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Loopring provides participants, traders, and institutions with a decentralized and automated trade execution system that implements trades across various crypto exchanges around the world. It does all this intelligently while at the same time shielding these players from counterparty risk and also reducing trading costs.
Loopring is a Layer 2 solution that is created on top of Ethereum. It uses open-source smart contracts from Ethereum to create its own projects. Essentially, the protocol intermediates trust between exchanges and blockchains, allowing trading members to retain custody of their funds.
History of LRC
Loopring was coined and founded by Daniel Wang, a software engineer who has worked with major internet companies like Google. Loopring was created to tackle some of the challenges faced by the two major types of exchanges in the modern crypto world; centralized and decentralized exchanges.
- Centralized exchanges — conduct trades on investors’ behalf and the exchange will hold custody of the funds. The main challenge with this type of setting is that investors will not hold direct ownership of the tokens in the exchange. Most of the funds risk being lost if the exchange is subjected to regulations or is hacked.
- Decentralized exchanges — created to allow investors to enjoy full ownership of their digital assets. All that is needed is for the user to connect their wallets and their assets still remain in their wallets instead of on a single exchange. Even though DEXs seem to be safer, their slow speeds and high transaction fees are some of the disadvantages.
How Loopring works
Loopring creates a platform where it does away with the negatives of both DEXs and centralized exchanges. Investors store their investments in their own wallets while at the same time executing trades in a centralized manner.
Users of Loopring earn rewards by providing liquidity on the exchange as up to 80% of transaction fees charged on the platform go to liquidity providers. Users who lock coins in the liquidity pool will earn a portion of the transaction fees.
Loopring is a zkRollup. However, zkRollups are just one of the approaches meant to make Ethereum more suitable for DeFi. Zero-knowledge proofs (ZKRollups) is a technique that lets computer programs claim a certain set of data without actually sharing it.
A perfect example is when a government agency verifies that you are actually of the required age to access a certain platform without necessarily revealing your actual date of birth. Using the same approach, zkRollups will bundle tons of transfers and make them one transaction, an approach that allows cheap and fast trades to occur outside Ethereum. All these transactions are settled on this blockchain, where zkRollups are used to confirm that these off-chain transactions are accurate.
$LRC is Loopring’s native token. While the protocol and products have changed over time, $LRC’s usage has been maintained. $LRC is used to incentivize behavior that essentially benefits the Loopring ecosystem. The token has a capped supply of 1,374,513,896 tokens. As of this writing, the token is trading at $2.11 and has a market cap of over $2.6 billion.
Loopring L2 is a decentralized exchange built on the Loopring zkRollup. It doubles as an AMM-based and order-book-based decentralized exchange with low-cost trading costs and high performance, similar to what you can get in centralized exchanges. Users can trade cheaply and fast without worrying about Ethereum’s high gas fees and congestion while at the same time maintaining custody of their assets. Loopring is not just a decentralized exchange but also a payment app. You can send ERC20 tokens and $ETH to any Ethereum address cheaply, instantly, and securely on this Layer 2 protocol.
Loopring announced its partnership with Bitfwd in 2019, a Sydney-based blockchain company to host workshops, help build decentralized applications and build open-source tools. The collaboration also resulted in a joint research initiative tasked with building free and open-source products that support the blockchain community.
Bitfwd is a community of blockchain developers, cypherpunks, crypto enthusiasts, and entrepreneurs that organize an array of blockchain events such as workshops, blockhathons, developer sessions, and content sessions. Its communities are spread across different countries such as New Zealand, China, Singapore, and Australia.
Loopring partnered with TokenMarket in Feb 2019 in a bid to accelerate and advance security and transparency across its security exchanges. The two agreed to work together to build Loopring 3.0 within the upcoming decentralized exchanges from TokenMarket located in the Middle East and Europe. The new protocol seeks to improve the speed, increase throughput and reduce fees on DEXs on TokenMarket.
TokenMarket is an international investment platform that provides investors and companies with a blockchain-based platform that allows them to raise capital pretty fast. Since its launch, the company has worked with more than 30 blockchain organizations and helped them issue tokens to over 250,000 investors, and raised over $270 million.
Consensus FinTech Group
Consensus FinTech Group is a cryptocurrency management firm that focuses exclusively on tokens, ventures, projects related to digital currency, cryptoassets, and blockchain tech. The company also provides professional advisory services and is backed by Starwin Capital. Consensus FinTech Group is an early adopter of various technologies and protocols such as Loopring, EOS, Acute, Angel Coin, and Open Garden, to mention a few.
Obsidian Capital is a company that focuses exclusively on investing in crypto and blockchain-related projects.
Amplifi Capital is a private venture capital firm as well as a crypto-combiner that focuses on disruptive technologies. The firm provides consulting and multi-stage investment for top crypto projects in the world.
Other notable investors include Kosmos Capital, Zhi Zi Fund, Matrix CIB, and UniValue Associates.
Loopring has shown its determination to power a highly scalable exchange and allows batch-processing of transactions off-chain through zkRollup technology before uploading them back to the main chain. Even though it is not the first protocol to do this, we can only wait and see what new products the protocol will roll out and how it improves its delivery.