Loopring is an open source protocol built on Ethereum to build high-performance, orderbook-based, decentralized exchanges. Loopring's goal is to build highly scalable exchanges using zkRollup technology without compromising Ethereum-level security guarantees.

Key objectives of Loopring include reducing users' reliance on centralized exchanges or other trusted third parties and supporting global liquidity markets. The Loopring protocol achieves this goal by motivating ecosystem participants to perform transaction functions in a decentralized manner, with transactions handled by unmanaged smart contracts.

While blockchain essentially provides for distrusting transactions, there are problems with purely building exchanges on the chain. Specifically, processing speed, throughput, and computing costs. Performing all switching steps on the chain may be too expensive, or it may not be possible to simulate the speed and performance of centralized switching. For these reasons, Loopring moves almost all data and computation down the chain, but uses zero-knowledge proofs to preserve the trust minimization property.

Loopring utilizes Zero Proof of knowledge (ZKP), an innovative blockchain technology that bundles transactions together for efficiency, allowing anyone to build a high-throughput, unmanaged DEX. Loopring also uses its native LCR tokens to reward ZK-rollup operators and liquidity providers.

Loopring uses the traditional order book switching model, but moves all calculations down the chain (zkSNARKs) by using a zero-knowledge proof. When users want to deposit money, they send assets to exchange smart contracts. Their balances are stored outside the Merkle tree chain, where they are updated based on transfer requests rather than the actual exchange of assets between users' wallets. The way orders are matched is up to the exchange operator, but when settlement is needed, the protocol creates a ring settlement request by matching two orders and sending the request to the operator, who in turn contains it in a block, charges a fee and submits the request on the chain. Users can also withdraw money at any time.

1. Get 70% of transaction fee rebate for agreement pool mortgage. Exchange owners also need to bet on reputation and safety. There are at least 250,000 LRCS for exchanges with data availability and at least 1 million LRCS for exchanges without data availability.

ZkRollup.

While ZK-Rollups represents the technology that enables Loopring, it is its implementation that makes the multifaceted protocol so useful, especially with its latest Loopring 3.0 update. Loopring has an on-chain/off-chain switch called OCDA, which can significantly speed up transactions in cases where data is available to move calculations off-chain. Loopring also utilizes high-throughput arbitrage mechanisms, using order rings, order miners, and order sharing systems to achieve near-instant Internet-scale liquidity. 1. On-chain Data Availability (OCDA) : Loopring encryption protocols use a feature called on-chain data availability (OCDA). This hybrid approach to data storage allows users to choose whether their data is stored on or off the chain. When OCDA is turned off, data is stored on the chain and the network can achieve 2,025 transactions per second (TPS). However, if OCDA is turned on and the data is stored off-chain, the throughput can reach 16,400 TPS by using what it calls Validium mode. Through the use of Loopring 3.0 innovations such as OCDA, unmanaged exchanges may be able to match the performance of their centrally managed competitors. 2. Loopring Miners: Loopring uses a unique consensus protocol to circumvent the traditional order book and AMM mechanisms that manage liquidity pools. Instead, network participants, called ring miners, are responsible for filling orders quickly before they are executed or canceled. Those operating as ring miners are charged service fees in the form of LRC tokens (the native token of the Loopring protocol) or margin for the order amount. 3. Order Ring: When the miner completes the order ring, the Road Seal smart contract decides how to fill it. If it can execute an order on either side of a transaction, the smart contract will perform atomic swaps -- moving from the smart contract directly to the user's wallet. Order loops also facilitate ring matching, which is the process of fulfilling orders by stringing them together and settling multiple transactions by multiple users. The order ring distinguishes the Loopring protocol from other DEX such as Waves, IDEX, and Bancor. 4. Order sharing: The order sharing function can also be realized through the order ring on the road printing protocol. Order sharing is used to split the order into its components until the full original order amount is completed, in cases where the Roaddex smart contract cannot execute the order in a single transaction. The ring matching technique aggregates multiple individual orders into a single order ring. Once the roadseal smart contract validates the order, each party receives assets in exchange. Orders are run through the order sharing system as part of a subsequent order loop until these partial orders are fully executed.

1. Non-trusteeship. Users will always have control over their digital assets. 2. Safety. Merckle certification allows users to access layer 2 assets even if layer 2 protocol execution fails. ZkRollups relies on the security of the Ethereum network on exchanges. 3. Speed up and cost down. Off-chain execution of the exchange means a significant reduction in transaction times and virtually zero gas charges on the layer 2 network. 4. Reputation system. Motivate DEX to act correctly with users for fear of losing pledged LRC tokens.

Pledge LRC tokens to get a rebate on transaction fees.

Loopring's main competitors include ShapeShift, Nexo, Amber and Anchorage. Loopring is an open protocol for building decentralized exchanges. ShapeShift is a Web and API platform that offers instant bitcoin and shanzhai currency exchange. Nexo offers instant cryptocurrency loans.

Loopring combines the best of both centralized and decentralized cryptocurrency exchanges. Its innovative use of zkRollups enables it to achieve higher throughput and lower cost than any other decentralized exchange built on the Ethereum blockchain, while its unmanaged technology improves the security of the centralized exchange.

"In the medium to long term, ZK Rollup will win out in all cases as ZK-Snark technology improves." -- Vitalik Buterin, founder of Ethereum.

Government regulation, smart contract loopholes, etc.

Loopring (LRC) cryptocurrencies are native tokens of the Loopring network. It incentivise positive behavior by liquidity providers and DAO (decentralized autonomous organization) managers and gives them a vote on how the agreement is run. Operators must lock in at least 250,000 LRC to run a decentralized exchange using the protocol for on-chain data availability on Loopring. To run DEX without this feature requires a mortgage of 1 million LRC. The LRC is deflationary as some of the tokens of fees and operators whose shares have been cut for bad behaviour are burned. This means that LRC's total supply will decrease over time, which could affect Loopring's token price and market cap.