Top Things you should know about Loopring (LRC)

Top Things you should know about Loopring (LRC)

By CryptoKraut | Showcase | 15 Jan 2021


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Loopring
Loopring is an open protocol for building decentralized exchanges. The protocol is free, extensible, and serves as a standardized building block for decentralized applications. Its interoperable standards facilitate trustless, anonymous trading. Loopring is not a DEX, but a modular protocol for building DEXs on multiple blockchains. The roles in the network include wallets, relays, liquidity-sharing consortium blockchains, order book browsers, Ring-Miners, and asset tokenization services. Wallets will be incentivized to produce orders by sharing fees with ring-miners.

Functionality
There is a built-in liquidity sharing relay-mesh using a consortium blockchain. This relay-mesh is optimized for speed and inclusivity. The current rate and order book for token B vs token C, are provided by relays or other agents hooked up to the network. Order Broadcast: The wallet sends the order and its signature to one or more relays. Once a valid order-ring is found by a ring-miner, it could be tempting to add other orders to the order-ring to fully absorb the users margin (rate discounts) To prevent this, Loopring requires that a valid loop cannot contain any sub-rings. A user can partially or fully cancel an order by sending a special transaction to the LPSC. Ring-miners will share a certain percentage of fees with wallets. Wallets represent a primary target for Loopring protocol integration. LRx tokens will be used to effectuate protocol updates through decentralized governance. Smart contract updates will, in part, be governed by token holders to ensure continuity and safety.

Token economics
The fee model in the Loopring protocol allows other protocols and projects to take advantage of the fee model. It is possible for a third-party project to burn a certain amount of LRC to knock down the burn rates applied to their token when users pay fees in it. Lowering the burn rate is particularly appealing for other decentralized exchanges that use their own platform payment tokens. LRC token holders can lock up LRC in a smart contract in exchange for a percentage of fees that would have otherwise been burned. For example, an order has a total fee of 10 AnyToken, and 4 AnyToken (40%) is to be burned. LRC holders may be inclined to send the tokens to some external address to fund a community project, but for now they will be used to buy and burn more LRC.

Summary
The Loopring protocol sets out to be a foundational layer for decentralized exchange. It has profound repercussions in how people exchange assets and value. 



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