Loopring - $LRC, Asset Review
ZkSync Sharpens Role in Future of Ethereum With $200M Funding (Blockworks, 2022)
General Information-What is Loopring
Loopring Background
Loopring Funding/Collaboration
Token Information-Tokenomics
Consensus
Additional Information-
Roadmap/What’s Next?
Technical Analysis
Conclusion
General Information-
What is Loopring?
Loopring is a decentralized cryptocurrency exchange protocol that enables users to trade digital assets securely, efficiently, and without the need for intermediaries. It operates on the Ethereum blockchain and uses a unique technology called zkRollup to process trades in batches and minimize transaction fees. Loopring's open-source architecture allows developers to build and integrate their decentralized applications (dApps) on top of the protocol. The native token of Loopring, $LRC, is used to pay for transaction fees and participate in network governance. With its emphasis on security, scalability, and interoperability, Loopring is quickly becoming a leading player in the decentralized finance (DeFi) space.
2. Loopring Background
Loopring was created in 2017 by a team of blockchain enthusiasts led by Daniel Wang, a former Google engineer and veteran of the cryptocurrency industry. The team's goal was to create a decentralized exchange protocol that could overcome the limitations of existing centralized exchanges, such as high fees, slow processing times, and security risks. They envisioned a platform that would enable users to trade cryptocurrencies in a trustless, transparent, and secure manner, without the need for intermediaries. The team also aimed to create a scalable and interoperable protocol that could be integrated with other blockchain projects and applications, thus contributing to the growth of the decentralized finance (DeFi) ecosystem. Since its launch, Loopring has grown in popularity and usage, attracting users, developers, and investors who share its vision for a decentralized and democratized financial system.
3. Loopring Funding/Collaboration
Loopring Foundation held an ICO in August 2017 raising a total of 45 million dollars according to CryptoRank which may be found here. We will cover tokenomics in the next section with greater detail as well as token allocation. The ICO has interested firms like G2H2 Capital, China Growth Capital, NEO, Fundamental Labs, Obsidian Capital, and others according to Crunchbase. Last March, Gamestop announced an NFT marketplace that is powered by Loopring’s L2. People believe that Gamestop utilized Loopring's network due to zkRollup functionality which inherits Ethereum’s self-custodial security while abstracting expensive gas fees, which allows everyone to participate. Another interesting partnership that took place two months ago was Protocol Gemini and Loopring. The goal is to experience the future of NFT gaming with Loopring’s high-speed, gas-free, and Ethereum-secure execution environment. More on that here.
Figure A
Token Information
Tokenomics
$LRC is the native token for the Loopring blockchain. Currently, the circulating supply is 1,245,991,468 with a max supply of 1,374,513,896 according to Coingecko. The early distribution can be broken down per the following: 30% of the crowd sale was allocated to the founders/project, and 50% was allocated to the investors accordingly per Messari.io. The tokens have multiple use cases like the following. $LRC is used to pay transaction fees on the Loopring network. These fees are charged for executing trades and maintaining the network's security and are paid in $LRC. Users can also stake $LRC tokens to become validators on the network and participate in network governance, such as proposing and voting on protocol upgrades and changes. Additionally, $LRC can be used to participate in token sales on the Loopring Launchpad, a decentralized platform for raising funds and launching new tokens. $LRC holders can also use their tokens to purchase discounted products and services on partner platforms and marketplaces that accept $LRC as a payment method. Finally, $LRC can be traded on various cryptocurrency exchanges and used as a store of value or speculative investment.
Figure B (Messari.io)
2. Consensus
Loopring's consensus mechanism is based on a technology called zkRollup, which is a form of Layer-2 scaling solution for Ethereum. The zkRollup technology uses zero-knowledge proofs to bundle multiple trades into a single transaction and validate them off-chain, before committing them to the Ethereum blockchain in a batch. This process reduces the overall transaction fees and increases the transaction throughput, making it more efficient and cost-effective for users. In Loopring's implementation of zkRollup, a group of validators is responsible for validating and processing the transactions off-chain. These validators are incentivized to behave honestly through a bonding mechanism, where they must lock up a certain amount of $LRC tokens as collateral. If they fail to validate transactions correctly or act maliciously, they risk losing their bond, which creates a strong incentive for them to act honestly and maintain the network's security. Once the transactions are validated and batched, a single transaction is then submitted to the Ethereum blockchain, which acts as the final settlement layer. This process ensures that the trades are executed in a trustless and transparent manner, without compromising the security and decentralization of the Ethereum network.
Figure C
Additional Information
Roadmap/What’s Next?
While there is no official roadmap from the Loopring team, they do publish quarterly updates with developments and any relevant news here. So what’s next for Loopring, one might ask. While that answer is not very clear, what is clear is the usage of their network. They have continued to gain trading volume in the bear market, with 200k Layer 2 wallet accounts created, and 43k+ smart wallets being deployed. Additionally, the space is seeing zkRollups receive more funding, as per a recent post late last year. Matter Labs raised $200M to a $458M fund that helps zkRollup developments. This makes us bullish on the future of Loopring because it was the first zkRollup DEX platform on Ethereum. It will be fun to watch how the future progresses with the potential of zkRollups.
Figure D
2. Technical Analysis
$LRC has had an amazing run from $.018 to $4 yielding ~210x + returns since 2018. Ever since $LRC hit all-time highs, we have seen the price fall towards a high time frame demand zone (grey box) which has acted as a support region. Price has already consolidated at this level and to me, it will continue to consolidate. The way the correction subdivides will give hints on how the next move plays out. Bottom structures typically take a long time to form and reverse when the bears are exhausted, so it's best to stay patient for a clear pattern. Currently, there are three scenarios that I believe will play out. (1) $LRC goes to .66 and then retrace to .45. (2) XMR consolidates above the .22 range which turns into support leading to new highs. (3) $LRC goes back to the .08 range. All in all, the price action of this chart is bullish over the long term, and holding the support(grey box) will be crucial.
Figure E
Conclusion
In conclusion, Loopring has revolutionized the world of decentralized exchanges and created a powerful impact in the blockchain industry. With its innovative technology, the platform offers fast, secure, and efficient trading, while also ensuring transparency and user control over their funds. As the world moves towards a more decentralized financial system, Loopring is well-positioned to continue its growth and make significant strides in the future. With a dedicated team and a strong community, Loopring is poised to be bullish in the coming years, making it an exciting investment opportunity for those looking to enter the crypto space. While I am bullish on Loopring, that doesn’t mean it’s correlated to the value of $LRC.