Loopring is an Ethereum-based layer 2 open protocol designed for scaling and building decentralised crypto exchanges (DEXs). It uses modular zkRollup (zero-knowledge rollup) technology to facilitate DEX building on several blockchains.
Ethereum came up with layer 2 scaling solutions like rollups, state channels, sidechains and Plasma in order to alleviate throughput problems. In this regard, zkRollup technology is the figurative sibling of Optimistic Rollups, which are used to increase Ethereum scalability.
Loopring also has two native crypto products which aim to develop quick and cheap non-custodial automated market makers and payment applications on Ethereum.
In brief
Loopring was founded by Daniel Wang, a software engineer based in Shanghai, China. Wang is the company CEO and manages protocol development alongside Jay Zhou (CMO) and Johnston Chen (COO).
Wang got a bachelor's degree in computer science from the University of Science and Technology of China. He later received his master's degree in the same field from Arizona State University.
Before founding Loopring, Wang worked with several tech companies, including Boston Scientific, where he was a lead software engineer.
Wang also worked as a senior director of engineering at the Chinese e-commerce giant JD.com and had a similar role at Google.
On top of all this, Wang co-founded several companies - Yunrang Information Technology and a crypto services firm called Coinport Technology Limited.
The core principle of rollup technology is to execute transactions off-chain (L2) while keeping important data on-chain (L1). By doing this, Loopring leverages the security from Ethereum while also benefitting from the scalability improvements of centralised services.
A so-called order ring layer rests on top of these various components, and together they make the protocol function.
The breakdown of the core mechanics:
With this system in place, Loopring increases exchange transparency, rethinks custodial risk and somewhat protects against potential malicious actors inside a centralised exchange or regulatory bodies.
LRC is an ERC-20 utility token for the Loopring protocol.
LRC has five use cases:
The initial coin offering (ICO) happened in August 2017 and raised $45 million.
The Loopring protocol was first deployed on the Ethereum mainnet in December 2019.
The token allocation as of 2022:
According to data from CoinMarketCap, the total circulating supply of LRC tokens is 1.33 billion. As of 2021, nearly all LRC tokens were released, with the team holding 127,881,971 LRC. The Loopring protocol smart contracts govern token issuance.
Layer 2 transaction and swap fees are split - 80% for relays (and their affiliates) and 20% for protocol fees. This is part of the main way to earn LRC tokens, also known as 'ring mining', which we mentioned earlier.
For all of you SwissBorg app newbies who want to add LRC to your portfolio, we came up with a short tutorial demonstrating the simplicity of the process:
The Loopring protocol seeks to improve general transaction throughput while reducing or eliminating DEX inefficiencies through hybrid solutions.
By managing orders centrally but settling trades on-chain, the protocol promises to improve Ethereum's scalability potential exponentially.