Loopring is an open-source and decentralized exchange protocol that removes the need for third- parties such as exchange websites in peer to peer trading process. The loopring protocol serves as an automated system that allows users to execute trades over multiple other cryptocurrency exchanges, thus increasing liquidity, reducing risk, lowering the cost of trading and eliminating the problem of fee shopping. Tokens and coins are kept in the traders’ wallets or Loopring’s smart contract (which can be built on any blockchain that supports smart contracts) while they are trading, without having to send them to an exchange. Users’ trades are executed automatically across various exchanges that Loopring supports using an automated trading intelligence feature. Loopring(LRC) is the token that is used to pay exchange transaction fees and serves as a deposit for exchange registrations.
ZeroRisk: Loopring does not require members to send tokens to exchanges for custody. Tokens always remain in their blockchain addresses during the whole transaction life cycle Members can even transfer their tokens around after orders are submitted – Loopring will automatically adjust trading amount at the initial price. Loopring protects members from threats such as exchange bankrupcies and DDOS.
Order Sharing: Loopring mechanism allows to order break into small pieces, identifies the best exchanges and times to trade those pieces on, and applies game theoretic logic to optimize trading results. Loopring can also well protect trading from DDOS attack.
Ring-Matching: 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.
￼Cross-chain protocol: ￼￼Loopring was designed to be blockchain agnostic. As long as a blockchain has smart-contract ￼support, Loopring can be implemented, and all ERC20-like tokens on such a blockchain can be ￼traded under Loopring.
The main value is that exchanges need to provide a discount for transactions made through their protocol. The percentage of this fee can be negated by depositing LRC tokens into the protocol and the rank of the exchange determines the discount that needs to be provided.
Exchanges will try to buy as many LRC tokens as cheap as possible to increase their ranking, therefore decreasing the discount they have to provide, ultimately increasing their profits.