Loopring

What Is Loopring [LRC]?

In 2020, the average daily trading volume of the entire cryptocurrency market fluctuated in the approximate range of $50-$200 million. Most of that trading is conducted on centralized cryptocurrency exchanges — online platforms operated by private companies that store users’ funds and facilitate the matching of buy and sell orders.

Such platforms have a number of downsides common to all of them, so a new type of exchange — decentralized— has emerged to try to alleviate these disadvantages. However, fully decentralized exchanges are not without their own flaws.

Loopring’s purported goal is to combine centralized order matching with decentralized on-blockchain order settlement into a hybridized product that will take the best aspects of both centralized and decentralized exchanges.

LRC tokens became available to the public during an initial coin offering (ICO) in August 2017, while the Loopring protocol was first deployed on Ethereum mainnet in December 2019.

Who Are the Founders of Loopring?

The founder and current CEO of Loopring Foundation, which manages the development of Loopring protocol, is Daniel Wang, a software engineer and entrepreneur based in Shanghai, China.

Wang has a bachelor’s degree in computer science from the University of Science and Technology of China, as well as a master’s degree in the same field from Arizona State University.

Prior to starting work on Loopring, Wang has held multiple managerial and executive positions in major tech companies: he was a lead software engineer at the medical device manufacturer Boston Scientific, the senior director of engineering, search, recommendation and ads system at the Chinese e-commerce giant JD.com, as well as a tech lead and senior software engineer at Google.

Wang has also co-founded several companies: Yunrang (Beijing) Information Technology Ltd. and the cryptocurrency services firm Coinport Technology Ltd.

What Makes Loopring Unique?

The main idea behind Loopring is to combine elements of centralized and decentralized cryptocurrency exchanges to create a protocol that will enjoy their unique advantages and eliminate inefficiencies.

Centralized exchanges are currently the main mode of operation for crypto trading services. While highly popular and convenient, using a centralized exchange carries a number of risks, the chief of which is their custodial nature. Because these exchanges hold users’ funds for them between the points of depositing and withdrawing, those funds come under the risk of being partially or fully lost due to potential hacker attacks, malicious actors inside the exchange or regulatory intervention.

Another major problem for centralized exchanges is the lack of transparency: the fact that trades are not settled on the blockchain, but rather stored in the exchange’s internal records makes possible price manipulation by the exchange and allows it to use user funds for unauthorized purposes while in custody.

In order to eliminate these problems, a new type of trading service has emerged in recent years: a decentralized crypto exchange (DEX). Instead of holding user funds in custody and processing trades internally, it helps buy and sell orders connect directly with each other and settle trades on a public blockchain.

While removing the custodial and transparency risks, DEXs introduce disadvantages of their own: mainly, lower efficiency (when compared to centralized alternatives) associated with the limited capabilities of the underlying blockchains and fragmented liquidity.

Loopring protocol seeks to keep the advantages of decentralized exchanges while reducing or eliminating their inefficiencies via innovative hybrid solutions. Through managing orders in a centralized manner but settling the trades on-blockchain, and combining up to 16 orders into circular trades instead of allowing strictly one vs. one trading pairs, Loopring expects to increase the efficiency of order execution, as well as enhance the liquidity of DEXs.