Hey guys! Back with another in-depth list of answers for the most asked questions, this time it is for the magical decentralized exchange protocol - Loopring (LCR).
Let's get to it!
1. What is Loopring (LRC)?
Loopring (LRC) is an ERC-20 token that is built on top of the Ethereum blockchain. It is a cryptocurrency that is used primarily to pay miners in the Loopring’s decentralized exchange protocol.
The entire Loopring project aims to create an ecosystem where traders can exchange cryptocurrency in a decentralized manner. However, Loopring is not an exchange in itself, instead, it is a protocol and an automated execution system that allows other people to build a Decentralized Exchange (DEX) that runs on their protocol.
The great thing about Loopring is that it is blockchain agnostic. This means that the protocol can be deployed on any blockchain that has smart contract capabilities. As all Loopring DEXs will be built on the same principles, they can all work together to provide liquidity. Furthermore, even centralized exchanges can participate in providing liquidity for Decentralized Exchanges built on the Loopring Protocol. LRC plays a vital role in the Loopring reputation system as DEX owners are required to stake LRC to build a reputation and provide economic security for their users. If the DEX owner acts badly against its users, they will lose a proportion of their staked LRC.
Ring-miners make sure that orders are filled on Loopring DEX’s as they are tasked with matching orders for traders. Once a Ring-miner completes a trade, they are compensated in LRC. Furthermore, LRC is also used as gas to fuel the execution of smart contracts and with the launch of Loopring 3.0, a cut from every trading fee is taken (currently 10%) and the equivalent amount of this fee is burned by a Loopring smart contract, leading to a decreasing supply.
2. How many Loopring LRC tokens are out there?
There are currently 1,095,798,773 LRC tokens in circulating supply with a total max supply of 1.375 billion, according to data from Loopring. However, it is important to note that since they upgraded to Loopring 3.0 this number will continuously change.
This is because the team has now implemented a burning mechanism in which a cut of all trading fees are taken and used to burn LRC from the Loopring Development Foundations coffers. This leads to an ever decreasing supply in the number of LRC that will be in circulation.
Furthermore, for exchange operators, LRC is required to handle many processes such as creating the exchange, assigning downtime, and registering other tokens. Each process has its own burn rate to dictate the amount of LRC to burn. The LRC required for these functions is typically sent to the Loopring smart contract to be burned, removing the LRC from circulation. With this type of burning mechanism, we can expect the supply to continuously decrease over a longer period of time making each token slightly more valuable.
3. Is Loopring LRC an ERC-20 or NEO token?
Loopring (LRC) is an ERC-20 token that is issued on the Ethereum blockchain. It was launched via an ICO in August 2017. However, as the Loopring protocol is blockchain agnostic it has already been implemented on other blockchains such as NEO and QTUM. The implementation of these blockchains gave birth to LRN and LRQ, respectively.
Loopring was implemented on the NEO blockchain in 2018 as a NEP-5 token dubbed LRN, and was airdropped to all LRC holders. However, LRN had many problems with delivering a NEO DEX solution. Loopring founder, Daniel Wan, stated that it is difficult to implement a Loopring DEX on the NEO blockchain due to the cost of deploying the protocol and the settlement of the ring orders being far too high to be practical and would not deliver on the low fees that Loopring set to achieve. It is important to note that the team plan on releasing Loopring Chain in which LRN will be the payment, utility and governance token for this new blockchain.
4. What can you use Loopring LRC token for?
- Stake LRC to earn a portion of the protocol fees
- LRC is needed by decentralized exchange owners to gain a reputation and keep their DEX open.
- LRC can be used to lower protocol fees.
Loopring (LRC) is required for a variety of functions on the Loopring protocol. Firstly, in Loopring 3.0, anyone can stake LRC and earn a portion of the 70% protocol fees of all of the different decentralized exchanges built on the Loopring protocol. Each token must be staked for at least 90 days before they are mature enough to earn from the protocol fees. These protocol fees are to be paid by the exchange owners and not by traders themselves. Instead, traders will pay a fee that is dictated by the particular DEX they are trading upon.
Secondly, LRC is needed by exchange owners to gain a reputation in the Loopring reputation system. This is to develop extra safety for traders using any Loopring DEX. A minimum amount of LRC is also required to open the exchange and the LRC must remain staked for the DEX owner to be able to keep their exchange active. If the owner becomes dishonest in their reporting, their stake will be removed giving them an incentive to run an honest service.
Lastly, LRC can also be used to lower the protocol fees that exchange owners need to pay. The owner can lower their fees further by incentivizing traders and market-makers to also stake LRC for them in a custom contract.
5. Who is behind the Loopring cryptocurrency project?
Loopring was founded by Daniel Wang. Before Loopring, Wang was a co-founder of Yunrang Technology, a Google Tech Lead, co-founder of Coinport Exchange, and the Senior Engineering Director at DJ.com. Wang has an extensive history to bring the entire Loopring vision into reality with the experience gained in his former positions.
The CMO of Loopring is Jay Zhou who had previously worked in the Risk & Compliance department and Ernst&Young. Furthermore, Zhou has experience in cross-border payments industry after working in the risk operations sector at PayPal. The former COO of Loopring is Johnston Chen who is also CIO for 3NOD, founder of WeDEX, and a product expert in the finance industry. Chen remains on board as an advisor for the team. Other notable members include Brecht Devons (Chief Architect), Steve SUO (CTO), Hoss MA (Cheif Scientist), and Matthew Finestone (Director of Business Development).
Some notable advisors to the Loopring team include Da Hongei (Founder of NEO and ONT), GUO Yuhang (China Blockchain Application Research Center), and Li Xuefend (CTO at Zhongan Technology).
The entire Loopring project is governed by the Loopring Foundation which is a non-profit organization based in China.
6. What is the product of Loopring?
Loopring’s product is the decentralized exchange protocol that they have created. This open protocol allows any user to come and build their own decentralized exchange without going through the hassle of coding everything themselves.
The interesting thing about Loopring is that it is blockchain agnostic. This means that it can actually be built on any blockchain that has the capability to execute smart contracts and is not tied down to any single project. Furthermore, all of the Loopring decentralized exchanges that are built can communicate with each other and share liquidity.
This creates an exchange system that becomes more powerful as more decentralized exchanges are built as the liquidity increases. Centralized exchanges can even share liquidity to Loopring decentralized exchanges through the protocol.
Additionally, another thing about the protocol that Loopring has created is the fact that users will not have to deposit their cryptocurrencies into a 3rd party wallet in order to participate and trade on decentralized exchanges. Instead, all trades are executed directly from the user’s wallet, on-chain, which gives complete peace of mind that users are always in control of their cryptocurrency.
7. Can you stake Loopring?
Yes, Loopring can indeed be staked. Users now have the potential to stake LRC ever since the team released Loopring version 3.0. When a user stakes Loopring, they allow themselves to earn a portion of the protocol fees from all decentralized exchanges that are paid by exchange owners when trades take place. Up to 70% of this fee is taken and is shared amongst stakers that are staking LRC. This is known as a global type of staking as it is apparent across the entire protocol.
Additionally, with Loopring 3.0 a new reputation system has been established that forces decentralized exchange owners to stake a certain amount of LRC to increase their reputation and keep their exchange open. This type of staking is known as local staking and it provides a strong incentive for owners not to cheat their users as they will lose a certain amount of their LRC stake if they start to behave dishonestly.
Finally, exchange owners can also stake their LRC to help to reduce the protocol fees that they pay to the Loopring network. Protocol fees are to be paid by exchange owners and not by traders themselves (they pay trading fees that are dictated by the DEX owner they trade upon). Exchange owners can also be helped by their traders as they can provide smart contracts to allow its users to stake for their DEX and to reduce protocol fees also and, in turn, should reduce the trading fees for traders.
8. How to stake Loopring?
As of early 2020, a friendly user interface has not been provided by the Loopring team. Nevertheless, you can still stake Loopring on a 3rd party service such as Etherscan.io. It is quite a complicated process but you can use the following guide to help you along each step.
9. What exchanges or relayers use Loopring technology?
Toward the end of February 2020, Loopring released its own fully-fledged decentralized exchange (DEX) called Loopring.io - weeks ahead of schedule!
This now allows traders to trade LCR against ETH, USDt, and Dai in a decentralized and anonymous way. The launch of Loopring.io will most certainly help to expand the entire DEX ecosystem as it is a DEX that has the look and feel of any top-flight decentralized exchange! The non-custodial exchange currently has trading pairs for LCR/ETH, ETH/DAI, and ETH/USDt - but we can expect many more pairs to be added in the following months. The best thing about trading on this DEX is the fact that trading fees will be around $0.0025 which is SIGNIFICANTLY cheaper than trading costs on any centralized exchange.
Another great decentralized exchange is Dolomite.io. It is built on top of Loopring 2.0 but will be upgraded to Loopring 3.0 pretty soon. Dolomite is also another exchange that is non-custodial. Additionally, Dolomite actually has a portfolio manager integrated into its platform and it even as a USD fiat gateway that users can take advantage if they wish to withdraw in USD.
There is also a further list of strong contenders of decentralized exchanges and wallets that are actively working to implement the Loopring 3.0 protocol. These include;
- imToken - a digital asset wallet that enables multi-chain assets.
- MyTokem - A one-stop crypto platform that provides a wallet, news, charts, and data analysis.
- QBao - a token exchange platform and payment settlement solution.
- Loois - A DEX platform.
- DEXLAB - w wallet, trading terminal, and messaging service.
- Tokenall - a multi-currency digital asset wallet.
- GTEX (Game Token Exchange - a gaming asset marketplace to allow gamers to exchange in-game assets.
- Uone - A web wallet that allows users to trade in a decentralized manner.
- CPOO - a non-custodial wallet, OTC trading environment, and asset management platform.
10. What is Loopring’s transaction throughput?
Loopring can settle up to 2,025 trades per second (As of late-Feb 2020) by utilizing the security of Ethereum and can process up to 16,400 trades per second when the On-Chain Data Availability (OCDA) is disabled. However, when OCDA is disabled security is significantly reduced. Compared with other blockchains, this is an extremely high throughput and it is required to make a usable decentralized trading environment.
Loopring can process so many transactions after the upgrade to Loopring 3.0 which takes most of the computations off-chain and uses the blockchain as a data and a Zero-Knowledge Proof verification layer. Instead, trades are batched into zkRollups which move computations from the exchange off of the blockchain and only transmits exchange ‘state roots’ with their corresponding Zero-Knowledge proofs onto the blockchain. This type of off-chain scaling also helps to significantly reduce the price of trading for users, in fact, trades can cost as little as 0.9 cents.
11. How secure is Loopring?
Loopring is considered secure considering that you never lose control of your cryptocurrencies. The fact that users do not have to give up the custody of their private keys means that they have complete peace of mind that their tokens will not be stolen. Typically, centralized exchanges are often subjected to outside attack vectors and hackers as they are targets for large-scale theft. This is not the case with Loopring as it is a completely decentralized protocol and every DEX built on top of this protocol has to adhere to certain standards set-out by it.
Additionally, Loopring also teams up with 3rd party security firms such as SECBIT to audit their protocol on a regular basis and any adjustments are made to improve the security. The introduction of Zero-Knowledge Proofs in Loopring 3.0 also adds an extra layer of security as the privacy of users increases.
12. What is the latest Loopring protocol?
The latest protocol for Loopring is 3.0 which introduces scalability into the Loopring protocol. Loopring 3.0 utilizes Zero-Knowledge Proofs, known as zkSNARKs, which helps to introduce scalability to the protocol. It allows DEX owners to be able to prove that users’ have accurate account balances and trades history is accounted for in an easy way that does not compromise security. In fact, the introduction of Zero-Knowledge Proofs actually improves privacy.
As Zero-Knowledge Proofs assure that what is claimed is to be true and executed, it allows data to be updated off-chain in Merkle trees meaning that trades can be settled between users by updating the Merkle tree, without the need for the slow and expensive token transfers on-chain. The result is that DEXs are communicating within the Ethereum chain less often and with extremely lighter loads due to the fact that the DEX will only need to submit the ‘proof’ instead of the entire data that is stored in the Merkle tree.
Furthermore, the introduction of Zero-Knowledge Proofs still does not require users to hand custody of their tokens to exchange owners, meaning that they cannot be stolen by hackers or malicious actors.
13. Where to buy and sell Loopring?
Loopring can be bought on a variety of exchanges for cryptocurrency. To buy with traditional fiat, in most cases, a user will need to deposit the fiat into an exchange and buy BTC or ETH. They can then use this BTC/ETH to go ahead and buy Loopring. Loopring can be bought at the following exchanges; (USDt = Tether)
- Loopring.io - ETH, USDt, Dai
- Binance - BTC, ETH
- OkEx - USDt, BTC, ETH
- Gate.io - USDt, ETH, BTC
- Bitthumb - KRW (Fiat)
- Bitrue - BTC, ETH
- BitFinex - BTC, ETH, USD (Fiat)
- Bittrex - BTC
- Bitvavo - EUR (Fiat)