While the amount of DeFi projects and NFTs on Ethereum has grown, so have transaction fees and processing times. The typical ETH transaction cost reached a record of $40 in February 2021. Whether you used the crypto with live blackjack dealers or poker tables, you know this is only going to rise.
Many Layer-1 protocols address these issues by creating networks that compete with Ethereum. Layer-2 protocols, on the other end, are intended to solve concerns such as network congestion and excessive gas prices. They do this by constructing scaling alternatives on top of Ethereum.
The Loopring team runs the Ethereum Layer-2 scaling technology, Loopring (LRC). It enables users to build DeFi payment systems and decentralized exchanges on top of Ethereum. These can compete with centralized exchanges in terms of performance. Loopring offers low-cost, high-speed DeFi services. As a result, customers can avoid high fees and poor speeds that many connect with Ethereum’s decentralized network.
Loopring is defined as an open-sourced and audited non-custodial exchange and payment mechanism. It can process up to 1,000 times more transactions per second than Ethereum. Each transaction costs only a fraction of a cent.
Loopring asserts that with zero-knowledge proofs, you can achieve high-performance trading. And, it can do this without violating Ethereum-level security assurances. Throughout the trade’s lifetime, users have complete control over their assets. Nobody in the Loopring ecosystem has to trust others. zkRollup ensures that assets are always in the hands of the user.
Loopring’s own LRC token is used to reward Zero-Knowledge Rollup operators and liquidity providers. Loopring’s L2 App delivers DeFi services. These include protocol development, infrastructure development, and user-facing solutions. It bills itself as a low-fee, high-speed platform for trading, exchanging, liquidity provision, and payments.
A Rundown of the LRC Token
The platform’s main cryptocurrency is LRC, an ERC-20 token that runs on Ethereum. Loopring acquired $45 million in an initial coin offering in August 2017. (ICO). Ever since the inception of the Loopring protocol, more than 20 million LRC have been burnt. Any LRC that has been frozen for operating exchanges is presently off the market.
Stake LRC to gain a portion of the protocol payments made by any exchanges established on Loopring. 70% of protocol fees are distributed to stakeholders, 20% is saved for the Loopring DAO funding, and the rest of the 10% is burnt.
DAO votes on whether to spend the cash on grants, transitory loss protection, liquidity incentives, or purchasing back LRC to burn.
On top of the tokens sold during the ICO, the market was supplied with LRC acquired by miners. This was done to validate Proof of Work consensus throughout Loopring network operations. The project burns tokens using the LRC Burn Rate method, enhancing the market value of tokens. The coin is used to pay the Loopring transaction commission.
LRC can be used for the following purposes:
- The ability to vote on development updates
- Structure of rewards for ring miners and relays
- LRC tokens being burned
- A DEX operator staking to minimize platform costs
- Lock-up periods while using Loopring to execute a DEX
Understanding How Loopring Operates
Loopring surpasses regular decentralized exchanges by bulk-processing requests off-chain. Moreover, it ensures accurate execution via zkRollups. This refers to the sort of proof Loopring must produce to ensure the accuracy of off-chain transactions.
In order to keep out of Ethereum’s network congestion, zkRollups merge multiple transactions into a single one. This enables rapid and affordable trade execution outside of the Ethereum blockchain. These transactions are subsequently added to the blockchain. Here, zero-knowledge proofs are utilized to ensure that off-chain transactions are valid.
To fill orders, Loopring also employs an order ring. Each order ring comprises up to 16 orders. It establishes a loop in which each order can swap the needed tokens without the need for an opposing order for its pair.
Loopring also protects assets by appointing a trustworthy third party as a guardian. Users that utilize Loopring Wallet pay only 1% of their Ethereum Layer 1 fees. Loopring is blockchain agnostic. This means that it can interface with any platform that employs smart contracts.
Loopring is now available on the Ethereum and Neo blockchains, with upcoming plans to add inclusion on the Qtum blockchain.