Loopring (LRC) is a protocol that seeks to facilitate the construction of secure, private and low-cost DEXs, making use of a powerful sidechain and zkRollups privacy technology.
| Symbol |
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| LRC |
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| Consent |
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| PoS - zk-Rollups |
Loopring (LRC) is a protocol designed to facilitate the construction of decentralized exchanges (DEX), whose operation is based on a sidechain that uses the scalability and privacy technology known as zkRollups o zero-knowledge Rollups.
The idea of this platform is to offer developers a series of building blocks that allow not only to build the DEX, but to take all that load of operations out of the chain of Ethereum (off-chain) and thus offer greater scalability and much cheaper commissions.
However How does Loopring make all this possible? What's behind this platform and its native LRC token? That and more you will be able to know below ...
Loopring (LRC), a protocol for DEX
Loopring (LRC) is a protocol designed to allow the creation of DEX on a sidechain that uses zkRollups technology and that is compatible with Ethereum.
Due to its compatibility with Ethereum, Loopring is able to interconnect its sidechain with the largest DEX ecosystem that exists today, which has drawn the attention of several projects looking for scalability options to deal with the limitations of Ethereum.
As a result, Loopring has created the LRC token, a utility token that follows the standard ERC-20, in order to allow not only the operation of its sidechain network, but also to create a bridge between both networks.
Loopring (LRC) began its development after a ICO (Initial Coin Offering) which was made in August 2017 thanks to the efforts of its creator Daniel Wang and, after two years of development, in December 2019 they announced the official launch of their main network.
How does Loopring work?
Loopring works thanks to two basic technologies, namely: sidechains and zkRollups.
The sidechain allows Loopring to run a secondary network where it can perform all its operations quickly and cheaply. This is the same concept that applies to Lightning Network (LN) de Bitcoin, where operations with BTC are carried out almost instantaneously and with low commissions, but then all that information ends up on the Bitcoin blockchain for its definitive storage. Well, in this case, Loopring uses the Ethereum network to store all the information of its operations and leave an accurate record of them.
The second technology behind Loopring is zk-Rollups. A zk-Rollup is an off-chain operation system that uses the tests zk-SNARK to carry out crypto operations that can be quickly verified and sent to the blockchain for a record of their completion. All this functionality in Loopring is integrated into a powerful Smart contract that runs on the sidechain of the protocol, and allows all operations to have great security and privacy.
Exchange process in Loopring
As the name implies (Loopring), This protocol uses a system of "loops" and "rings" to carry out the exchange processes. First, when a user creates a trade, it actually generates an order that is taken by the well-known “ring miners”. The ring miners are in charge of taking the order formed and dividing it into small orders that are sent to the relays, to find the necessary liquidity and execute the entire order created by the user.
This process between the ring miners and the relays is iterative (a loop), executing the number of times necessary to be able to carry out the operation successfully. In the end, with the completion of the entire process, the miners receive the reward for their work, with which their economic incentive is justified.
In addition, you should know that Loopring works as an automated market maker (AMM), so pools are created that serve to feed the necessary liquidity to carry out operations in a decentralized way. In this way, users are faced with a completely decentralized trading protocol.
Using an AMM system allows Loopring to offer staking and liquidity mining within its dApp, with eye-catching reward options for its holdings in the protocol. Another aspect to highlight in its operation is the compatibility with Web3 wallets such as MetaMask. Thanks to this ability, it is very easy for Ethereum users to exchange their tokens within Loopring.
LRC Token
The Loopring token (LRC), is the platform's native token and had its beginning as an ICO held in August 2017. During this ICO, the project managed to raise 45 million dollars in Ethereum (ETH) that served as seed capital for the creation of the protocol and all its functions.
LRC, is a token that is built on the Ethereum ERC-20 standard, and its main function is to serve as a means for the payment of commissions on the network, to serve as an economic incentive for operators of sidechain nodes.
Another use of LRC tokens is their use within staking pools. Stakers must enter their tokens in the pools, which receive 70% of the distribution of the protocol commissions. To qualify for this rewards system, users must be staking for at least 90 days to receive their proportionate share of commissions.
Finally, the LRC token is limited to a total of 1.375.076.040 tokens during its entire existence, of which 97% are in circulation.
Conclusions
Loopring offers its users a perfect marriage between speed, privacy and compatibility with the largest DEX ecosystem in the world, all in the same space.
With this, Loopring enters to compete with options such as Polygon or xDAI, two of the best-known scalability platforms for Ethereum, which has made it an alternative widely used by DEX traders within that network. A fact to highlight due to the demand that Ethereum has suffered since 2019 and its marked increase in operating commissions. Thanks to this, Loopring and its token have developed rapidly and is emerging as one of the great DEX protocols in the world.
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