What is Loopring (LRC)?
Loopring (LRC) is the native ERC-20 token for the platform of the same name. Loopring is an open-source zkRollup layer 2 solution for Ethereum. It acts as a decentralized exchange (DEX) protocol that also implements some aspects of centralized exchanges (CEX).
The Loopring token is used for utility. Users stake LRC to be able to use the DEX. The platform runs as a decentralized autonomous organization (DAO), with Loopring being used as the governance token during voting. You can take a look at the Loopring price and market capitalization performance in the charts above.
Who Founded Loopring?
Loopring was founded by Daniel Wang. He’s an entrepreneur and a software engineer. He has headed blockchain-based software engineering projects in China and the US. Wang has also co-founded a number of other projects for crypto networks, including Coinport and Taiko Labs.
In 2017, prior to the launch, the team held an initial coin offering (ICO). During this event, the Loopring price was valued at around $0.05-$0.06. The Loopring crypto protocol officially started running in 2019.
The goal of establishing Loopring was to provide a hybrid solution for issues related to both centralized and decentralized exchanges. CEX platforms are the more common method of cryptocurrency exchange. They are owned by centralized entities and the clients do not have access to the internal operations, leading to transparency concerns.
Decentralized exchanges, on the other hand, allow users to trade peer-to-peer, without any intermediary parties. Here, the users’ funds are not held by a custodian, users maintain them themselves, and all transactions are accessible on the distributed ledger.
While CEX platforms are preferred for their ease of use, decentralized exchanges are perceived as more true to the spirit of blockchain – they are not run by custodials and offer more transaction transparency. However, decentralized exchanges are often slower and the lack of KYC regulations can lead to scam transactions.
Loopring combines the strengths of each exchange type while balancing the downsides to create what may be the optimal cryptocurrency exchange model. It offers peer-to-peer transactions at significantly higher speeds.
While the LRC price remained low and showed minimal volatility during the first couple of years, there were market changes in 2020. The token experienced a significant increase in value in November 2021, when the asset nearly peaked at $4.
What Are the Features of Loopring?
Loopring is a blockchain-agnostic protocol. According to the whitepaper, the ticker for any Loopring-related token is LRx. LRC is the Loopring token that runs specifically on the Ethereum network. The platform is also supported on the Neo and Qtum blockchains, using the LRN and LRQ tokens respectively.
The Loopring coin supply is set to nearly 1.4 billion. The asset is deflationary, meaning that its supply is designed to decrease over time. Such scarcity is expected to make the Loopring price increase over time.
As an Ethereum-based platform, Loopring relies on smart contracts to initiate orders and complete transactions. However, as a layer 2 solution, it’s able to process operations faster than Ethereum, with the throughput rate exceeding 2,000 trades per second, compared to ETH’s 15 trades per second.
Users can also earn LRC tokens by a method known as ring-mining. To optimize the transactions and maintain the network liquidity, the protocol automatically conducts an order ring and performs a circular transaction, which can involve up to 16 orders. The orders in the order ring can be of various trading pairs.
The node operators are in charge of sorting the order rings. By maintaining the network and managing the transactions, they receive LRC tokens in return as an incentive to continue their contributions. The decentralized exchange operated by Loopring offers standard services, such as an automated market maker (AMM) and digital order books.
Loopring functions as a decentralized autonomous organization (DAO). As such, LRC token holders are able to participate in the protocol governance. They can also submit proposals for protocol changes. This ensures network decentralization and transparency within the Loopring crypto community.
As many crypto assets, it can be considered volatile. The Loopring price is responsive to the general market trends and experiences frequent fluctuations. However, it is possible that the token's value may increase in the future, particularly if Loopring's utility as a hybrid exchange platform becomes more widely applicable.
