How Loopring Network is Facilitating Decentralized Exchanges
As a large number of crypto assets are being introduced every year, the need to exchange or trade these blockchain-based assets among the traders has increased remarkably. A large section of the populous all over the world is showing interest in the blockchain technology and cryptocurrencies. Before the emergence of Loopring, there was no other way of trading tokens other than traditional centralized exchanges. The point is that in this method, the presence of the ‘trusted’ third party continues in order to prevent double-spending. The Loopring network has been developed for building decentralized exchanges. The network behaves as a smart contract that is accountable for exchange and settlement.
Team of Loopring
Daniel Wang, the founder of Loopring formerly was the Google Tech Lead and Senior Director & Blockchain Researcher of Zhongan Technology. The CMO of Loopring, Jay Zhou was involved with PayPal Risk Operations. Among the members and community contributors of Loopring, Freeman Zhong was the Senior Engineer at Bank of China while Leon Wang was Google Map Leader and Research Leader. There are also talents from Apple and Alibaba on the Loopring team.
The game-changing technology of Loopring
The Loopring protocol is free, flexible and is also a part of the support system of decentralized applications (dApps) that integrate exchange operations. The open protocol of Loopring unlike the present decentralized exchange protocols, allow the orders to combine with other similar or dissimilar orders. This means that the borders of two-token trading pairs are broken down and it is also a great way to increase liquidity. The Loopring network is thus bent on solving the problems commonly faced by the existing centralized exchanges.
Security: The centralized exchanges in the crypto space face security issues mainly due to users having to give control over their private keys to a centralized entity. Simply speaking, the users do not have much control over their owned tokens or funds when exchanging through a centralized exchange.
Transparency: In case of a centralized exchange, the users first send their tokens to the exchange’s wallet that in turn, offers an IOU. The trades conducted are thus between the users’ IOUs. The process has an opaqueness as the exchange may shut down or freeze the user’s account. Even if the traders do not lose the total amount of funds due to lack of transparency, they will have to face higher trading fees, delays in withdrawal and regulatory risks.
Liquidity: In case of a centralized exchange, fragmented liquidity does not allow much space for user experience. The users can trade only with the token pairs supported by the exchange and in its own liquidity pools, using the exchange’s order book.
Even though the decentralized exchanges allow the users to have control over their private keys, there are performance issues and the structure too has some boundaries. Liquidity too is a concern. Other issues faced by the decentralized exchanges include scalability, delays in execution of a confirmation and high transaction charges.
The ring-style order matching is a unique feature added by the Loopring protocol. It supports only one type of order without distinguishing the market makers from the users. The relay-mesh network structure of Loopring ensures order and increases liquidity. The Loopring nodes can act as “ring miners” that receive orders from the relay-mesh or wallets. The Dual-Authoring technology eliminates the middlemen (blockchain miners also). Another feature, Asset Tokenization Services enables the users to exchange assets that are not allowed for direct trading on the Loopring network. This leads to cross-chain trading. Mr. Daniel Wang (CEO – Loopring Foundation) says “Loopring manages orders and order-books off-chain, this greatly reduces the number of transactions required on the target blockchain and makes trading faster.”
Loopring’s protocol token LRN was recently deployed on the NEO blockchain. Gate.io, cex.io, syex.io, idax.mn, and bitpaction.com are the five cryptocurrency exchanges that have enlisted LRN/BTC and LRN/ETH trading pairs from 1st May 2018. The users can deposit or withdraw using LRN tokens.
The web-based and iOS version of Loopr, a non-custodial Ethereum wallet, and Loopring DEX are currently under beta testing. The focus is on improving the user experience and through this wallet, they will also be able to trade ERC20 tokens in a decentralized way. The developers aim for wide adaptation of Loopr Wallet by the exchanges and make the transactions more secure. The Loopring wallet is “trustless” and “secure”. This is because it is not required to deposit crypto assets aka funds to any custodian and trust them for safekeeping. The funds remain secure in the user’s own wallet.
Loopring (LRC) was created on the Ethereum blockchain and supported ERC20 tokens. The users can trade LRC tokens and it can also be used to reward the ring miners on the Ethereum blockchain. The users do not need to register as they can conduct exchanges with private keys and remain anonymous. The settlements of trades, on the other hand, are done on-chain and are visible to everyone.
DISCLAIMER: Opinions expressed by Coinschedule Blog contributors are their own.