What the [email protected]#$ is Loopring?

That was my first thought when I saw LRC appear on a list of Top 100 cryptocurrencies according to market cap. I may have seen it appear here or there on Reddit but I couldn’t be sure. This token is more than four years old but only recently achieved a daily trading volume near $1 billion. That’s a lot of ground for a random cryptocurrency to gain in such a small amount of time!

What is the source of this miraculous resurrection? I haven’t heard of any dark sorcerers or wizards willing it into reality nor did I see any Tweets pumping this token. It wasn’t an obvious pump-and-dump scheme like the Squid Game token and it piqued our interest. It turned out that meme stock and Reddit darling GameStop might be responsible.

On November 16th, a deposit of 61.3 million LRC (worth more than $160 million) occurred on the network with internet sleuths suggesting that it is related to GameStop’s foray into NFTs. This fits with other rumors of a partnership between LRC and Gamestop. So what in the world is going on and why is LRC suddenly valuable? Is it just another meme or something worth investing into?

 

The Problem:
Inefficient Exchanges

Both centralized exchanges (CEXs) and decentralized exchanges (DEXs) have their issues. A centralized exchange is non-custodial, meaning you don’t have the private keys to your cryptocurrency unless you move it elsewhere. Many CEXs are also limited in which cryptocurrencies you’re able to purchase. The other issue with some CEXs is that trades aren’t always immediately settled on the blockchain; this is an issue of transparency.

While DEXs ensure that you retain the custody for your keys and let you trade hundreds and sometimes thousands of cryptos, they have their unique issues. But DEXs have lower efficiency and are often limited by the speed of the underlying blockchain; in addition, liquidity of different tokens is spread among many different DEXs.

 

The Solution:
Layer 2 Scaling of Ethereum to Improve Exchanges

Loopring allows developers to build efficient non-custodial DEXs without any gas-fees, which bundle transactions together for efficiency. These are settled much in the same way as Visa or MasterCard transactions; they may appear almost instantaneous to you but are settled a little bit later. This is called an Ethereum Layer 2 solution because it helps the network settle transactions quicker, without altering the underlying architecture of Ethereum.

 

How Does Loopring Work?

Loopring uses the Zero Knowledge Rollup method to bundle and settle transactions. Anyone using this network will either be participating in a crypto transactions or otherwise bundle and relay the transactions to the blockchain. When you make a transaction, you broadcast it as information and it is picked up by a relayer. A large amount of transfers is then converted into “proofs of data” rather than relaying the data itself. Think of it like compressing a lot of individual files into one .zip folder. This entire .zip folder can later be sent and settled on the Ethereum blockchain. Due to this, the gas costs are really low and can facilitate a high volume of transactions – more than 2000 per second (this is higher than Visa).

One downside of this method is that it is very resource intensive for the relayer and leads to a level of centralization; thus the security of these rollups will depend on the trustworthiness of these transactors.

 

A Brief History

Loopring coin is an ERC-20 token. This crypto was founded by a former Google software engineer, Daniel Wang, in 2017. Today, the project continues to be developed by the non-profit Loopring Foundation based in Shanghai.

It’s initial coin offering launched in August of that year, raising $45 million in funds for further development. However, due to strict regulations in China, much of this funding was returned. Since its start, the project has been updated five times and in 2020 even launched its own DEX. It has also launched its own smart wallet that runs the Layer 2 Loopring solution.

Their website touts that LRC has the same security features as Ethereum but it allows for fast, gas-free transactions.

LRC and GME ?

Let’s take a step back and talk about GME. As many hedgefunds were shorting it, Redditors took it upon themselves to buy shares of the stock and help it go up. After all, while large institutional investors were down on the company – individual retail investors saw value.

GME is poised to rebound as a valuable tech and gaming company and even has plans for an NFT platform in the works. A recent job listing for the head of Web 3.0 gaming reads: “Future creators won’t just build games but also the components, characters, and equipment. Blockchains will power the commerce underneath.”

Since rumors of LRC collaborating with GME emerged on Reddit, the price of LRC went up more than 500%. These rumors emerged when someone dug into an open-source code inventory for Loopring on GitHub, finding alleged code to build GME’s NFT marketplace. If this is true, GME would have a gas-free Ethereum-based NFT market for gamers.

The Highs and Lows of LRC

Loopring has a circulating supply of 1.33 billion tokens which are rewarded to machines and nodes that rollup, relay and certify transactions for the blockchain. It hit a high of $3.83 on November 8th, a huge increase from its price of $0.40 just a month prior. The total market cap now sits at $3.4 billion thanks to the recent GameStop rumors.

 

Buying and Storing LRC

Buying LRC may require you to use a DEX since it has only recently gained its notoriety. However, it is listed currently on Coinbase and Gemini. You can also use 1inch, which is an aggregator of different DEXs to find the best deal with the lowest fees to swap another crypto for LRC.

Coinbase Gemini
Ease-of-Use ✔✔✔✔✔ ✔✔✔✔✔
Trading Fees Vary depending on your transaction; high fees Vary depending on transaction; up to 1.5% of your purchase
Payment Method Debit or Credit Card Debit or Credit Card
Recurring Buy? Yes Yes
Other Notes Offers the opportunity to earn various crypto for free through learning rewards
Security & Reputation Strong reputation and track record. FDIC Insured for Fiat. FDIC Insured for Fiat.

Once you’ve purchased the Loopring, you can move it to a custodial wallet and even stake it to earn some level of rewards. You can also use the usual ERC-20 compliant hot wallets like MetaMask as well as either Ledger or Trezor for more secure cold storage. Exodus unfortunately does not support LRC at this time.

Note: At the time of this writing, Loopring does not recommend staking its token with the network. For now, HODL on.

Hot Wallets Cold Wallet
Wallet Metamask Ledger Trezor
Supported Platforms Windows, Android,  macOS, iOS, Connects to any computer via USB Connects to any computer via USB
Supported on Cold Wallets? Yes
Mobile App Available Yes No No
Initial Setup 10 – 15 mins 10 – 15 mins
Non-Custodial Yes Yes Yes
Staking No No No

 

The Case for Investing

Pros

A Meme-Adjacent Layer 2

If LRC is indeed collaborating with GameStop, then that means they’re entering the lucrative NFT market. LRC would allow an NFT marketplace without any gas fees and would facilitate play-to-earn gaming. Think about the incredible growth of the Axie Infinity platform and its token over the pandemic. It’s token grew from around $0.30 to well over $120 in the past year. Several crypto gaming companies have now raised more than $100 million in funding and mainstream game studios are taking notice. If LRC is indeed involved in GameStop’s NFT endeavour, LRC could experience huge gains.

Additionally, if it isn’t involved – then it is still a solid Layer 2 solution for Ethereum. It leverages all that security along with low costs and the ability to process so many transactions at once. It has already succeeded in developing and releasing its own DEX and wallet. There’s a solid track record for Loopring.

Cons

There are two main downsides for investing into LRC. Mainly, there is the possibility that the price tanks if the rumors of LRC’s involvement with GME are false. The other downside is technical, the infrastructure for using zk-Rollups is somewhat centralized. There are other Layer 2 solutions and at this stage, it’s anyone’s guess which ones will be used most often on Ethereum five years from now.

 

Should you Invest?

While there is no guarantee that LRC  or anything else will continue to go up, there is a chance. It may be tapping into the nascent crypto gaming market and worst-case scenario, it is a functional Layer 2 Solution for Ethereum. If you were willing to throw some money at DOGE or SHIB you’re already someone who swings a little harder for the fences. Compared to a lot of tokens LRC seems worth consideration for your portfolio. Don’t invest more into LRC than you can afford to lose or be prepared to HODL for awhile to see how it plays out.

 

Takeaways

As a character from The Simpsons might say, this is a perfectly cromulent crypto.

Due to rumors of LRC’s collaboration with GameStop, its price went way up but has since settled down along with much of the crypto market in early 2022. Nevertheless crypto enthusiasts have taken notice.

LRC is an ERC-20 token that secures the Loopring Layer-2 network. This retains the security of the Ethereum blockchain while allowing it to scale by bundling up many transactions. That means that trades and transactions occur very quickly, 2000 transactions can be processed in a second, and of course there are no gas fees.

LRC has proven capable of developing a decentralized exchange as well as its own wallet, so it isn’t purely a meme-adjacent coin. There is some circumstantial evidence indicating their collaboration with GameStop meaning that the price may go way up if this is confirmed.

Overall, this is a pretty okay investment – moderate risk but also the opportunity for moderate to high returns.