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What is loopring and what drives its growth?

5 min reading

Loopring a blockchain based project is being developed for Ethereum2.0 upgrade.


“Just wait for Ethereum 2.0”, might persuade the Ethereum peers when they help you with your doubts. "It will get better soon!" But then you can turn to him and sadly ask: "But what do you say now?"

You will not be alone. While the Ethereum 2.0 upgrade may seem far from over, help is currently available. Blockchain-based project Loopring is developing Layer 2 technology, or accompanying systems, to help Ethereum scale or increase capacity before updating it by 1,000 times, according to the company's former director. In addition, the scalability improvement is claimed to not affect the security of the Ethereum protocol. Investors are so confident in Loopring's technology that the price of its LRC currency rose 8.250% between May 2020 and reached the coin's highest ever value of $3.83 in November 2021.

What is Loopring Protocol?

Loopring is a program designed to run on the Ethereum blockchain (layer 1 or base blockchain). This means that Loopring seeks to speed up the Ethereum experience by processing elements of Ethereum transactions on its own network. You can think of this as making a back road from the main road to reduce traffic jams. Developers at Loopring claim that this will help the protocol achieve roughly 1000 times the bandwidth of Ethereum, with a spike of 2025 transactions per second. Unlike Ethereum's incredible fees, Loopring's transaction fees are less than a penny.

You may have heard of other blockchains, such as Avalanche and Solana, which also claim to be faster and cheaper than Ethereum. Unlike Loopring, however, they are known as Layer 1 blockchains, meaning that they are independent blockchains with their own validators, like Ethereum. Token Loopring supports the decentralized exchange of the same name, which allows you to trade Ethereum tokens like USDC, AAVE, and ETH at a lower cost than decentralized Ethereum blockchain applications like Uniswap. On December 22, 2021, CoinMarketCap reported Loopring's daily volume of $13 million; Uniswap, the most popular decentralized exchange (DEX), publishes daily volume of $1.3 billion.

Main features of Loopring

Loopring achieves high bandwidth and low costs through something called zkRollups. Let's destroy it. Zk means “Zero Knowledge”, which stands for “Evidence of Zero Knowledge”. This is a private transaction processing method. This allows one party to prove to another that something is true without providing additional information about the transaction itself.

Unknown evidence can tell you it's raining today without looking out the window or prove to border control officials that you're allowed to enter the country without providing your name and address. Zero-knowledge proof is important for cryptocurrency protocols that don't want to leak unnecessary information to third parties or want to trust a central organization if something goes wrong. An aggregate package is a type of scaling system that collects stacks of transactions, then "spins" them into a single transaction, and processes them on the blockchain at a base layer like Ethereum. Bundled plans are a way to reduce costs and increase speed by allowing multiple transactions to be processed at the same time and sharing costs for a single transaction.

ZkRollups combines both technologies. Looping describes it as "the most secure scaling mechanism known in the industry, where consumers can access their assets under all circumstances". It is suitable for applications that require desperation, such as: B. Decentralized exchange or creditors.

Loopring token

The loopring network is supported by its own useful tag called loopring (also known as its ticker, LRC). LRC was launched in 2017 and mainly supports decentralized exchange Loopring, which started in February 2020. When using DEX, you have to pay to LRC every time you process a transaction. Exactly 80% of the money goes to liquidity providers, the rest is divided between insurance companies and Loopring's decentralized autonomous organization (DAO).

What makes the LRC price go up and down?

Like other cryptocurrencies, the LRC is highly volatile. The LRC was booming in late October 2021, rising from $0.38 to an all-time high of $3.70 in two weeks. Analysts have linked the price hike to rumors that GameStop, the video game retailer at the center of the social media-powered jump in early 2021, will use loopring to create an irreplaceable token market (NFT). ) - based on blockchain art. Neither side has confirmed or denied such a partnership yet.

More broadly, some analysts believe that the price of LRC is tied to the success of Ethereum and its tier 1 scaling system and competing blockchain scaling systems. Vitalik Buterin believes the two achievements will complement each other.

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