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Over the last couple of years, Ethereum onboarded thousands of users and products, but it’s hardly following the growth with scaling the platform. Thankfully, there are layer 2 solutions to help, and protocols like Loopring adapt to solve whatever issue is at hand. What is Loopring, its native token LRC and why is it trending? Get comfy and dive into our guide.
Key Takeaways
- Loopring is a protocol on top of Ethereum that operates as a decentralized exchange platform. Its features let it double as a payment channel, with which users can send ETH and ERC20 tokens for a fraction of Ethereum’s fees;
- To secure the network and introduce a reputation system for participants, Loopring has a stakeable LRC token;
- Loopring is trending because the gaming retailer Gamestop opened a public beta of their NFT marketplace, built on this protocol.
What is Loopring?
Loopring is an Ethereum layer two solution that combines a payment service with a partially decentralized exchange. The goal of the platform is to combine the security of the Ethereum blockchain with ZK-rollup scaling and the convenience of centralized services.
On the one hand, Loopring operates like a decentralized exchange (DEX), with markets, order books, and matching orders. On the other hand, with Loopring users can send ETH and ERC20 assets much faster and cheaper than natively on Ethereum.
Loopring’s market-making is partially off-chain (the data is stored in a Merkle tree, a P2P data structure), but by making settlements on-chain they achieve a level of trustlessness comparable with other DEXs. Zero-knowledge proofs are a cryptographic function that records the off-chain data on the blockchain securely.
How Does Loopring DEX Work?
On Loopring, the balances of users are stored as Merkle trees and instead of tracking the exchange of assets, the Merkle trees track transfer requests. Once the time for settlement comes, the DEX creates a ring settlement request: the orders are matched, a request is sent to the operator and they include it in a block.
The network participants who commit the results of trading are called ring miners and they receive a block fee as a reward for their work. There are also exchange operators who run markets and collect a share of trading fees, but this role comes with a larger commitment.
The users can withdraw funds at any time, and there is a contract that prevents exchanges from withholding withdrawals. If the exchange fails to process all withdrawal requests in a specified amount of time, its other functionality gets irreversibly shut down.
Loopring’s Features
- On-chain data availability (OCDA). This is an option that allows DEX operators to choose between storing data on-chain for more security or off-chain for higher scalability;
- Ring mining. Instead of relying on automated market makers, Loopring has its users fill in orders as fast as they can for a fee in reward;
- Ring orders that can include up to 16 trades. When settled, only the result is included in the blockchain and performed as an atomic swap.
Loopring’s Features
- On-chain data availability (OCDA). This is an option that allows DEX operators to choose between storing data on-chain for more security or off-chain for higher scalability;
- Ring mining. Instead of relying on automated market makers, Loopring has its users fill in orders as fast as they can for a fee in reward;
- Ring orders that can include up to 16 trades. When settled, only the result is included in the blockchain and performed as an atomic swap.
History and Team behind Loopring
At the concept stage, Loopring was intended to be a blockchain-agnostic platform, potentially compatible with all smart contract-supporting public blockchains. The first one, which saw the official launch of the protocol, was, of course, Ethereum.
To fund the development and launch, the Loopring Foundation held an ICO over two weeks in August 2017. The 697.5M or 50% of the total supply of the utility token LRC went for $0.067 a piece at the time.
Loopring v1 on Ethereum was launched in December 2017, followed by the NEO blockchain testnet in 2018. A year later, Loopring v2 was released and the current version, Loopring v3, also was released a year later, in December 2019.
The Loopring Foundation still oversees the development of Loopring, even though there have been plans to cede governance to a DAO. The Foundation was founded by Daniel Wang, and its current CEO is former CTO Steve Guo.
Wang is a computer scientist and software engineer with extensive experience in Boston Scientific, JD.com, and Google. Guo has similar academic and professional experience in Intel and Cheetah Mobile and brought the zk-SNARK vision to Loopring.
What is LRC?
| Total Supply | 1,374,513,896 LRC |
| Transactions per second | up to 16,400 tps with OCDA |
| ICO Price | $0.067 |
| Emission Type | Programmatic Burn |
Loopring on Ethereum uses a native token of the ERC20 standard with the ticker LRC.
In the ICO and presales, 50% of the total supply was distributed to investors, which included both VCs and retail ICO participants. Loopring Foundation reserved 30% of the supply, 20% of which was locked for 2 years and vested monthly over 2 more years.
Part of these will be directed to the Loopring Ecosystem Advancement Fund (LEAF), which will accumulate 20% of the total supply. LEAF funds are to be used to reward community members for contributions.
What is Loopring Crypto Used For?
The primary use of the LRC tokens is staking in return for the fee distribution. A minimal time frame to start receiving the rewards is 90 days.
Loopring exchange operators also need to stake for safety reasons, and the threshold depends on whether they enable on-chain data availability. With it, the minimum staking amount is 250,000 LRC instead of 1 million.
Comparison with Similar Projects
Loopring doubles as a scaling layer two on Ethereum that utilizes zk-rollups. However, it is not the only provider of this approach.
Immutable X (IMX), the primary focus of which is NFTs, is also powered by zk-rollups. This platform estimates its potential maximum throughput a bit lower, at 9,000 tps.
Unlike Loopring, Immutable X uses zero-knowledge STARK proofs instead of SNARKs. STARK proofs are more cost intensive but they are claimed to be more secure.
Polygon also houses several protocols that use zero-knowledge rollups, such as ZKSync. Polygon itself, though, is more of an interoperability protocol, allowing users to choose a network with the function they find the most useful.
What is Loopring Criticized For?
Like all other Ethereum scaling solutions, the consensus layer merge (previously known as Ethereum 2.0 merge) is an event that brings uncertainty about the future of layer 2. For the time being, Ethereum remains relatively congested and Loopring and the like are in demand, but sharding on layer 1 might change that and make these protocols obsolete.
Moreover, Vitalik Buterin argued that rollups as a whole are a novel technology that cannot be fully decentralized yet. Loopring is more or less decentralized but operates partly off-chain, which may turn away some of the users.
Loopring was designed as a blockchain-agnostic platform and is not limited to Ethereum, though. So how are the alternatives going?
Loopring has actually deployed on the NEO blockchain and even held several rounds of airdrops of the LRN token in 2018. Since then, this effort has been paused and is all but abandoned. The Qtum implementation and LRQ token have been scrapped entirely.
Partnerships and Future Plans
The price of the LRC token has been flying on the Loopring news about the Gamestop NFT marketplace. It is now in public beta, minting and deposits are now open to users.
The NFT functionality was added to Loopring in summer 2021, but a collaboration this prominent came into the limelight only a couple of months ago.
There is no official roadmap, only quarterly reports on the work that has been done, in the official blog. However, on Reddit, you can find unofficial updates with items in the pipeline: Loopring DAO, off-ramps, wallet updates, and more.
How to Store LRC?
What is Loopring best stored in? First of all, there is an official mobile wallet, to which the developers pay a great deal of care.
The ERC20 version of the LRC token can also be stored in popular Ethereum token wallets: Metamask, MEW and others.
Last but not least, LRC is supported by multi-currency wallets such as Exodus or hardware Trezor wallets. Both have the option to seamlessly exchange it with other altcoins provided by ChangeHero.
How to Buy Loopring with Crypto on ChangeHero?
Purchasing LRC with crypto on ChangeHero only takes five steps:
- Choose the currencies on the home page, amounts, and the type of exchange. Provide your wallet address in the next step and check the amounts;
- Double-check the provided information, read and accept the Terms of Use and Privacy Policy;
- Send in a single transaction the sum of the cryptocurrency you will be exchanging. Fixed Rate transactions have a 15-minute limit;
- And now, relax! We are doing all the work: checking the incoming transaction and doing the exchange as soon as it arrives;
- As soon as the exchange has been processed, your LRC is on the way to your wallet. We’ll be happy to hear your feedback if you enjoyed using ChangeHero.
Our support team is always available in the chat widget on the website, official Telegram group, or through the email: [email protected].
Conclusion
Loopring is a protocol of many uses, aiming to solve problems with exchanges and provide an alternative to L1 Ethereum at the same time. Thanks to Gamestop, which became popular with retail investors and then crypto users, LRC went on a blazing run.
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Frequently Asked Questions
What is Loopring?
Loopring is a protocol on top of Ethereum that operates as a decentralized exchange platform. Its features let it double as a payment channel, with which users can send ETH and ERC20 tokens for a fraction of Ethereum’s fees.
What is the purpose of Loopring?
The goal of Loopring is to combine the security of the Ethereum blockchain with ZK-rollup scaling and the convenience of centralized services.
What is LRC?
LRC is the native token of the Loopring implementation on top of Ethereum. It is rewarded for participating in the network’s operations and used mostly in staking, either by individuals or exchange operators.
Is Loopring a DEX?
Loopring is different from other DEXs because it does not rely on an automated market maker (though it has AMMs) but has ring miners execute orders for a reward in LRC. Loopring exchange operators can opt-in for decentralized data storage, making the operations transparent and secure (and more costly).
