What is Loopring: an overview of the project and its cryptocurrency

In the face of technological advancements, many projects find their solutions becoming outdated. Ethereum, the second-largest cryptocurrency by market capitalization, also faced this challenge. To aid Ethereum, the developers of the Loopring project introduced a protocol of the same name, which enhances the efficiency of Ethereum. Let’s delve into how it works.

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Loopring is the brainchild of engineer and programmer Daniel Wang. His team created a second-layer framework for the Ethereum blockchain known as Loopring zkRollup. Let’s uncover the significance behind the name.

How does Loopring work? The primary Ethereum network is referred to as Layer-1, serving as the foundational layer for the cryptocurrency. Unfortunately, due to technical limitations of Layer-1, Ethereum network operations have become increasingly expensive with the project’s growing popularity, while the transaction speed has decreased. To address this issue, Loopring zkRollup was developed as a Layer-2 blockchain protocol that acts as an overlay on top of Layer-1.

“We are building protocols, infrastructures, and user-centric products for the future of finance. We believe that this future will be built on Ethereum, specifically on Layer-2 (zkRollups),” is how the developers describe the blockchain protocol.

The Layer-2 solution has been available on the market for several years, with transaction capabilities within the Ethereum network being launched in December 2018.

Building upon L2 Loopring, the project team has developed various products. Among them, users have been offered a cryptocurrency wallet and a decentralized cryptocurrency exchange (DEX). Additionally, Loopring zkRollup can be utilized for creating and transacting non-fungible tokens (NFTs).

The protocol’s code is open-source and available on GitHub. The developers encourage users to stay updated on the project through their blog.

How does Loopring work? 

The developers utilized the zkRollups scaling solution to create the Loopring blockchain protocol, which alters the process of recording transaction data in the cryptocurrency network. Here’s a breakdown of how it works:

• Layer-1: The network sequentially records transactions, with miners prioritizing transactions with higher fees. During times of high network congestion, a queue of transactions forms, requiring users to increase fees to expedite their transfers.
• Layer-2: The protocol aggregates transaction information and batch processes multiple transactions in the blockchain simultaneously. This approach reduces the load on the Ethereum network, resulting in lower transaction costs and faster processing speeds.

A similar solution to enhance network throughput exists for Bitcoin, known as the Lightning Network. L2 Loopring is a versatile protocol that supports cryptocurrency trading, coin exchanges, liquidity provision, and payments.

“The Loopring protocol can handle up to 2,025 transactions per second while maintaining the same level of security as the underlying Ethereum blockchain,” states the project’s official website.

Loopring cryptocurrency

The project has its native token called Loopring (LRC), which is used for transactions within the L2 network. Token holders can also participate in decision-making processes related to the project’s development. As of writing, LRC is listed among the top 50 cryptocurrencies by market capitalization according to CoinMarketCap.

The Loopring network implements a token-burning mechanism, whereby 10% of LRC commissions are regularly destroyed. This gradual reduction in available coins creates scarcity, positively influencing their value.

LRC cryptocurrency experienced growth in November 2021 when rumors of a potential partnership between the project and the GameStop video game retailer circulated. The trend towards metaverses has also fueled interest in the platform, as Loopring tools can be used to construct virtual worlds.

Additionally, there were reports of a shortage of LRC on Coinbase, the largest cryptocurrency exchange. According to CoinMarketCap, the maximum recorded value of LRC reached $3.83 on November 10, 2021.

Unfortunately, the rumors of collaboration with GameStop have not been confirmed even a month later, leading to a correction in the cryptocurrency’s price. Nonetheless, LRC managed to establish itself among the successful coins of autumn 2021.

Is it worth investing in a Loopring token?

Investing in Loopring instruments may become less advantageous due to the upcoming Ethereum transition. Ethereum is expected to shift to the Proof-of-Stake (PoS) mining algorithm, which aims to address the low bandwidth of Layer-1. As a result, Loopring tools may no longer be necessary.

In July 2020, researchers at the British Institute of Physics suggested that the Lightning Network could enhance Bitcoin’s scalability. It is possible that Layer-2 solutions may also impact Ethereum.

However, the cryptocurrency may still experience growth during periods of hype, presenting opportunities for investors to profit from LRC.

Therefore, it is important to note that the project’s cryptocurrency should not be viewed as a long-term investment. Nevertheless, the active news surrounding the project can be leveraged for potential gains.

In conclusion, the price prediction for Loopring is generally positive. The protocol addresses current issues in Ethereum. However, considering the forthcoming restructuring by Ethereum developers, the tool may lose relevance in the future. Despite this, the active news environment surrounding the coin’s price chart can still be utilized to capitalize on market movements.