Background Behind Loopring (LRC)
Loopring was established by Daniel Wang, who currently serves as the CEO of Loopring Foundation, the governing body responsible for the development of the Loopring protocol. Wang, a software engineer and entrepreneur based in Shanghai, China, holds a bachelor’s degree in computer science and a master’s degree in computer science from Arizona State University.
Throughout his career, Wang has held various positions in prominent tech companies. He served as a lead software engineer at JD.com, a Chinese e-commerce giant, where he worked on projects involving medical devices, engineering, search, recommendations, and advertising systems. Additionally, he worked as a tech lead and senior software engineer at Google. Furthermore, Wang co-founded two companies: Yunrang Information Technology Ltd in Beijing and Coinport Technology Ltd, a cryptocurrency services firm.
In 2017, Loopring conducted an initial coin offering (ICO), raising 120,000 ether, which was equivalent to $45 million at the time. However, due to the tightening regulations surrounding such offerings in China, Loopring was compelled to return a significant portion of their public sale funds. Wang stated that approximately 80% of the raised funds were returned, while the remaining proceeds were utilized by the Loopring team to continue the development of their exchange.
Loopring (LRC) Basics
Loopring’s primary innovation lies in its incorporation of zero-knowledge proofs, specifically in the form of zkRollups. It’s worth noting that zkRollups are just one among several proposed methods aimed at enhancing the suitability of the Ethereum blockchain for DeFi applications. Other competing cryptographic proposals include xDai, Matic, Optimistic Rollups, and Plasma.
Zero-knowledge proofs are cryptographic techniques that enable a platform to assert the truth of a statement without revealing any additional information. For instance, a website utilizing zero-knowledge proofs could verify your eligibility without requiring your birthdate or personal details. This aspect ensures that Loopring prioritizes the security and privacy of its users, reducing the risk of data breaches.
By leveraging this principle, Loopring “rolls up” or combines numerous transactions into a single bundle. Similarly, zkRollups employ this technique by bundling hundreds of transfers into a solitary transaction, enabling fast and cost-effective trades to occur initially off the Ethereum blockchain. Subsequently, these transactions are settled on the blockchain, where zero-knowledge proofs are employed to confirm the accuracy of off-chain transactions. Through the implementation of zero-knowledge proofs, Ethereum can ascertain the validity of all transactions without needing individual verification.
It’s important to highlight that Loopring does not utilize Proof-of-Work or Proof-of-Stake for its consensus mechanisms. Instead, due to the application of zero-knowledge proofs, the system ensures the security of each transaction. Loopring utilizes a distinctive security measure based on a multi-layered Merkle Tree, which adds an additional layer of protection to its operations.
Ethereum Blockchain
Loopring is a decentralized exchange program and layer-2 scaling protocol that aims to enhance the performance of Ethereum by conducting various operations, such as trades and transfer settlements, off the Ethereum blockchain. By leveraging its own network, Loopring endeavors to expedite the user experience of utilizing Ethereum by processing certain aspects of Ethereum transactions internally.
Loopring (LRC) Staking
Users have the opportunity to stake LRC (Loopring’s native token) and receive a share of the trading fees paid to the protocol. Approximately 70% of these fees are distributed among users who have staked LRC. Another 20% of the fees are allocated to the Loopring Decentralized Autonomous Organization (DAO), creating a fund that can be utilized by Loopring users in the future. Lastly, 10% of the fees are burned, effectively removing them from circulation.
Loopring (LRC) Mining
LRC can be obtained through ring mining, a process where locking up your funds is not required, but the LP tokens must remain in your Loopring layer 2 account. The protocol has the ability to match up to 16 orders for different cryptocurrencies in a circular trade known as an order ring. Ring miners and order rings collaborate to execute orders and receive rewards in return.
Loopring (LRC) Transaction Fees
Loopring finalizes trades between users by settling transactions on the Ethereum blockchain, even though the initial matching process occurs off-chain. To optimize efficiency, these trades are batched, reducing costs and enhancing speed. Each batch of transactions is subsequently added to the Ethereum blockchain, accompanied by a zero-knowledge proof that enables anyone to reconstruct the off-chain transaction that occurred.
Loopring asserts that its network is capable of accommodating over 2,000 trades per second, showcasing its ability to handle high transaction volumes. This feature instills confidence in users, assuring them that their transactions are authentic and remain unaltered by unauthorized parties.
Loopring (LRC) Supply
At the time of writing, Loopring has a circulating supply of 1.3 billion LRC coins, a market capitalization of $300 million, and a 24-hour trading volume of $13.8 million. Similar to other cryptocurrencies, the supply of LRC is capped at a maximum of 1.3 billion coins.
Loopring (LRC) Security and Safety
Being a decentralized exchange, Loopring eliminates the presence of a central point of failure that could be susceptible to hacking attempts. Moreover, the utilization of zkRollups ensures that trades are settled off-chain, significantly reducing the possibility of system manipulation.
Loopring operates on both the Ethereum and Neo blockchains, with future plans to incorporate support for the Qtum blockchain.
The security of tokens within Loopring is reinforced by the robust hash functions employed by their respective underlying blockchain platforms.
Loopring (LRC) Volatility
The current valuation of Loopring (LRC) stands at $0.23 at the time of writing. It has experienced significant volatility, with an all-time high of $2.40 per LRC and an all-time low of $0.018 per LRC, both of which were recorded in December 2019. This price fluctuation highlights its highly volatile nature.
Review and Final Thoughts on Loopring (LRC)
Loopring has the potential to revolutionize the world of cryptocurrency payments due to its exceptional features, making it a highly attractive option for investors and traders alike. Its key strengths lie in its affordability, speed, and security, setting it apart from traditional payment methods and other cryptocurrencies.
The platform’s innovative design allows users to bypass costly intermediaries and conduct peer-to-peer transactions, resulting in significantly lower fees compared to conventional banking systems and many other cryptocurrencies.
Loopring leverages a unique protocol that enables high throughput and rapid settlement of transactions. This swift processing capability ensures that users can complete their transactions quickly, enhancing the overall user experience and facilitating real-time exchanges.
The platform also incorporates robust cryptographic techniques and decentralized protocols to safeguard users’ assets and personal information. By eliminating single points of failure and central authorities, Loopring significantly reduces the risk of hacks and potential security breaches, instilling confidence in its users.
The combination of affordability, speed, and security positions Loopring favourably. As it continues to gain traction and expand its user base, Loopring has the potential to transform the way digital payments are conducted, contributing to the broader adoption of cryptocurrencies in the global financial landscape.