Far From “Supercharged,” Loopring Finally Launches DEX Beta
Loopring launch DEX two years after ICO raise
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After successfully concluding a $45,000,000 ICO raise in August 2017, Daniel Wang and the Loopring team have finally released the beta to Loopring Exchange, a decentralized token exchange. For all its promise, however, this latest release has a series of issues that will likely keep the DEX from topping the DeFi charts.
Nonetheless, the founders’ honest take on these hurdles is a fresh change for the crypto space.
Loopring’s DEX Faces Old Problems
Loopring Exchange (Loopring.io) is the first application built on top of the Loopring Protocol. The two initiatives are distinct, much like relayers built on 0x Protocol.
It leverages ZK-Rollups, a scalability solution that draws from zero-knowledge proofs. Typically used in privacy-centric crypto projects, ZK-Proofs have also found a home in many layer 2 roadmaps. This is because implementing these proofs can reduce the amount of data included in a transaction.
Transactors broadcast relevant information (i.e., ETH addresses, values, network fees, and nonce) to the network. Relayers collect this information and create bundles. They stamp these bundles with a cryptographic proof that proves that all the transactions included in the bundle are valid. For their work, relayers earn a small fee relative to the amount they have staked in the network.
It’s almost like a certificate of authenticity, except math, rather than a centralized authority, proves it. More importantly, the technology is gaining a lot of traction in the Ethereum space.
In Loopring’s implementation of the technology, they are hoping that bundled transactions will help solve a common problem among decentralized exchanges (DEXes). In exchange for decentralization and security, DEXes face serious challenges in scalability.
In a post announcing the exchange, Wang wrote:
“It is 100% non-custodial, inheriting Ethereum-level security guarantees while capable to perform at a throughput 1000x greater (and 600x cheaper settlement cost) than the current state of the art layer-1 DEXes.”
Despite the promise for improved performance, Wang’s exchange likely won’t be able to meet the throughput outlined above. The Loopring Exchange can only handle 100 trades-per-second, according to the post.
The speed of transactions, the cost-per-trade, and opening up the DEX to a wider variety of crypto wallets are the next steps for Wang and his team. For reference, the cost of trade on Loopring.io is currently $0.0025, and MetaMask is the only compatible wallet on offer.
Interested traders are incentivized to test out the exchange via three reward programs, which began on Feb. 27 and will run to Apr. 30. There are currently only four trading pairs on the platform, including ETH/DAI, ETH/USDT, DAI/USDT, and LRC/ETH.