Decentralized token exchange protocol
One of the challenges of building a financial system on blockchains is that they aren’t designed to process a large number of transactions quickly. This is called the scalability problem, and one solution is creating a secondary layer of infrastructure on top of the blockchain to solve it. This is known as a layer 2 protocol. Loopring is a layer 2 protocol that can be used to speed up transactions for products like exchanges and payment systems. It maintains the anonymity and trust of pure blockchain-based systems through a technology called “zero-knowledge proofs,” algorithms that can prove something is true without needing to reveal the actual information. Loopring is built to function over the Ethereum blockchain and operates using the LRC token.
Loopring is most useful to developers working on the future of decentralized finance. It provides a platform that can reduce fees and increase speed in markets, exchanges, and payment systems, while maintaining the security of the Ethereum blockchain. Speed is important in decentralized finance, because shorter processing times can reduce the slippage of prices between the time a transaction is ordered and when it goes through, and shorten the time that transactions are vulnerable to hacking while waiting to be processed. Faster transaction times could also entice more merchants to incorporate cryptocurrencies into their businesses, making the entire network stronger.