The Loopring decentralized exchange (DEX) has partnered with Layer 2 solutions provider StarkWare to launch an innovative new automated market maker.

In an announcement on July 30, the Loopring DEX revealed that it had entered into a collaboration with StarkWare to work on a revolutionary cross-layer 2 automated market maker called dAMM.

The decentralized AMM, first introduced in March under the name Caspian, aggregates liquidity in a single Layer 1 pool and enforces logic with a Layer 1 contract. This creates better capital efficiency and development flexibility while maintaining L1 security, the blog post explained.

Loopring heralded it as a revolutionary development for scaling DeFi.

“We predict that dAMM will become one of the most fundamental primitives to scaling DeFi.”

The blog post went on to explain that dAMM’s functionality has been extended to enable a cross-L2 market making while allowing the same liquidity pool to be used across multiple layer 2 protocols asynchronously.

This means that several L2 protocols can access the same liquidity pools which enable the scaling of AMMs without liquidity fragmentation. StarkWare stated that this asynchronicity is a core feature of dAMM, making shared AMMs practical for the first time.

“By asynchronicity, we mean the ability for one L2 to process dAMM transactions without mandatory communication with other L2s using the same dAMM L1 liquidity pool.”

It explained that the dAMM separates the liquidity pool from the pricing state which allows it to put multiple states on top of the same pool. It can then assign each L2 protocol its own dAMM state, which facilitates the asynchronous cross-L2 automated market maker.

“dAMM demonstrates how the permissionless nature of L1 can be harnessed to reverse the liquidity fragmentation that some feared would follow the rise of L2s.”

In March, Loopring launched layer 2 bitcoin trading pools as reported by BeInCrypto.

Loopring’s native LRC token was trading for $0.234 at the time of press according to CoinGecko. Over the past week, LRC has notched up 17% having recovered somewhat from its July 21 low point of $0.19.

The DEX token is still a long way down from its 2021 high of $0.82 in mid-February and it has been battered 90% from its all-time peak of $2.40 in January 2018.

According to DappRadar the total value locked for the L2 exchange is just $122 million — a far shot from the market leaders.

The post Loopring DeFi Exchange Unveils Cross-Layer 2 AMM With StarkWare appeared first on BeInCrypto.

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