Loopring : A Decentralized Token Exchange Protocol

akashshunya13 (25)in #loopring • 6 years ago

Introduction

Loopring is an open protocol and a decentralized exchange.It is developing a open protocol/wallet which people can use to trade tokens right from their wallet, unlike using Centralized Exchanges or the Blockchain’s DEX.

Why We Need Loopring….?

The Whitepaper Explains it clearly

"The Loopring protocol is needed because, just as Bitcoin dutifully emphasized that, in regards to peer-to-peer electronic cash, the main benefits are lost if a trusted third party is still required to prevent double-spending”, so too are the main benefits of decentralized assets lost if they must pass through trusted, gated, centralized exchanges."

India’s central bank issued guidelines for banks and financial intuition to restrict their service to crypto-related entities and gave three months time for further settlements. Following China, India made sure no INR flows in crypto. So, what will happen to exchanges in India. Few days back Binance was made to move to Malta, following regulatory crack down. Existence of centralized exchange in compliance with the regulatory framework is really a challenge this year.

In this debacle, DEX Decentralized Exchange has gained much traction. DEX eliminates the need of a centralized authority to trade tokens/assets. Funds remain in control of the user and the trade executes using Smart Contracts, this brings the end of trade manipulation and hacking related risks. Moreover, the user does not have to share his personnel Information for KYC compliance. DEX usually have almost no withdrawal fees unlike Centralized Exchange.

Despite all the feature, which DEX provides, there are numerous drawbacks which obstructing it to go mainstream.

Poor User Interface
Lack of liquidity
Token/Coin Availability
No cross chain chain asset support
Lack of base token to make transaction/Gas fee(e.g. Myether Wallet : You need to have Ether for token transactions to excute)

I personally had a very bad experience using one. I got some WTC on a DEX platform and screenshot will explain the issue. Lack of liquidity was the reason means, there was less amount of sellers and due to scarcity of that particular token, this small seller tend to put order very much higher than its current market price. This puts user in a very infancy situation where he must not able to sell his tokens quickly, trading is slow on DEX.

Loopring Protocol Seems to Solve the these issues with its hard code and distributed decentralized ecosystem Infrastructure. Loopring is rated as B+ by Darpal Rating which brings more trust towards its Code Base. Watch it on twitter. https://twitter.com/loopringorg/status/984425784017383426

Why Loopring Can Excute…?

The main point of believe in the protocol is it’s Team Members.

Daniel Wang: He is the founder and his experience are as Google Tech Lead, Co-founder & VP of Yunrang Technology, Senior Engineering Director at JD.com, Cofounder & CEO of Coinport Exchange, Cofounder & VP of Hygene Online, Senior Director & Blockchain Researcher of Zhongan Technology.

He regularly communicates about the protocol’s development on Medium and share his insights. Follow him on twitter to get regular updates. https://twitter.com/daniel_loopring?lang=en

Jay Hou : He is the CMO and have experience in E&Y, PayPal Risk Operations, SJ Consulting Founder.

So, Ex Google and Ex paypal in the team. Anyone can estimate upon their capabilities in executing the product they promised to deliver.

Ecosystem Participants

Wallet
Order Ring
Relay Mesh And Ring Minning Technology
Loopring Protocol Smart Contract
Open Protocol

Wallet
The wallet will be the DEX interface to the user with built-in execution system which optimizes the exchange of tokens at each and every level to ensure better liquidation, faster execution of Orders, flexibility in exchange and most importantly reduces trading fees significantly.

Cross Chain tokens means, you have ERC20 and Nep 5 tokens and you could just trade with them with few clicks in your wallet itself. This wouldn't be a dream soon. Belive Me ..Loopring Protocol is up something splendid achievements in this regard.

According to the Latest Interview of Daniel Wang, he informed that Loopring Web based wallet will be released anytime in April and IOS will in June. The work on Android version will commence with it. To be more informative, he just said that recently they hired a Engineer specialized on NEO, which requires a different environment(skill set) to work on its deployment on NEO Blockchain.(More Information Below)

Order Ring
Loopring uses a different kind of Order book called Unidirectional Order Model in which you can exchange or have orders like TokenX/TokenY. So, orders are like Exchange TokenX at the price for TokenY. The Protocol claims that it matches order into circular trade and achieves the “trade is possible whenever the buyer is willing to pay an equal or higher price than the seller’s price.”

By using this kind of Ordering Service, the protocol seems to bind several orders(16 orders) in a circular ring unlike having a single trading pair, to improve liquidation and price in it’s ecosystem.

Relays Mesh And Ring Minning Technology (Liquidity Multiplier)
Relay’s and Ring Minning Technology is responsible for enhancing liquidity by many folds usings its underneath Protocol and Relay’s plays the most important part in it.

Ring Minning Technology

“Loopring is a decentralized, automated trading intelligence interfaces between crypto exchanges and blockchains, using our balance sheet to enable users to realize liquidity many times greater than available directly in the market, by both generating liquidity within the platform and breaking orders into small pieces that are placed across all market venues simultaneously.”as stated on Looprings website.

The most powerful participant in the Ecosystem are the Relays. They are nodes which receives order from the Wallet, maintains a public order books and trade history.

Relays are free in

(1) how they choose to communicate with one another,

(2) how they build their order books, and

(3) how they mine order-rings (mining algorithms).

Relays are free to decide whether they choose to broadcast their order book with the other relays, this will greatly enhance liquidity sharing in the platform and enables faster execution of orders.

Relays are 100% capable of fulling orders breaking into several small order, matching it on it’s own order book and decide upon fees or can just decide to share it’s order book with other relay’s to fulfill the trade.

Relays who choose to ring mine are “Ring Miners” who produces order rings and as reward they get a portion of LRC or LRX which was consumed in the trade as fees.

Loopring Protocol Smart Contract

Finally checking Ring orders from the Ringer Miner, A smart contract executes and trustlessly executes, settles the trade and incentivizes to the Ring Miners. Orders are managed off chain and settlement is done on chain.

Open Protocol

Loopring is not only a DEX with a wallet-like UI but also a open protocol which can be deployed on any blockchain it wants. Daniel Wang himself said in an Interview that the main Goal of the protocol is implement it on as many blockchains as possible.

For example, if Loopring will be deployed on BLOCKCHAIN X(e.g Blockchain), it will lead to a creation of a new token called LRX(e.g.) and this token will facilitate exchange process in it’s Blockchain ecosystem, although LRC remains to be only feul in main Ecosystem and will required if any interoperability has to be seen like exchanging a ERC20 with a NEP 5, you need both LRC and LRN to facilitate exchange between the two.

The portion of this new token will be sold to the private investor to raise money for protocol ‘s development and a significant no. will be airdrop to the LRC Hodler’s.

For Airdrop participants, you need to have LRC in your wallet(not a exchange walet) where you controls your keys and will required further binding.(More Precise Details will be Posted By Loopring at least 2 weeks prior to its distribution)

As of now Loopring decides to be implemented on NEO and Qtum. A detailed dev Road map for the year 2018 can be seen here.

LRN

The deployment of Loopring Protocol on NEO blockchain leads to a creation of new token (LRX) called LRN.

Roadmap and Development of LRN

v1.4 was succesfully deployed on NEO Blockchain
Private sale for LRN was succesfully concluded where the price of one LRN was 1 usd.
Token smart contract will be deployed this month(April) and token will be distrubuted towards the end of this month
Airdrop of LRN to LRC Hodlers in June
A recent update here https://twitter.com/loopringorg/status/984259023255035904
Loopring will list LRN on multiple exchange platforms where it will be available for trade towards this June

LRQ

Loopring Protocol v1.4 is succesfully deployed on Qtum Blockchain. There is a very good Work Progress
We will see it’s complete deployment in Q3 of 2018

Jibrel Network Partnership

Talal Tabbaa, co-founder of the Jibrel Network, said: “The Jibrel Network is pleased to announce a strategic partnership with Loopring that will enable us to explore one of the industry’s most technologically advanced protocols." https://medium.com/loopring-protocol/loopring-and-jibrel-network-jointly-disrupt-the-exchange-of-tokenized-assets-f34cb316fa08

Further Partnership

In an interview Daniel said that his recent tour to China was a very big success where he met several engineers from a Technical Giant Company where they showed very high interest in the Protocol’s Infrastructure. He also met a eminent team who is not happy with current Chinese Public Blockchains, and eyes to build one of their own. He said further that Loopring Protocol will be implemented at it’s core and at least 2% of the Base Blockchain token will be airdropped to the LRC hodler’s.

The team is also looking toward EOS to implement it’ s protocol but awaits EOS’s ecosystem to grow further.

Conclusion

As expected, 2018 will be the year when Regulation will hit the Cryptocurrencies in terms of acceptance. Loopring Protocol ‘s services and it’s deployment on different Blockchain, will enhance user to trade without taking the risks of Sharing his personnel information on Centralized exchange entities where user are exposed to several threats. Loopring Protocol seems to solve the issue what a traditional DEX platform faces and picked up by several experts who believes that Loopring will be the Game Changer of 2018.

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