- Loopring is a new DEX built on top of Ethereum
- It promises to solve some key problems facing other DEXs like speed and cost.
- But the exchange is still suffering from a number of UX issues .
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Loopring Exchange, a decentralized exchange that doesn’t force users to relinquish control over their funds, launched a public beta today on the Ethereum mainnet with four trading pairs. It claims to be the first publicly Ethereum-based DEX that uses a technology called zkRollup, as well as cheap and fast.
Decentralized exchanges, unlike centralized exchanges, don’t hold user funds in wallets owned by the exchanges, and aren’t owned by a centralized party. Recall how hackers can steal funds from exchanges, or how exchanges sometimes run away with customer funds? Decentralized exchanges, at least in theory, avoid those vulnerabilities. Sometimes.
Loopring also doesn’t ask for any identifying information from its customers—apart from an Ethereum address—keeping things anonymous.
But most decentralized exchanges are expensive and slow. Loopring promises to be none of these.
In part, that’s because it uses zkRollup, a technology that allows hundreds of transactions on the Ethereum blockchain to be rolled-up into a single transaction. It sits on top of Ethereum, and means that the network can run faster and smoother—no more bottlenecks, which occur when the network gets too full.
The “zk” part stands for “zero-knowledge proof”, another way of making things quicker. According to an explainer on the matter on EthHub, zero knowledge reduces the amount of information contained in a transaction, saving on computing and storage resources.
Loopring’s not overpromising just yet: “we admit that the current implementation is far from being perfect at the UX level,” wrote Daniel Wang, Founder of the Loopring Foundation in a blog post today. It takes up to thirty minutes to process deposits and withdrawals, its relayer is “still quite centralized”, and the beta only supports one million users.
Wang will have to scale his own, uh, scaling solution, for the project to succeed. “We are not thrilled it is not designed for the masses just yet,” he wrote.
In the past few weeks, DeFi, the catch-all term for decentralized financial solutions like what Loopring is offering, has had a terrible time. With a series of daring hacks, and increasing noise around the over-centralization of DeFi solutions, Wang has his work cut out.
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