Bitpush Exclusive Interview: How Loopring Plans To Scale Ethereum And Lower Fees

As Ethereum has surged past the $1,000 price level demand for the network has spiked, causing transaction fees to rise to prices most users can not afford. Loopring founder and CEO, Daniel Wang, told BitpushNews that the only way for Ethereum to change the lives of everyday users is by solving the scalability issue.

Loopring is a layer two decentralized exchange protocol aiming to manage fees and avoid network congestion by leveraging zkrollups. Loopring has recently gained lots of attention in the cryptocurrency community, with their utility token, LRC, rising over 2.5x since the beginning of the year, and over 25x since January 2020. With Loopring, users no longer have to spend tens of dollars to send a simple transaction from address to address, and the cost of a decentralized exchange transfer goes from upwards of $50 during peak congestion to less than a penny. This is significant in helping Ethereum achieve its goal as the "World Computer" it set out to be, and allows for anyone, not just those willing to pay high transaction fees, to use the blockchain.

According to Wang, Loopring is a “combination of a wallet and Layer 2 solution” which will allow for users to be able to use zkrollup technology to achieve extremely fast and cheap transactions on the Ethereum blockchain. However, the project did not start out with this goal. 

"We do onchain order matching, but later we found out that scalability is an issue, so we switched to layer 2, so now we offer a zkrollup based layer 2 solution specifically for transfers, for AMM swaps, and for orderbook trades."

Zk-Rollups, also known as zero-knowledge rollups, are an advanced technology used on Ethereum to achieve more scalability. Right now, Ethereum can only handle about 10 transactions per second, which is why it can sometimes take upwards of thirty minutes for a payment to go through. Zk-rollups work by taking hundreds, or thousands, of Ethereum transactions and “rolling them” together into one large transaction, which saves users time and money. With this technology, Loopring can handle 3,000 transactions per second.

The project is also a decentralized exchange protocol, and allows for users to have an experience like Uniswap or EtherDelta without all of the high fees associated with Ethereum.

Not only does Loopring allow for fast and cheap transactions, but also they strive for the same level of security as Ethereum, and Wang wants the project to “be as secure as layer 1” meaning that storing your funds in the Loopring wallet and on Layer 2 is as secure as Ethereum itself. Having fast transactions would mean nothing without strong security and the reassurance that your funds will not be lost or stolen, so this is a significant part of why Loopring has had success in onboarding users to their layer 2 solution. As of January 2021, they have over 10,000 Ethereum addresses using their Zk-rollup technology.

The Loopring token, LRC, has seen a massive increase in price in the past few months. The token is not required for transactions, but instead offers users the opportunity to earn some of the fees received by the protocol. However, some exciting speculation around the future use of the token has no doubt helped the price as well, as Wang told us they are planning on creating new tokenomics for the LRC token within the coming weeks.

Unlike many other cryptocurrency projects, Loopring is incredibly results-oriented, and has spent very little money on advertising, instead electing to use their ICO funds on creating a time of primarily engineers and developers. Wang stated he does not regret this decision, as it has led to Loopring’s technology advancing significantly. However, he wants 2021 to be the year of growth, and plans on doing more promotions, marketing, and PR for the project. 

With the launch of Ethereum 2.0 coming in the next few years, which promises to fix lots of the scalability issues seen today on Ethereum, Wang is not phased about this undermining Loopring’s purpose.

“We feel like the sharding solution and the Zk-rollup solution, they can work together to scale Ethereum even further. They don't conflict with each other. They don't compete with each other.”

Even though Loopring is the primary layer 2 solution at the moment, Wang humbly admits that this may not always be the case. Instead of seeing this as the death of the project, he sees it as an opportunity to improve.

“We have to be able to learn quickly and adapt to the fact that there are more even smarter people out there than we are. Sometimes we have to follow. Sometimes we have learned from others and we have to think more and dare to innovate in the future.”

By Lincoln Murr

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