Loopring (LRC)

Decentralized Exchange Protocol

Loopring is a protocol built on Ethereum that enables decentralized, non-custodial trading. It allows users to trade assets directly from their wallets without needing to deposit funds into an exchange. This means users keep control of their funds at all times.

Layer 2 Scaling with zkRollups

Loopring uses zkRollup technology to bundle many transactions off-chain and then settle them on Ethereum with zero-knowledge proofs. This approach increases transaction speed (up to 2,000 trades per second) and lowers fees compared to traditional decentralized exchanges.

Fee Payment and Incentives

The Loopring token (LRC) is used to pay fees on the Loopring Layer 2 network. Fees collected are partly distributed to users who stake LRC and partly to the Loopring DAO, supporting the protocol’s development and governance.

Trading and Liquidity

Loopring supports order book-based and automated market maker (AMM) exchanges, providing a fast and low-cost trading experience similar to centralized exchanges but with the security and transparency of blockchain.

Ecosystem and Use Cases

Loopring aims to build a full ecosystem including wallets, NFT marketplaces, and DeFi products optimized for Layer 2. It focuses on providing a user-friendly, secure, and scalable platform for decentralized finance and trading applications.

Pros

• Loopring allows traders to keep control of their funds at all times, as funds remain in user wallets and are never locked by orders or deposited into exchanges. This increases security and user control.
• It uses zkRollup technology on Ethereum Layer 2, which bundles many transactions together to reduce gas fees and increase transaction speed while maintaining security.
• Loopring is blockchain agnostic, meaning it can integrate with multiple smart contract platforms like Ethereum, NEO, and Qtum.
• The protocol supports decentralized exchanges (DEXs) with non-custodial order books and automated market makers (AMMs), offering access to cross-blockchain and cross-exchange liquidity.
• Loopring’s smart contracts verify and settle trades efficiently, helping users get the best prices and reducing arbitrage opportunities.
• The Loopring Wallet is a smart contract-based wallet with social recovery features, enhancing usability.
• LRC token holders have governance rights and can participate in protocol development.
• Loopring offers a mix of decentralization and centralization to balance user-friendliness and security.
• Layer 2 solutions provide cheaper fees for transfers and trading compared to Layer 1 Ethereum.
• The protocol has shown resilience in the market and has potential for growth based on its technology and fundamentals.

Cons

• Some users report delays when withdrawing funds from centralized exchanges built on Loopring, especially if the operator is unreachable or the website is down, which can lock funds for days or weeks.
• The Loopring Wallet depends on users protecting their seed phrases and devices; losing access to the device can complicate wallet recovery.
• Initial setup of Loopring’s smart wallet requires gas fees, which can be a barrier for new users.
• There is some sell-side pressure and whale dumping observed in the market, which may affect token price stability.
• The project is still developing, and some planned integrations or features have been put on hold to focus on core development.
• Some community members express concerns about the project’s long-term value and market conditions affecting investment potential.
• The mix of decentralization and centralization may not satisfy users seeking full decentralization.

Founders

Loopring was founded by Daniel Wang and Jay Zhou in 2017. Daniel Wang is the CEO and founder of the Loopring Foundation, and Jay Zhou serves as the COO.

Background of Founders

• Daniel Wang: A software engineer with experience at Google, JD.com, and other tech companies. He also founded a centralized crypto exchange called Coinport before starting Loopring.
• Jay Zhou: Has a background in risk management and financial operations, previously working at PayPal and Ernst & Young.

They created Loopring as an open protocol for building decentralized exchanges on Ethereum, aiming to improve trading by combining off-chain order matching with on-chain settlement.

Investors in Loopring

Loopring has received funding from multiple investors over several rounds. Key investors include:

• Kosmos Ventures
• Simon Jenson
• TrustVC
• Fundamental Labs
• Hash Capital
• Hashchain Capital
• China Growth Capital
• NEO

In total, Loopring has about 7 to 10 institutional investors who have supported the project since its founding in 2017. The project raised around $45 million in its initial coin offering (ICO) and has had additional funding rounds involving these investors.

Shariah Compliance of Loopring

Loopring is considered halal by some Islamic finance perspectives because it operates as a decentralized exchange protocol without involving interest (riba), which aligns with Islamic finance principles. It uses its LRC token for governance, fees, staking, and rewards within its ecosystem, focusing on decentralized finance and blockchain technology. However, definitive halal certification or fatwa from a recognized Islamic authority specifically for Loopring is not explicitly stated in the available information.

Reasoning

• Loopring’s LRC token is used for protocol governance, paying fees, staking, and rewards, which are generally acceptable activities in Islamic finance if they do not involve interest or gambling.
• The protocol aims to improve efficiency and security in crypto trading without engaging in prohibited financial practices.
• Some Islamic finance forums and advisory firms discuss Loopring’s halal status but do not provide a clear yes or no verdict publicly.
• The absence of interest (riba) and the use of blockchain technology for decentralized exchange are positive indicators for halal compliance.

Answer: Yes, Loopring can be considered halal based on its use and structure, but individuals should consult a qualified Islamic scholar for personal guidance.