Loopring (LRC) is the Ethereum-based cryptocurrency token for Loopring, an open protocol created to build decentralized crypto exchanges.

In 2020, the average daily trading volume for the whole cryptocurrency market varied in the approximate range of $50-$200 million. Centralized cryptocurrency exchanges handle most of this trading. These are online platforms run by private companies that keep users’ funds and help match buy and sell orders.

These platforms share common downsides, leading to the emergence of decentralized exchanges intended to reduce these disadvantages. However, fully decentralized exchanges have their own flaws.

Loopring’s stated goal is to blend centralized order matching with decentralized on-blockchain order settlement into a hybrid product. This aims to take the best parts of both centralized and decentralized exchanges.

LRC tokens were made available to the public in an initial coin offering (ICO) in August 2017. The Loopring protocol was first deployed on the Ethereum mainnet in December 2019.

Daniel Wang, a Shanghai-based entrepreneur and software engineer, serves as the founder and current CEO of the Loopring Foundation, which oversees the development of the Loopring protocol.

Wang holds a bachelor’s degree in computer science from the University of Science and Technology of China and a master’s degree in the same discipline from Arizona State University.

Before initiating work on Loopring, Wang occupied various executive and managerial roles at prominent technology firms. His experience includes serving as a lead software engineer at medical device manufacturer Boston Scientific, senior director of engineering for search, recommendation, and ads systems at Chinese e-commerce giant JD.com, and tech lead and senior software engineer at Google.

Additionally, Wang co-founded multiple companies, including Yunrang (Beijing) Information Technology Ltd. and the cryptocurrency services provider Coinport Technology Ltd.

Loopring aims to merge features from both centralized and decentralized cryptocurrency exchanges, creating a protocol that captures their distinct benefits while removing inefficiencies.

Centralized exchanges currently dominate crypto trading. Although they are convenient and widely used, their custodial model presents significant risks. Since these platforms hold user funds between deposits and withdrawals, assets face the danger of partial or total loss from hacker attacks, internal malicious actors, or regulatory actions.

A further issue with centralized exchanges is poor transparency. Because trades are recorded in internal databases rather than settled on the blockchain, exchanges can manipulate prices and potentially use customer funds for unauthorized purposes while holding them in custody.

To address these issues, decentralized crypto exchanges (DEXs) have appeared in recent years. Rather than taking custody of funds or processing trades internally, DEXs facilitate direct connections between buy and sell orders, settling transactions on a public blockchain.

While DEXs remove custodial and transparency risks, they suffer from their own drawbacks, primarily lower efficiency compared to centralized options due to blockchain limitations and fragmented liquidity.

The Loopring protocol attempts to retain the benefits of DEXs while mitigating these inefficiencies through hybrid solutions. By managing orders centrally but settling trades on-chain, and by combining up to 16 orders into circular trades instead of restricting activity to strict one-vs-one pairs, Loopring expects to boost order execution efficiency and improve DEX liquidity.

Smart contracts within the Loopring Protocol control the issuance of LRC tokens.

The main method for acquiring LRC is through ring mining. To boost liquidity on the Loopring network, trades are not limited to simple two-cryptocurrency pairs. The protocol allows for the combination of up to 16 orders involving different cryptocurrencies into a circular transaction known as an order ring.

Loopring network nodes receive LRC token rewards for merging individual orders into these rings, keeping public order books and trade histories updated, and, in certain instances, sharing orders with other relays.

Loopring currently functions on the Ethereum and Neo blockchains, with plans to incorporate support for Qtum. Distinct tokens are associated with each network: LRC for Ethereum, LRN for Neo, and the planned LRQ for Qtum upon its launch. The security of these tokens relies on the hash functions of their respective base platforms. Specifically, Ethereum’s Ethash secures LRC, Neo’s SHA256 and RIPEMD160 protect LRN, and Qtum’s proof-of-stake PoSv3 algorithm is designated to secure LRQ.

You can purchase LRC on a wide variety of exchanges. Among the most prominent and reliable platforms offering this asset are: