Why Say Loopring Will Be One Of The Booming ZK-Rollups Platforms In 2023?
Layer 2 with ZK Rollups technology is leading the trend in the Defi field because of its advantages. One Rollups protocol that is gaining attention from the community is Loopring (LRC), and it is predicted to explode this year. So today’s article will explain to you what the reason behind this argument is.
Why are ZK-Rollups exploding?
Ethereum’s biggest problem is its excessive gas fees, which people pay when making transactions, such as buying NFTs. These fees can be extremely high, especially during high network congestion. This can make using Ethereum prohibitively expensive for many users and has led to the development of alternative blockchain networks that offer lower fees and faster transaction times.
Layer 2 was born to solve the problems of transaction speed, fees, security, and decentralization issues.
ZK Rollups technology bundles multiple transactions into one… and through a complexity that I don’t understand, it is possible to process these pooled transactions in a way that makes them super fast, super cheap, and highly secure.
And that is also the reason why Layer 2 using ZK Rollups technology is increasingly booming.
What is Loopring (LRC)?
Loopring is an open protocol platform, and China built it by building on Ethereum’s Blockchain technology. Loopring’s automatic decentralized system helps to process all Crypto transactions in the most efficient way with the desire to protect users and minimize risks and transaction costs.
Loopring has stated that they are setup in a way that will allow them to adapt to new technologies in the long term, even though their current technology is said to be the strongest solution for the short and medium term.
Loopring Token (LRC) is a token built on Ethereum’s ERC-20 standard. LRC Token is a Loopring DEX decentralized exchange token that integrates Loopring Protocol. Loopring Protocol is the token conversion protocol, and its role is similar to Kyber Network, 0x Protocol.
In Loopring Protocol, LRC is the token for Ethereum’s token conversion protocol and LRN (NEO) and LRQ (Qtum). Uses of LRC token:
- Acting as a Fee Model to pay Ring Miners to receive and maintain Order Books
- Participate in Decentralized Governance
- Burned in LRC Burn Rate
Loopring is not a decentralized exchange DEX (Decentralized Exchange) but a protocol to help build a DEX on blockchains. AMM stands for Automated Market Maker, a tool that helps bring about automatic liquidity on exchanges.
The Loopring project started in June 2017, with the zkRollup Layer2 solution enabling low-cost, high-throughput transactions and payments on the Ethereum network.
Features of Loopring
High security is the most outstanding feature of Loopring. At the same time, thanks to some of the following features, transaction costs are relatively low:
- Distributed network: All orders are processed automatically. The entire amount in the transaction is under the control of the smart contract holder on the Blockchain.
- Order Sharing: Orders are split into several pieces from this mechanism, applying game theory to optimize every trading outcome. Thereby protecting the transaction from any risk of DDOS attack.
- Round order matching: Loopring interface (LRC) automatically intelligent, decentralized between exchanges and blockchains. As soon as it exceeds the direct market value so many times that it is alarming, users can immediately recognize it.
- Cross-chain: Loopring is not Blockchain dependent and all ERC20 tokens on Blockchains are tradable with Loopring.
The reasons why Loopring exploded
ZK Rollup is the future
As mentioned above, ZK Rollup is arguably the best solution for scaling Ethereum.
Ethereum Founder Vitalik Buterin says ZK compilations are likely to win for simple payments, exchanges, and other application-specific use cases, but in ZK’s compilations, medium to long-term will prevail in all use cases as ZK-SNARK technology improves.
Besides, the founder of the most extensive Binance Exchange in the market, CZ, also said that he took ideas from Vitalik and improved PoR with zk-SNARK to protect user privacy.
Technology like Loopring can be built on top of Ethereum to maintain the security/reliability that Ethereum provides while reducing gas fees to near zero and allowing projects/DEXs to scale to tens of thousands of dollars thousand transactions per second. Imagine paying $100 for $10 NFT, a new technology comes along and turns the $100 fee into a few cents.
Improved scaling problem
Loopring powers highly scalable decentralized exchanges and payments by batch-processing thousands of requests off-chain, with exact execution verifiable through ZKP.
Loopring enables fast, cheap, and secure blockchain transactions. They can process thousands of transactions per second, the transaction costs are almost zero, and since it’s built on Ethereum, it’s also secure. Loopring allows companies to create exchanges based on a decentralized order book.
Loopring is scalable, and instead of performing worse with more users… it performs better / has more liquidity. When Ethereum 2.0 is released, this project will scale much more significantly than Ethereum 1.0, but this is not even necessary for their success, as their staff stated in the discord of the company Surname.
This mechanism breaks orders down into small pieces, applying game theory to optimize every trading outcome. Thereby protecting the transaction from any risk of a DDOS attack.
A new point with Loopring Protocol mentioned in their plan is that they will apply this solution to other Blockchain Platforms in the future, such as LRC (Ethereum – already), LRN (NEO – already), LRQ (QTUM – future).
According to this plan, the future Loopring (LRC) will be much more extended to many other platforms, which it looks forward to. However, their opponents will certainly not stop at what they have.
Currently, Loopring coin is racing with many other competitors such as: Bancor Network (BNT), 0x Protocol (ZRX), Kyber Network (KNC). The common point of these projects is that they are all aiming to solve the problem of token conversion with low cost and shortest time.
Fragmented liquidity can cause problems if DEXs do not use consistent standards to interact with each other and if orders are not shared/spread across a wide network.
Above is our share of why Loopring will become one of the strongest warriors in the boom of ZK Rollups technology.
Overall, Loopring is an open source protocol built on top of Ethereum with the aim of making it possible for developers to build secure, scalable decentralized exchanges DEX and AMM from which to build. build a sustainable financial system.
The big plus point of this project is that they will apply this solution to all established Blockchain Platforms in the future such as: LRC (Ethereum), LRN (NEO).
Hope the above article is useful to you. If you have any suggestions, please leave them below in the comments section to make our article better.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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