Loopring is a decentralized, Ethereum-based exchange protocol that lets users create assets in different exchanges. Unlike other decentralized finance networks, it is not a platform but a software that facilitates exchanges.
Loopring was founded by Daniel Wang, a China-based software engineer who worked in Google and JD.com. It launched an initial coin offering in 2017, raising 120,000 Ethers worth $45 million at the time. However, China tightened their regulation protocols regarding cryptocurrencie. As a result the Loopring team returned 80% of its assets to public sale funds.
Loopring Objective
Loopring aims to address current cryptocurrency exchange platform issues, like high transaction fees, high energy consumption, low scalability, and its centralized nature. It uses a new type of cryptography called zero-knowledge rollups or zk-Rollups.
Loopring gathers hundreds o transactions and combines them into one. It matches identical orders and collates these orders in an order ring. Ring miners then fulfill these orders before they cancel or expire. Then zk-Rollups confirm these transactions. Afterwards, smart contracts check the orders to make sure the network can fulfill them. If the order ring is ready to go, then the smart contracts send crypto coins and other assets to the recipient.
Though Loopring is Ethereum-based, it does not completely rely on Ethereum to operate. Many of the computations, transactions, and verifications of data are done off the blockchain, this reduces energy consumption.
Loopring claims to be able to settle 2,025 trades per second with the same level of security as the Ethereum blockchain. This high scalability and security is due to the zk-Rollup structure built in the protocol. Because transactions funnel into order rings and confirme without revealing all the data, users can use the protocol without exposing all of their data in public.
The LRC Token
Its low transaction fees are also a big draw to users can opt to use Loopring’s native token, the Loopring-Coin (LRC) or other cryptocurrencies to pay for the transaction fees. Miners also earn LRC coins. Because Loopring can also operate outside of the Ethereum blockchain, it does not consume as much energy as Ethereum.
Loopring’s value skyrocketed when rumors that it will team up with Game Stop showed up. Game Stop gained popularity in 2020, when many internet users decided to invest in its stocks and boost the value of the company exponentially. Game Stop allegedly plans to develop its own NFTs and other crypto assets by collaborating with Loopring. However, the hype might not continue once Game Stop officially announces its plans.
Overall, Loopring tries to address and solve many crypto exchange platforms. It also has plans to develop another layer to its structure, making it even more scalable, safe, and secure.
