Loopring (LRC) is an Ethereum Layer-2 scaling protocol that enables the creation of decentralized exchanges with performance comparable to centralized exchanges. The network can conduct 1,000 times more trades per second than Ethereum, with each transaction costing only a fraction of a penny. It also inherits the security of Ethereum's blockchain, with users having access to their funds in all circumstances and exchange operators limited to the protocol's permitted behaviour.

Loopring brings together the advantages of both centralized and decentralized bitcoin exchanges. Its novel usage of zkRollups enables it to achieve better throughput and cheaper costs than any other decentralized exchange based on the Ethereum blockchain, while its non-custodial approach improves centralized exchange security.

History

Daniel Wang, a software developer, launched Loopring (LRC) in 2017. Loopring's initial coin offering took place in August 2017 and garnered 45 million USD. However, due to China's tightening rules, the majority of the cash raised were refunded to ICO participants. The remainder was spent to build the protocol by the Loopring Foundation, a non-profit based in Shanghai.

The protocol was upgraded from Loopring 2.0 to Loopring 3.0 in December 2019, resulting in a nearly 1000x increase in efficiency. In the same month, it collaborated with Bitcoin to include oracles. Loopring announced its own decentralized exchange in February 2020 after failing to find third parties to construct DEXs on the protocol. The non-custodial Loopring Exchange is an orderbook and automated market maker (AMM) trading platform that also serves as a payment app.

How does it work

Loopring (LRC) outperforms previous decentralized exchanges by establishing a "fast lane" in which transactions are pooled and performed off-chain in order to bypass Ethereum's network congestion. This is accomplished through the use of zkRollups, a Layer-2 scaling solution that combines many transactions off-chain before submitting them to the Ethereum blockchain as a single transaction. The number of transactions Loopring submits to the Ethereum network to be resolved is considerably decreased by this strategy, making Loopring trades much quicker and cheaper. This method is extremely efficient and puts significantly less burden on the Ethereum network. The "zk" in zkRollup stands for "zero knowledge," and it refers to the sort of proof that Loopring must produce to ensure the accuracy of off-chain transactions.

On other exchanges, an order to purchase a specific token within a trading pair must be matched by an order to sell that token within the same trading pair. Loopring, on the other hand, combines and combines several orders in a circular trading mechanism known as an order ring. Each order ring comprises up to 16 orders and establishes a loop in which each order can swap the needed tokens without the need for an opposing order for its pair.

Total supply and circulation

The current circulating supply of Loopring is 1,245,991,469, with a maximum supply of 1,374,513,896 LRC. Since the inception of the Loopring protocol, over 20 million LRC have been burnt, and any LRC that has been locked up for operating exchanges is presently off the market. 10% of all fees go to the Loopring DAO.