Loopring: A Crypto Revolution
Fundamentals
Hey everyone, I've been browsing for a while but thought I'd try my hand at a writeup.
Source:
myself on medium
TL
R
· Strong fundamentals and solves Ethereum’s scalability issue
· Rumored GameStop partnership will bring adoption to the masses
· Apes stronger together — a powerful community
What is Ethereum? Why are fees bad?
Ethereum is the second largest cryptocurrency by marketcap and is primarily known for smart contracts. Users pay an ETH fee each time they interact with these contracts and the network. Due to Ethereum’s rapid growth,
fees are becoming increasingly expensive. This is because Ethereum’s transactions per second (TPS) are limited to around 13, but the demand is significantly higher.
Ethereum is an exclusive club in this sense:
- Pay to enter and the queue is single file
- The estimated price is based on the length of the queue (and it’s a pretty long line because it’s pre covid Saturday night)
- People that pay more can cut in front
- The process repeats
High fees are a barrier to adoption and scalability. Ethereum may be the hottest club in town, but many will look for another unless the fees are reduced.
What is Loopring?
Loopring is a layer 2 zkRollup exchange and payment protocol. It helps Ethereum scale by increasing TPS and reducing fees. This
article summarises rollups:
- Currently gas is paid for every transaction on Ethereum
- Rollups take a bunch of transactions and perform the computations off chain. They return the results of the transactions with proof.
- Instead of paying a fee for each transaction, the fee is split across multiple transactions**, reducing the cost by up to 100x and improving scalability**
How do these computations work?
Zk stands for zero knowledge, meaning we can prove A is true without conveying additional information about B. These were designed with privacy in mind, however they help with scalability via data compression. Here’s a
Where’s Waldo explanation. A simpler example is proving your age. Instead of showing your license, you show a card that says ‘over 18’ because it was verified by another party. No additional information from your license is shown, but you have proof you are 18+.
There are a few types of rollups but Ethereum’s founder Vitalik acknowledges that
zkRollups are the future of Eth. Loopring is also working with the Ethereum Foundation on zkEVM’s which will enable layer 2 to work with a broader range of applications (the more the merrier).
Tokenomics
Matt Finestone’s
post is the most comprehensive overview of Loopring’s tokenomics. Loopring’s max supply is around ~1.4B with
roughly 97% in circulation. This is good because we will not see any sudden increases to supply which usually leads to price suppression when tokens vest or VC’s dump.
Tokens can also be used to stake, provide liquidity and contribute to the DAO. Loopring is deflationary meaning the supply only decreases. This occurs when transaction fees are burned and DEX’s misbehave.
Loopring DEX
Decentralised exchanges enable users to exchange coins with each other instead of an intermediary like Coinbase. The main benefit is that coins remain in the user’s wallet whereas in an exchange, the exchange owns the coins until you withdraw them. If you’re here from GameStop, DEX’s are like directly registering your shares.
Loopring’s DEX is
secure, scalable and affordable. Operating a DEX requires a stake of 250,000 LRC which is another factor that decreases supply.
Loopring Smart Wallet
Loopring’s wallet is designed for the masses:
· On fiat ramp — Deposit money (real money) directly to the wallet
· Social recovery — Recover your wallet by selecting friends, institution or hardware (easier than buying a metal plate to engrave your 12 word seed phrase)
This is superior to normal wallets because it simplifies the process of transferring funds and wallet recovery, which are common barriers for non crypto users. A smoother experience is always better for adoption.
GameStop (GME) and why you’re probably here
The word on the street is that Loopring’s partner is GameStop. This has led to exponential growth in the Loopringorg subreddit.
I believe Loopring will be a top 10 coin if 1 and 2 are satisfied:
- Loopring’s partner is actually GameStop.
- GameStop’s NFT implementation has a good use case and goes smoothly
- Success is possible without GameStop, but it will take longer.
Usage is a key driver of value for crypto —
who uses it, what for and how often. Adoption will occur once the average joe can easily answer these questions, or when they start interacting with blockchain without realising.
GameStop taps a potential market of
55 million PowerUp users. Some may be familiar with crypto, however we are interested in those that are not. Once these users interact with crypto in a way that doesn’t involve buying animal coins, they will begin to see the value. Imagine if just 20% of these users told a friend. Since GameStop is listed on the NYSE, a partnership also adds credibility to Loopring. When other companies see a company with real humans investing real money in crypto, you can bet they’ll start exploring use cases.
So what is the use case?
It’s speculation at this point. An NFT marketplace is being built, however we don’t actually know what the NFT’s will be. NFT stands for Non Fungible Token which is a unique token that demonstrates
ownership of a digital or physical good. These goods could range from cosmetic items in games to the games themselves. It’s also worth mentioning that a key theme behind Ryan Cohen (chairman at GameStop) is digitization.
Unlikely but epic: NFT CD Keys. GameStop’s business model allows users to return games for store credit. This could become peer to peer if CD keys were NFT’s. NFT’s ownership would allow the user to play the game and then sell the NFT back to each other, with GameStop taking a percentage of each resale. NFT’s also have traits enabling differentiation between versions of the game (ultimate edition, release edition etc). This could influence the game’s content as certain editions could come with additional cosmetics.
Slightly more likely: In game items. Many platforms feature marketplaces that enable users to buy and sell goods, however most tend to lock the credit onto that platform. eg selling a hat on the Steam marketplace gives Steam dollars, but you can’t withdraw without 3rd parties. Transforming items into NFT’s would enable play to earn as users would be able to sell their items for real money. We’ve seen this happen with Axie Infinity and a similar move was announced by Ubisoft and Tezos today. We could even see an extension to the metaverse based on this.
TLR GameStop will bring the masses. Assuming the use case is good, the masses bring their friends.
How likely is the partnership? You tell me.
· GitHub leaks in Loopring’s code mentioned GameStop several times
· Gamestop is building an NFT marketplace
· Loopring is launching an NFT marketplace with a ‘premium partner’ in Q4
· Matt Finestone, head of blockchain at Gamestop used to work at Loopring. He left on good terms and remained an advisor to Loopring.
· Daniel Wang (Loopring’s founder) mentioned that this quarterly report will be worth 10 quarterly reports.
· Daniel also said ‘no comment’ when asked about GameStop, implying an NDA.
· Daniel struggled to write the Q3 report in fear of breaking an NDA.
· Loopring team has squashed misinformation before but no comment on anything GameStop related
Neither parties have denied the partnership and doing so now would lead to disappointment.
Loopring confirmed there will be a big Q4 announcement, so it is a matter of time. Some believe it will be on the 9th since GameStop’s earnings call is on the 8th and they are unable to make announcements prior to this. Others check twitter religiously. I will be holding patiently.
Community
Strong communities drive adoption and Loopring’s grows stronger by the day. The community ranges from people that have believed in the tech since day 1 to apes that hate Kenny. This is the same bunch that caused hedge funds billions of dollars by buying up GameStop shares. Whilst the subreddit is mixed about the new arrivals and their emojis, I am impressed by Loopring’s ability to unite such a diverse bunch. Many workplaces spend a lot of money to do the same thing, yet here we are on our own accord.
Logic does not apply here and this community will not sell until they are driving lambos.
This is evident by the increasing average hold time at Coinbase and Coinbase frequently running out of LRC due to people withdrawing it. Combine this with Loopring being 97% in circulation, being deflationary, and an incredible technology. Supply goes down, and prices go up.
Welcome to the revolution.
Anyone playing the long game should be prepared for the harshest scenario domestically. Bots about to be riled into a frenzy with ALL the right talking points.
They ramping it up now. So predictable.
” . Brothas gonna have their great-great grandkids building statues in the 2100s because of moves being made today and the sheep will still be in poverty.
