A brief history
Loopring (LRC) was founded in 2017 by former Google software engineer Daniel Wang. The goal of the project is to reduce the need for centralized exchanges and grant traders access to global crypto liquidity. Both decentralized and centralized exchanges can use the Loopring platform, allowing them to create liquidity across as many exchanges as possible. Loopring also seeks to make the experience of using Ethereum faster by processing elements of Ethereum transactions on its network. Loopring does this through its unique cryptography called zero-knowledge rollups, or “zkRollups.” ZkRollups are smart contracts that update the state of all transactions on layer 2, the off-chain component. Using this cryptography allows exchanges built on top of it to sidestep the slow speeds and high costs associated with decentralized exchanges on Ethereum. Loopring’s developers claim the protocol processing speed is 1,000 times greater than that of Ethereum’s, with peaks of 2,025 transactions a second, with transactions on Loopring costing less than a cent.
LRC in practice
There are three types of staking on the Loopring protocol. With Protocol pool staking users can stake LRC to earn up to 70% of Loopring protocol fees. There is no minimum amount of LRC that needs to be staked, but the tokens must be staked for at least 90 days. Exchange owner staking ensures safety on the DEX by requiring new exchange owners to stake a minimum of 250,000 to 1 million LRC, depending on whether they use Loopring’s on-chain data proof service. If an exchange withdraws funds from its staking pool or otherwise falls below the minimum requirement, the protocol will seize funds from the exchange, shut it down, and distribute the confiscated tokens to LRC stakers. Lastly, there is exchange protocol fee reduction staking. In this form of staking, exchange owners pay the protocol fees while traders pay transaction fees for each trade. However, traders that stake Loopring (LRC) crypto are entitled to lower transaction fees on the Loopring exchange.