What is loopring
Crypto for Advanced
Loopring is a software that runs on top of Ethereum's blockchain (a layer 1, or base, blockchain). This implies that Loopring aims to speed up the Ethereum experience by processing components of Ethereum transactions on its own network. Consider it like establishing a secondary road off the main highway to assist relieve congestion. Loopring's creators say that this enables the protocol to achieve throughput 1,000 times that of Ethereum, with peaks of 2,025 transactions per second. Unlike Ethereum's exorbitant costs, Loopring transactions cost less than a penny.
Other blockchains, such as Avalanche and Solana, that promise to be quicker and cheaper than Ethereum may have caught your attention. These, however, are characterized as layer 1 blockchains, as opposed to Loopring. This simply implies that they, like Ethereum, are autonomous blockchains with their own validators.
Loopring's token powers an eponymous decentralized exchange that allows you to trade Ethereum tokens like USDC, AAVE, and ETH for a fraction of the cost of decentralized Ethereum blockchain services like Uniswap. Loopring's daily volume was $13 million as of December 22, 2021, according to CoinMarketCap, whereas Uniswap had a daily volume of $1.3 billion.
Loopring achieves its high throughput and cheap cost through the use of zkRollups.
Zk is an abbreviation for zero-knowledge proofs. This is a means of discreetly processing transactions. It enables one party to demonstrate to another that something is true without disclosing any further information about the transaction itself.
A zero-knowledge proof may inform you that it is raining today without you having to look out the window, or it could show a border control agent that you are qualified to enter the nation without you having to provide your name and address. Zero-knowledge proofs are essential for bitcoin protocols that do not wish to release unnecessary information to third parties or rely on a central entity in the event of a failure.
Rollups are a sort of scaling mechanism that collects batches of transactions, then "rolls" them up into a single transaction that is processed on a base layer blockchain such as Ethereum. Rollups are a method of reducing costs and boosting speeds by processing numerous transactions at once and splitting the cost of a single transaction.
ZkRollups combines these two technologies. According to Looping, it is the most secure scaling method the industry is aware of, allowing users to access their assets under any conditions. It is appropriate for applications requiring trust lessness, such as decentralized exchanges or lenders.
The Loopring network is powered by the Loopring utility token (also known by its ticker, LRC).