Fueled by a native utility token LRC, Loopring represents a decentralized exchange (DEX) protocol providing its users with a tool to exchange cryptocurrencies across different platforms in a secure manner. The project was launched by Daniel Wang on August 1st, 2017, in Shanghai and since it is open-source, the protocol is available for developers across the world totally for free. Although Loopring may look like a decentralized exchange at first glance, in fact, it is different as it serves as a connection between multiple exchange platforms, i.e. it facilitates the exchange process between other platforms including decentralized ones.
Loopring is blockchain agnostic, which means that it can be integrated with any platform running on smart contracts. So far, it is compatible with Ethereum, NEO and Qtum. Among Loopring’s closest competitors, 0x, Bancor, Waves, EtherDelta, Kyber Network, and Blocknet can be named. However, instead of competing, Loopring seeks to set up partnerships so as to provide all the exchanges with liquidity which all of them need most.
Compared to centralized exchanges, decentralized ones have a very small share of the market. However, more and more users look towards such types of platforms as they give their users a possibility to fully control their own funds and are less prone to hacks and frauds. This gives Loopring a good chance to stand out.
The Loopring technology
Unlike centralized exchanges, Loopring doesn’t require its users to deposit any funds to the platform. Instead, it gets integrated with wallet addresses directly via private keys. There’s been a lot of confusion and discussion in the crypto community regarding this aspect, but all their fears are groundless.
Binding your wallet to Loopring via private keys doesn’t mean uploading your funds to the centralized system. Loopring simply provides you with an interface to access your funds in the same way as mobile apps grant you access to your bank account. The funds don’t leave your wallet when you view them through Loopring’s interface.
When a user launches an exchange transaction through Loopring’s UI, a smart contract is created on the mainnet and on the off-chain relay nodes. The smart contract serves to ensure the proper exchange process while the off-chain nodes add the information about the transaction into the public order book and broadcast it to the ring miners.
The biggest advantage that users get when utilizing such an approach is full control over their funds and orders. Traders get a chance to change the sum, trim their orders, cancel them or even totally move their funds away from the wallet before the transaction is executed. Meanwhile, the funds remain on their own wallets and cannot be frozen by any third party.
In April 2019, Loopring announced implementing the Zero-Knowledge Proofs technology making it possible to process up to 450 transactions per second. This should help to resolve the ever-lasting problem of scalability since Loopring is still based on Ethereum, and eventually make DEX’s more competitive compared to centralized exchanges.
Loopring LRC is a mineable token. It can be obtained on different devices including GPU, CPU and even high-end Linux systems. The job of miners is to match orders from a huge database represented within the system and to ensure that they are fulfilled.
Ring miners get rewarded for their efforts with LRC tokens which serve as an incentive to provide the best exchange rate for traders. In theory, this should also help to reduce arbitrage opportunities and thus make the trading process fairer as the protocol is designed to find the best rate for switching cryptocurrencies.
Anyone can set up a Ring Node using the open code from GitHub, however, the process is rather complicated and requires some technical skills. Also, as the network constantly grows, an LRC miner would need a lot of SSD space and CPU cores to install and run a node.
Loopring is fueled by a native utility token named LRC. Its holders earn a percentage of all the fees from exchanges built upon the platform. 70% of all earned fees go as a reward to LRC stakers, 20% is used to fund the Loopring DAO (Decentralized Autonomous Organization) and the rest was burned after the ICO. Neo and Qtum-based alternatives come under tickers LRN and LRQ correspondingly.
The initial coin offering was launched on August 1st, 2017, and lasted for 16 days. The team has managed to raise 45 million USD for the future development of the project.
In order to ensure end-users’ security and prevent malicious DEX’s from harmful actions, Loopring-based exchanges are required to stake LRC to build their reputation. In case any malicious actions are performed, exchange owners lose some part of their stake. Also, staking LRC allows exchanges to lower protocol fees and thus attract more users.
In order to be listed on Bittrex, LRC had to pass the Howey Test and prove that this is not a security token. In addition to that, LRC can be traded on OKEx, Binance, Bithumb, and many other reputable platforms. Since this is an ERC-20 token, it can be stored on all Ethereum-compatible wallets, such as MyEtherWallet, Metamask, Coinomi and many more.
The Loopring team and partners
The founder and CEO of Loopring is Daniel Wang with a strong software engineering background. Prior to launching this project, he has co-founded a few other IT projects such as Bitcoin payment processing service Coin Port and Beijing-based Yunrang Information Technology.
His colleague, Co-Founder and CMO Jay Zhou worked as a Brand Risk Manager at Paypal in 2012-2014. He acted as a blockchain Advisor for the project ZhongAn Insurance and was also employed at Ernst & Young at the beginning of his career.
As for the partners’ network, Loopring has managed to set up a collaboration with Berkeley University from California, the Jibrel Network, NEO waller O3, and a few others.