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Loopring (LRC) is a Layer 2 solution that hopes to change the way crypto is transacted and provide benefits to all crypto traders. By combining aspects of centralized and decentralized exchanges (DEXs), Loopring hopes to create a powerful new exchange that can safely provide fast transactions with low fees.
Overview of Loopring (LRC)
Loopring is a scaling solution for Ethereum. Scaling means that the project is based on the Ethereum blockchain and aims to help scale Ethereum’s network. It uses Ethereum’s open source smart contracts to create its own projects. Specifically, it is focused on creating a new exchange for crypto traders. This exchange aims to combat major issues associated with the 2 main types of exchanges.
The first main type of exchange is a centralized exchange. These exchanges work by executing trades on behalf of the investor and the exchange holds custody of users’ funds. The main issue with this system is that investors do not have direct ownership of their tokens in a centralized exchange. If the exchange were to be hacked or subject to regulation, most or all of the funds within the exchange could be lost. Because of this, many are weary of investing in crypto through centralized exchanges.
To combat this concern, many developers use the other main type of exchange, a DEX. A DEX provides investors with full ownership over all of their crypto investments. This benefit is accomplished through the use of wallets, which are a way to safely store tokens separately from any single exchange. While DEXs may be safer, high transaction fees and slow transactions can reduce their value.
Loopring hopes to do away with the negatives of both centralized exchanges and DEXs. It offers safety by allowing users to store their investments in their own wallets while also executing trades in a centralized manner. This practice allows it to offer safety and speed.
Loopring History
Loopring was initially released in December 2017 by Chinese software engineer and entrepreneur Daniel Wang. As the founder, Wang sent out millions of LRC tokens in the form of airdrops during the initial release. Since then, 2 new versions of Loopring have been created, Loopring v2 and Loopring v3. These new versions brought new fee models and more options for executing trades.
The price of Loopring hit all-time highs shortly after reaching $2.59, and it currently sits at around $1.15. If you invested at all-time lows of just under $0.02, you would be able to realize a 5,838.89% return on investment.
Is Loopring Useful?
In terms of secure and quick trading, Loopring is very useful. It combines the best parts of both centralized exchanges and DEXs to create a safe and fast trading platform.
Users can also provide liquidity on the exchange and earn rewards. Up to 80% of transaction fees are given to liquidity providers. This feature means that if you decide to lock your coins into the liquidity pool, you can earn a portion of the transaction fees.
Loopring is also looking to create a Loopring DAO (decentralized autonomous organization). Its DAO is projected to earn 10% of transaction fees on Loopring’s exchange. The members of the DAO will vote to determine the uses of the earnings. Some examples would be burning to make each token more valuable or providing more liquidity to markets. However, the DAO has not yet been released, nor has a set timeframe for its release been shared.
Where To Buy Loopring's LRC
LRC is a relatively older token and is more established than other projects. Because of this, it is available on several crypto exchanges and brokerages. Coinbase Global Inc. (NASDAQ: COIN), Gemini, FTX and Crypto.com are all great options and offer the token.
These exchanges in particular stand out due to low fees, ease of use and security. To set up an account, you need to provide an email and password. You may have to provide some basic personal information. After your account is verified and funded, you are ready to purchase LRC.
- Active Crypto Traders
Loopring Blockchain vs. Other Blockchains
Loopring currently operates on the Ethereum blockchain alongside hundreds of other projects based on Ethereum as it is relatively easy for software developers to create their own works on Ethereum. However, several projects are creating their own blockchains to combat some major issues with Ethereum. Some of Loopring’s competitors are Optimism, Polygon and Arbitrum.
One of the largest issues with Ethereum is high transaction fees. Ethereum transaction fees can sometimes reach upwards of $50 for a single transaction. Solana is a blockchain hoping to solve this issue. Solana can process a lot more transactions than Ethereum due to shorter blocks and more transactions per block. The blockchain also uses far less computing power than Ethereum. Because of this, transaction fees on Solana can be up to 200 times smaller than on Ethereum.
Cardano is another blockchain hoping to fix issues with Etheruem. As of right now, Ethereum uses a proof-of-work (PoW) consensus model. PoW means it employs computing power to verify transactions, using huge amounts of energy in the process. Cardano uses a proof-of-stake model that requires only a fraction of the energy that Ethereum uses. Cardano is hoping to be more environmentally conscious than Ethereum.
How To Store Loopring (LRC) Safely
- ERC-20 tokens
If you are looking to trade on Loopring or store it away from a centralized exchange, a wallet is necessary. Hardware wallets are arguably the safest way to store crypto as investments cannot be accessed unless a physical key is present.
Ledger is a powerful hardware wallet that supports ERC-20 tokens. There are currently 2 models available: the Nano S and Nano X. The Nano S is more suited for beginners and only provides basic functions. The Nano X is more advanced and offers features such as more storage.
Loopring (LRC) vs. Competitors
Loopring’s major competitors are other cryptocurrency exchanges. Some of the larger centralized exchanges are Coinbase, Webull and eToro. These options can provide quick transactions but may not be as secure. DEXs such as Uniswap and SushiSwap can be safe but may not be the most efficient way to purchase crypto.
Loopring hopes to solve issues of both types of exchanges. It offers quick transactions with the security of blockchain technology. However, it may not be the fastest way for investors to get their hands on crypto, and it does not have as many users as other exchanges. If it can find a way to facilitate transactions more quickly and gain more users, it has the potential to become one of the largest decentralized crypto exchanges.
Frequently Asked Questions
Is Loopring a cryptocurrency?
No, Loopring is not a cryptocurrency, but rather a decentralized exchange protocol built on the Ethereum blockchain.
What is Loopring's tokenomics model?
Loopring’s tokenomics model involves the use of its native token, LRC, to incentivize and facilitate the operations of the Loopring decentralized exchange protocol.
Can I earn passive income by staking or providing liquidity on Loopring?
Yes, by staking or providing liquidity on Loopring, you have the potential to earn passive income through rewards and fees generated by the platform’s decentralized exchange.
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About Caden Pok
Caden has been involved with crypto since 2018, when he began investing, trading, and mining tokens. He took part in undergraduate research studying cryptoeconomics at the University of Michigan, where he will graduate Phi Beta Kappa with a bachelor’s in economics in 2025. He is experienced with DeFi technology and multiple blockchains, currently investing in Ethereum and Bitcoin.