A Hybrid Solution for Decentralized Finance

Loopring is a decentralized finance platform that shows protocols, infrastructure, and user-facing products for the future of finance. It strives to furnish a low-cost, high-speed platform for trading, swapping, liquidity conditions, and payments while protecting the security and sovereignty of user assets. Loopring executes the first zkRollup protocol on Ethereum, ensuring that exchange and payment applications cannot touch or lose user assets.

Loopring was created by Daniel Wang, a software engineer based in China who worked at internet companies including Google and JD(dot)com. It is an Ethereum-based project that began in June 2017 and has developed into a multifaceted effort across the stack, from protocol to product.

How Can You Use Loopring?

Users can access Loopring’s decentralized exchange and payment platform by using the Loopring Layer2 App, which is built on the Loopring protocol and run by the Loopring relayer. The app offers a gas-free, high-speed, and secure trading and transfer experience. Users can also use the Loopring Wallet, a self-custodial smart contract wallet with Loopring zkRollup integrated. The wallet enables users to swap on the AMM, trade on the books, invest and earn in DeFi, and send payments to anyone, anywhere.

What Makes Loopring Different?

Loopring is a protocol that aims to combine the best of both worlds of centralized and decentralized cryptocurrency exchanges to create a platform that will benefit from their unique strengths and avoid their drawbacks.

Centralized exchanges are currently the dominant way of providing crypto trading services. While they are very popular and convenient, using a centralized exchange involves a number of risks, mainly their custodial nature. Because these exchanges keep users’ funds for them between the points of depositing and withdrawing, those funds are exposed to the risk of being partially or fully lost due to possible attacks, malicious actors inside the exchange or regulatory intervention.

Another major issue for centralized exchanges is the lack of transparency: the fact that trades are not settled on the blockchain, but rather stored in the exchange’s internal records enables price manipulation by the exchange and allows it to use user funds for unauthorized purposes while in custody.

To solve these problems, a new kind of trading service has emerged in recent years: the decentralized crypto exchange (DEX). Instead of keeping user funds in custody and processing trades internally, it helps buy and sell orders connect directly with each other and settle trades on a public blockchain.

While eliminating the custodial and transparency risks, DEXs introduce drawbacks of their own: mainly, lower efficiency (when compared to centralized alternatives) related to the limited capabilities of the underlying blockchains and fragmented liquidity.

Loopring protocol aims to preserve the advantages of decentralized exchanges while minimizing or removing their inefficiencies via innovative hybrid solutions. By managing orders in a centralized way but settling the trades on blockchain, and combining up to 16 orders into circular trades instead of allowing only one vs. one trading pair, Loopring hopes to increase the efficiency of order execution, as well as improve the liquidity of DEXs.

Conclusion

Loopring is a protocol that seeks to provide a low-cost, high-speed, and secure platform for decentralized finance, by leveraging the zkRollup technology and the hybrid order matching and settlement mechanism. Loopring offers users a gas-free, high-speed, and secure trading and transfer experience, while protecting the security and sovereignty of user assets. Loopring is an innovative and multifaceted project that aims to improve the efficiency and liquidity of decentralized exchanges.

Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.