It happened on December 10th, 2018. Wanchain and Loopring made the announcement together. From this day forward, decentralized exchanges will be able to compete with regular centralized exchanges via new and better technological developments. Speed and cross-chain transactions start to become a reality for DEXes.
Wanchain is a futuritic version of Ethereum coded in the same Solidity language and specialized in interoperability, one of the biggest crypto dreams of the future. Wanchain is totally compatible with Ethereum. One can run any Ethereum program on Wanchain including cryptocurrencies. Loopring, on the other hand, is a protocol atop which decentralized exchanges designed to host trading platforms can be built and it is now live on the Wanchain network.
One of the first and most successful decentralized exchanges has been EtherDelta. It was a little cumbersome to operate and not oriented for newbies. But EtherDelta condensed all the essential elements of decentralization. No central authority ran EtherDelta. Funds were always in the control of holders. No trades incurred the risk of entrusting funds to anyone else.
EtherDelta seemed perfect, at least on a legal level. However, in 2018 this DEX came into the purview of the federal government’s analysis. The government deemed that this DEX was not a truly decentralized exchange and that it offered unregistered securities as a result.
Decentralized trading platforms, one by one, have been in the eyes of governments ever since, even being accused of offering unregistered securities. According to Crypto users, these DEXs were not centralized. In general, they were considered decentralized because all exchanges were developed on the Ethereum network. Any Ethereum token could be on the list for trading. However, some facts, such as the inability to trade with other crypto assets with different underlying protocols have made DEXs look like private networks where Blockchain administrators are seen as the central authority of the DEX.
What will happen then with these decentralized exchanges if they are not truly decentralized? The majority of Crypto users express deep concern about the current conditions of centralized exchanges. Many people want changes. One has to send their funds to centralized exchanges wherein they hold your coins in their possession forcing users to rely on them to keep their funds safe and secure. This represents a constant element of risk. However, the most widely used exchanges today are the centralized exchanges that can control and manipulate; they are like a new type of private banks. Indeed, many users say that these are a necessary evil, that we need them because they are efficient and extremely fast.
On this topic, Johann Ei of Wanchain has noted, “If you look at the current cryptocurrency ecosystem, a considerable chunk of digital assets is currently locked up in centralized exchanges. In order to trade between different protocol assets (eg BTC / ETH, BTC / XRP) users are forced to give up custody of their funds to “trusted third parties.” […] These are the same processes traditional financial system have been used to operate for years The crypto economy claims to decentralize the world and give back the power to the users. However, our space itself relies on centralized parties almost as much as the traditional systems it claims to disrupt. “
To consider solutions for these highly complex problems, Loopring has been conceived and established. Based on Loopring, any expert can collaborate and be part of the solution as its protocol is open source and decentralized, and is intended to stimulate and sustain the growth of decentralized exchange houses.
The protocol provides developers and exchange creators with the tools necessary to build seamless exchange platforms. Before it was integrated into Wanchain, it was already live on a several blockchain protocols including Ethereum, NEO and Qtum. Now developers who would like to use the Wanchain platform for Loopring development will have the ability to work with “wrapped” LRC tokens similar to how the protocol works in the Ethereum ecosystem.
Wanchain exhibits several advantages over Ethereum: It offers integrated access to both Ethereum and Bitcoin allowing cross-chain transfers between the two chains. Its token costs much less today than Ethereum’s Ether making it is extremely cheaper to use Wanchain – however, it is worth noting how it is actively creating a demand in the form of attracting new projects and partnerships. On the Loopring side, you can see solid advantages such as some of the most highly recognized VCs supporting it; a notable example is Obsidian Capital. Loopring also has its own financial products that can be incorporated into any exchange house, and also has its own stable currency, Loopr.
Matthew Finestone of Loopring has published that, “Historically, one of the best reasons to NOT use decentralized exchanges – even if you wanted to avoid the risk of centralized exchanges – has been because you could not use DEXs to trade across different blockchain’s assets. When you’re trading IOUs on a central server (CEX), different chains do not matter. Equipping DEXs with the same flexibility is a must. […] Now, any Ethereum-based dApp, DEX, or protocol can access Wanchain-wrapped BTC token, allowing for meaningful increases in liquidity. Wanchain-wrapping is also performed on the ERC20s (LRC and DAI) to facilitate the cross-functionality. Wanchain-wrapping LRC creates W-LRC, which removes the need to issue new Loopring tokens on future chains Wanchain supports. “
Wanchain and Loopring together can make the dream of fully decentralized exchanges happen thanks to the full interoperability property. According to experts, this will be the great step towards real exchanges that are not under the domain of a single Blockchain or its work team, and that can
democratically offer an open market to commercialize many types of cryptocurrencies.
Pinto da Costa, olé!