange with the highest volume is Bithumb, with DragonEX following it. Buying an LRC coin using the Binance exchange will require you to get another crypto through a ‘fiat gateway.’
LRC as an ERC-20 token can be stored using any wallet that is ERC20 compatible, like MyCrypto, MyEtherWallet, or the official wallet. The LRC official wallet can be downloaded from the Loopring website. You can also buy the token with USDT and ETH.
For beginners, users who wish to work with Loopring are not among those who must pay some funds into the exchange. Loopring to this regard, functions similar to debit transaction accounts with the authorization for the transaction occurring before the transaction settlement.
Sequel to the above, Loopring trade occurs in the following manner;
Loopring aims at increasing liquidity by joining with other exchanges. It also has the ability to eliminate arbitrage in the crypto market through one of its features known as the ‘lowest-order price matching.
One of the major advantages the Loopring protocol has over others is its ability to accommodate other exchanges. It also uses ring orders and ring-matching. The order sharing mechanism in the platform is an advancement in traditional (standard) order matching. It gives room for flexibility in the trading process.
The Loopring network has some loopholes. There is a big delay in launching the Loopring decentralized exchange. This may have caused the network to have a retarded momentum. Presently, Loopring is found in beta only.
Loopring protocol has put on hold the aspect of the project enabling the smart contracts to use the Loopring network for filling orders.
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