defi6 min read

What makes Loopring (LRC) different?

Every day something new is making its entry in the DeFi space, making it the most evolving industry. And here is what you should know about Loopring and its impact on decentralized cryptocurrency exchanges.


What is Loopring (LRC)? Loopring crypto explained in simple terms

Ethereum is the root cause for revolution in DeFi. Loopring is yet another decentralized software that runs on the ethereum blockchain. There is no central point of operation. Instead, a global network of users operates the platform in return for incentives. Loopring is not a DEX, but it enables the creation of crypto exchanges. Loopring uses a multitude of cryptocurrencies, including its own LRC crypto, to support the platform’s operation.

What’s the purpose of Loopring?

Loopring establishes itself as a platform that allows the creation of cryptocurrency exchanges on top of it to overcome the slow speeds and huge operation costs associated with decentralized exchanges. So, Loopring is an alternative to conventional decentralized exchanges deployed on top of the ethereum blockchain. In addition, Loopring uses a relatively newer type of cryptography called zero-knowledge rollups to sidestep the DEXes on Ethereum.

Decentralized exchanges on Ethereum usually settle trades directly on the blockchain, resulting in slower settlements. Loopring on the uses zkrollups to carry out fundamental computations elsewhere. The main idea behind Loopring’s exchange is to reduce the number of transactions the traders undergo to submit to the Ethereum network, obviously reducing the costs with enhanced speed. The existing decentralized exchanges require transactions confirmed by the ethereum blockchain, consuming up to a few minutes.

Loopring’s working Explained.

Loopring’s cutting-edge cryptography is its key value proposition, making Loopring stand out from other DEXes. There are a variety of cryptographic proposals, including but not limited to xDai, Plasma, Matic, Optimistic Rollups, and Zero-knowledge rollups. Loopring uses zk-rollups to make the ethereum blockchain suitable for trading, exchange, and other DeFi applications. Zk Rollups is one of the most promising cryptographic techniques. It allows the computer scripts to claim data without sharing the data. This technique is called zero-knowledge proof.

Exciting Fact: Your government can use zero-knowledge proofs to verify your age when you try to access a site without revealing your birth date.

As mentioned above, Loopring uses the zkRollups technique to gather hundreds of transactions into a single transaction and first settles the trade outside the ethereum blockchain. These transactions are then settled on the ethereum blockchain, where zkproofs are used to verify the accuracy of off-chain transactions.

How to trade on Loopring’s exchange?

  1. Users must send their funds to Loopring protocol’s smart contract.
  2. Loopring moves information like user’s account balances and order histories to complete the off-chain trade.
  3. Then, the transaction is settled on the ethereum blockchain to finalize the trades that were first matched off-chain.

Batching up trades

Loopring’s exchange batches up trades to increase speed and reduce the cost associated with individual trades. With Zero-Knowledge proofs, Loopring allows anyone to reconstruct the off-chain transaction on the ethereum blockchain. Loopring makes sure that it can batch up to 2000 trades per second with the zk rollups techniques. By allowing the network participants to recreate transactions on the ethereum network, Loopring ensures genuine and tamper-free transactions.


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