What Is Loopring?
Loopring (LRC) is a protocol developed to facilitate the creation of decentralized exchanges (DEX) based on a sidechain using scalability and privacy technology known as zkRollups or Zero-Knowledge Rollups.
The main idea of this platform is to provide developers with several tools that will not only allow them to create DEX but will also remove all the burden of transactions from the Ethereum chain (off-chain) and therefore provide greater scalability and much cheaper commissions.
Using zkRollups technology, the network makes cheaper commissions than Ethereum and checks thousands of transactions on Ethereum using smart contracts. So Loopring combines the best of the centralized exchange market (CEX) with its low commissions and the transparency of an open and verifiable protocol.
Loopring Protocol
The Loopring protocol is a schema-independent, second-level scaling protocol specifically designed to facilitate decentralized exchanges (DEX) and payment systems. It currently works with Ethereum, NEO, and Qtum blockchains. With this in mind, it is one of the vital infrastructures supporting the DeFi network.
From a technical point of view, it is an open-source automatic token exchange protocol. It also runs on a secure, decentralized, high-performance protocol system. Loopring’s design guarantees protection against frontal attacks, Sybil attacks, distributed attacks, and other forms of fraud.
What Is zkRollups?
It is a tool for scaling Ethereum. This solution can scale because it moves computation and transaction creation’s hard work outside the core Ethereum network. However, security is preserved by the cryptographic proof-of-concept, which validates thousands of transactions through a smart contract in Ethereum. In other words, the Ethereum blockchain creates proof-of-concept transactions on the Loopring off-chain network. As a result, users benefit from an effortless, fast and secure solution.
With these capabilities, Loopring can conduct 100-200 times more transactions than Ethereum at a lower cost and with higher security than other solutions. The project’s official page claims a throughput of 2,025 transactions per second.
Since the data is transmitted in a blockchain, it can be said that the security is similar to Ethereum’s. Orders in the order book are executed using an “order ring,” where triangulation can occur between orders and different assets to close a set of transactions.
The miners of these transactions are ring miners and receive a percentage of the transaction, almost like market makers. As a result, network participants seek to provide liquidity to the solution. It is because of the ring miners and the ring order system that the cryptocurrency is called Loopring.
Who Сreated Loopring?
The Loopring Foundation’s founder and the project’s creator is Daniel Wang, a software engineer from China. He holds a degree in computer science from the University of Science and Technology. Wang worked at JD.com, Boston Scientific, and founded Yunrang Information and Coinport Technology Ltd.
How Does Loopring Work?
The protocol relies on miners to perform necessary tasks. Ring miners and ring orders assist in executing orders in exchange for a reward. Traders also reimburse miners in the form of a feed or order margin:
- Order Reward - Traders can set a maximum number of LRC tokens to be transferred to the miner;
- Margin Split - Traders can determine the required margin for a specific order, leaving the Miner to choose the commission and margin.
What Is the LRC Token?
Loopring coin (LRC) is a native platform token and was launched as part of an ICO held in August 2017. During that ICO, the project managed to raise $45 million in Ethereum (ETH), the initial capital to create the protocol and all of its features.
Loopring (LRC) is an ERC20 token based on the Ethereum network. And its primary function is to serve as a means of paying commissions on the network, serving as an economic incentive for operators of sidechain nodes.
Other uses for LRC tokens include their use in staking pools. Staking participants must enter their tokens into the pools, which receive 70% of the protocol’s commission distribution. To qualify for this reward system, users must bet for at least 90 days to receive their proportional share of the commission.
The technology of the Loopring protocol involves creating a new LRx token for each integrated chain, where “x” stands for blockchain.
Loopring relies on a proof-of-work (PoW) algorithm to verify and generate new blocks on the network. Miners are rewarded with Loopring tokens.
The LRC burn rate increases token scarcity by burning off some of the fees coming from wallets. In addition, it also burns off some of the miners’ fees. As a result, bidders betting on Loopring cryptocurrency (LRC) are entitled to lower transaction fees on the Loopring exchange.
How to Stake LRC Tokens?
There are three types of LRC staking:
- Pool Betting Protocol (global): Everyone can bet on LRCs to earn 70% of the Loopring protocol fees. There is no minimum amount, but tokens must be locked for at least 90 days.
- Owner betting on the exchange: The owner on the exchange must bet on LRC to ensure the security and reputation of DEX. The minimum amount is 250,000 LRC but can be as high as 1 million LRC, depending on the type of exchange. In addition, the exchange’s owner must keep the LRC under lock and key for the duration of the protocol on the exchange.
- Reduced commission on an exchange: The owner on the exchange pays the protocol fees for orders, but traders must pay transaction fees for each trade. Traders pay the transaction fee with the same token as the transaction, but it can be reduced if the trader bets on the LRC.
Where to Store LRC?
The Loopring (LRC) is an ERC-20 type token, indicating that LRC can be stored in any cryptocurrency wallet compatible with ETH and ERC-20 tokens. LRC holders can choose from a rich list of cryptocurrency wallets on the market, mobile, online, hardware, and desktop wallets.
Guarda offers the best solution for storing, buying, and selling LRC tokens. Storing your LRC tokens with the Guarda wallet provides a secure, high-level solution with convenient functionality. You can get Guarda wallet on all possible platforms, including Windows, Mac, Android, iOS, and browsers.
Conclusion
Loopring technology doesn’t stop improving and introducing more and more features. As a result, its community is constantly growing, and new partnerships are expected in the cryptocurrency universe.
Ultimately, it is important to remember that the Loopring protocol could change the way decentralized exchanges are developed for a network that struggles with high transaction fees and low scaling prospects like Ethereum.
