What is Loopring (LRC)? Could it be the right moment to buy?
Loopring, built on the Ethereum blockchain, is a layer 2 that enables the building of decentralized apps. The project’s goal is clear: to create a quick and scalable ecosystem that combines the functions of both centralized and decentralized trading platforms. The LRC is the layer 2 native token that is based on proof of work. Its use cases are quite standard: LRC miner payment, staking pools, and transaction fee reduction. The LRC, like the market as a whole, is witnessing rather considerable growth. But what are the situations to think about? Let us now examine our graphs to determine our solutions.
What is Loop Ring [LRC]?
LRC is the Loopring coin, which is built on Ethereum, open technology for establishing decentralized crypto exchanges.
In 2020, the average daily trading volume across the whole cryptocurrency industry ranged between $50 and $200 million. The majority of these transactions take place on centralized cryptocurrency exchanges, which are private company-operated online platforms that hold user cash and allow the matching of buy and sell orders.
These systems all have a number of drawbacks in common, hence a new sort of exchange – decentralized – has evolved to try to solve these drawbacks. Fully decentralized exchanges, on the other hand, are not without faults.
Loopring’s vision is to combine centralized order matching with decentralized order settlement on a blockchain to create a hybrid offering that combines the best features of centralized and decentralized exchanges.
LRC currencies were released to the public in an ICO in August 2017, and the Loopring protocol was first deployed on the Ethereum mainnet in December 2019.
Who are the founders of Loopring?
Daniel Wang, a software engineer and entrepreneur headquartered in Shanghai, China, is the founder and current CEO of the Loopring Foundation, which oversees the development of the Loopring protocol.
Wang earned a bachelor’s degree in computer science from the University of Science and Technology of China and a master’s degree in computer science from Arizona State University.
Prior to joining Loopring, Wang held several leadership and management positions at large technology firms, including senior software engineer at Boston Scientific, senior director of engineering, research, recommendation, and advertising system at Chinese e-commerce giant JD.com, and senior technician and senior software engineer at Google.
Wang has co-founded many firms, including Yunrang (Beijing) Information Technology Ltd. and Coinport Technology Ltd., which provides bitcoin services.
Loopring’s basic idea is to merge parts of centralized and decentralized cryptocurrency exchanges to develop a system that takes use of their own benefits while eliminating inefficiencies.
The predominant manner of operation for crypto trading services is now centralized exchanges. Although popular and easy, utilizing a centralized exchange has a variety of hazards, the most significant of which is their conservative character. Because these exchanges store users’ cash between the deposit and withdrawal locations, they are at danger of being partially or fully lost as a result of prospective cyber attacks, bad actors inside the exchange, or regulatory interference.
Another key issue with centralized exchanges is a lack of transparency: because transactions are not completed on the blockchain, but rather in the exchange’s internal records, the exchange can manipulate prices and utilize user cash for unlawful reasons while in custody.
To address these issues, a new sort of trading service has evolved in recent years: a decentralized cryptocurrency exchange (DEX). Rather than holding user cash on deposit and processing transactions in-house, it enables buy and sell orders to be connected directly to one another and transactions to be resolved on a public blockchain.
While removing the dangers of custody and transparency, the DEX has its own limitations, including reduced efficiency (when compared to centralized alternatives), restricted capabilities of the underlying blockchains, and fragmented liquidity.
Through novel hybrid solutions, the Loopring protocol strives to maintain the benefits of decentralized exchanges while lowering or eliminating their inefficiencies. Loopring seeks to improve execution efficiency and DEX liquidity by centrally controlling orders but settling deals on a blockchain and merging up to 16 orders into circular trades rather than merely permitting a single pair of trades.
Is Loopring a zk or optimistic rollup?
Many DEXs, such as Uniswap, use automated market makers (AMMs) to connect buyers and sellers. These AMM protocols execute transactions automatically, substituting liquidity pools for traditional order books. Liquidity pools are crowdsourced asset pools used to provide liquidity. DEXs, as opposed to centralized exchanges (CEXs) that employ order books, typically have cheaper transaction costs and support for more digital assets. Centralized exchanges, on the other hand, benefit from more robust liquidity and faster throughput speeds than DEXs. Loopring promises to bring the advantages of centralized exchanges to the decentralized ecosystem by employing zk-Rollups, cutting-edge innovation in blockchain technology.
A zk-Rollup is a Layer-2 function, which means it operates on top of the main blockchain and interfaces with the Ethereum network to boost scalability. A zk-Rollup may combine hundreds of transactions into a single data-light Zero-Knowledge Proof, which is subsequently validated in a batch on the Ethereum network. This enables far greater transactional throughput than Ethereum can currently manage alone. The zk-Rollup calculation process takes place off-chain, yet the data and transactions are never removed from the Ethereum blockchain. Integrating the zk-Rollup process with DEX protocols enables far more complicated computations, resulting in cheaper transaction costs and dramatically enhanced liquidity.
In the context of the larger Ethereum network, validating a block of transactions using zk-Rollups is faster and less expensive since less data is provided, and a smart contract is only required to validate the final, light cryptographic proof. These transactions are also published to the Ethereum blockchain as call reference data, which needs far less compute than retrieving data from the network. Loopring is speeding blockchain technology adoption by combining all of these services into a single, open protocol, enhancing efficiency throughout the entire Ethereum ecosystem.
Specificities of the Loopring project
While zk-Rollups are the technology that drives Loopring, it’s how it’s implemented that makes the multifarious protocol so valuable, particularly with the recent Loopring 3.0 upgrade. Loopring has an on-chain/off-chain switch known as OCDA, which allows for much quicker transactions when data is available to transfer off-chain for calculation. Loopring also employs a high-throughput arbitrage method that achieves near-instant, internet-scale liquidity by utilizing a system of order rings, order miners, and order sharing.
On-chain data availability (OCDA): On-chain data availability is a characteristic of the Loopring encryption system (OCDA). This hybrid method to data storage gives consumers the option of storing their data on-chain or off-chain. When the OCDA function is disabled, data is kept on-chain, and the network may do 2,025 transactions per second (TPS). However, if OCDA is enabled and data is stored off-chain (through what is known as Validium mode), throughput may approach 16,400 TPS. Non-custodial exchanges may be able to match the performance of its centralized, custodial counterparts by utilizing Loopring 3.0 developments such as OCDA.
Ring miners: Loopring employs a novel consensus protocol that avoids standard order books and the AMM procedures that manage liquidity pools. Instead, network users known as ring miners are in charge of quickly processing requests before they are performed or canceled. Ring miners are paid a service charge in the form of LRC tokens, the Loopring protocol’s native currency, or a split on the order amount’s margin.
Order rings: The Loopring smart contract specifies how to fill an order ring when a ring miner completes it. If the smart contract can execute the order on either side of the transaction, it will perform an atomic swap — a straight transfer from the smart contract to the user’s wallet. Order rings also aid in ring-matching, the act of completing orders by connecting them together and settling numerous deals through different users. Order rings distinguish Loopring from other DEXs such as Waves, IDEX, and Bancor.
Order sharing: Order rings on the Loopring protocol provide the function of order sharing as well. Order sharing is used to break orders into partial components until the entire original order amount is fulfilled if the Loopring DEX smart contract cannot execute an order in a single trade. Ring-matching technology combines many individual orders into a single order ring. Following the validation of the orders by the Loopring smart contract, each party receives the assets in exchange. Orders are routed via the order sharing system as part of consecutive order rings until the incomplete orders are entirely satisfied.
How many Loopring [LRC] coins are there in circulation?
The smart contracts that comprise the Loopring protocol manage the issuance of LRC coins.
The main way to earn LRCs is through “ring mining”: in order to boost the liquidity of the Loopring network, orders are not precisely matched as pairs of two cryptocurrencies. Instead, in a circular transaction known as an ordered ring, the protocol may mix and match up to 16 orders for various cryptocurrencies.
LRC tokens are awarded to Loopring network nodes for aggregating individual orders into order rings, preserving public order books and trading histories, and, in some situations, broadcasting orders to other relays.
How is the Loopring network secured?
Loopring now runs on the Ethereum and Neo blockchains, with plans to add support for the Qtum blockchain in the future. Each of these networks has its own coin: LRC and LRN for Ethereum and Neo, respectively; the Qtum network token will be named LRQ when it launches.
The hash functions of the underlying blockchain platforms safeguard these tokens: LRC by Ethereum’s Ethash, LRN by Neo’s SHA256 and RIPEMD160, and LRQ by Qtum’s PoSv3 proof-of-stake algorithm.
How much TVL is on Loopring?
According to l2beat.com, there is at the time of writing ~250mUSD of value locked on Loopring.
While this might sound like a lot, keep in mind that a whopping ~63% of the TVL is locked in LRC token.
Technical analysis Loopring
To begin, below are the many stages listed on a weekly scale. What we can observe is the massive loss the asset may have had following its peak at $3.85, causing it to retrace to a prior resistance zone at $0.65. LRC has managed to stay above this level, giving it significant weekly support presently. A fall of this level would send a clear signal: it would be a manifestation of sellers wishing to drive the asset to lower levels. So, the next level at which LRC may respond is $0.35.
Of course, we haven’t arrived yet! On the other hand, we can observe a second element on our graph: the evolution of the LRC through time. Indeed, in addition to the support that the asset manages to sustain, it has been trapped at around 1.22 dollars for several weeks. A breach of this barrier will send a clear signal: a big rally of buyers to drive the LRC up in price.
As you have already realized, it is vital to watch price activity on a weekly basis. The possibilities will alter depending on whether the range exit is bullish or bearish. To best maximize our prospective positions and forecast future price movements, I recommend switching to a smaller time scale using a daily chart.
On a daily basis, we notice a continual breach of the top boundary of the range. Will the LRC always burst upward? No, nothing is now being played. It is probable that the asset will be reintegrated into its range as a result of a false breakout. As a result, he would have to lateralize for a period of time. In this context, I ask you to keep an eye on the polarity zone depicted in blue.
This polarity point is significant. When the price is above, it functions as support inside the range (as shown previously), boosting the chances of an upside breakout. When the asset is below the polarity zone, it functions as a resistance, increasing the likelihood of a bearish breach of the range. However, the price has not returned to this zone, favoring (for the time being) a positive scenario for the LRC. So, what should we take away from this?
It might be a reversal. After the daily breakout, the asset might return to the upper limit of the range, converting it to support. As a result, we will have confirmation of the departure before we begin a probable bullish rally. In this perspective, what are the LRC’s aims to be considered? On my chart, I’ve depicted many technical levels that have previously worked as support or resistance. Of course, do not expect a return to the most ambitious goals in the near future. It is vital to use caution since the LRC asset will not take off on its own if bitcoin displays symptoms of weakness.
Key resistance and price patterns Loopring (LRC)
Furthermore, a bullish rise (assuming it occurs) does not take a straight path. Price should form patterns by moving slowly between its supports and resistances. So here are the objectives to remember:
We are nearing the finish of our LRC study. As you can see, we are at a critical juncture since the asset has reached the end of its trading range. As I mentioned before in this research, it is critical not to declare victory! Nothing has been determined yet. Keep an eye out for confirmation of the bullish breakthrough. The last thing we want to see is reintegration back into the range. With this analysis, you have all of the cards! Prepare for price variations in the next weeks by keeping an eye on the various pricing levels.
The most crucial thing, whether the circumstance is bearish or bullish, is to avoid being caught off guard. Considering the many situations is probably the best thing to do in this case.