Today I’m looking at Loopring, a token exchange protocol for decentralized exchange on the Ethereum blockchain.
Recently I’ve been looking into projects around decentralized exchanges including Komodo, Blocknet and Binance.
Loopring is a decentralized automated execution system that trades across crypto-token exchanges. There’s a few benefits to this type of system. Being decentralized, users keep control of their assets and eliminate counterparty risk. It’s also cheaper than traditional trading. And by working across different crypto exchanges it can improve liquidity.
The key features of Loopring are order sharing and what they call ring-matching.
With order sharing Loopring can break larger orders into smaller ones and identify the best exchanges for execution.
The ring-matching is a feature that pools orders. It’s an automated trading intelligence that interfaces between the crypto exchanges. Loopring uses their balance sheet to realize liquidity greater than that directly available in the market.
With Loopring you can put an order on one exchange and have it broadcast to any exchange in the Loopring network.
Use of the Loopring requires its native token, LRC.
There’s a total 1.4 billion LRC tokens with 286 million circulating right now. It can be used to pay transaction fees for the exchange and as a deposit for exchange registration.
Exchanges are incentivized to hold more LRC than less. Exchanges are required to offer a discount for each transaction on the Loopring network. And the discount fees is dependent on the number of LRC deposited. So the more LRC held, the lower the fee.
One drawback is that LRC is not on any major exchanges. But it trades on HitBTC and EtherDelta.
This one is still in development. Launch is targeted for April 2018.
I like Loopring because I like the idea of linking decentralized exchanges and improving liquidity. One drawback though is that it only supports ETH and the ERC20 ecosystem.
Loopring is one to watch.
What do you think of Loopring?
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