Ethereum’s popularity is undeniable, however, some major roadblocks prevent it from achieving wider adoption. Chief among these issues are network congestion and expensive transaction fees during periods of increased demand. To try to solve this problem, Loopring has developed a “layer 2” solution that aims to address Ethereum’s network congestion and high costs. Check out how blockchain can help the agriculture industry maintain crop quality.
What is Loopring?
Layer 1 of a blockchain network is analogous to the underlying infrastructure that carries out all transactions. It verifies newly submitted blocks and adds them onto the blockchain after they are approved. Layer 1 is an essential portion of any functioning blockchain system, responsible for conducting operations and recording changes on the ledger. Layer 1 solutions are the foundation of blockchain technology and cannot be changed drastically.
Therefore, layer 2 solutions have become popular in recent times as they can speed up processes without burdening the underlying layer 1 infrastructure. Loopring is a decentralized exchange that utilises such layer 2 protocols to process transactions faster on its platform. By increasing the number of trades that can be processed and allowing transactions to happen 1,000 times faster than Ethereum does, this technology brings all sorts of benefits – such as lower transaction fees and less congestion on the base Ethereum blockchain.
Working of Loopring
Loopring has implemented a groundbreaking technology known as zero-knowledge proofs in the form of zkRollups. This cryptographic technique allows websites to ensure that only eligible users have access while protecting them from their privacy being compromised. As such, Loopring is highly secure and prevents any personal data leaks regarding its users.
Loopring has enhanced its security features through the addition of zero-knowledge proofs in the form of zkRollups. A zero-knowledge proof is a cryptographic tool used to authenticate users without providing any additional personal information, making it difficult for outsiders to gain access or leak user data. This provides Loopring with an extremely secure framework protecting users from privacy breaches.
Loopring provides an alternative to traditional consensus mechanisms, such as Proof-of-Stake and Proof-of-Work. This is done by utilizing a security model based on multi-layered Merkle Trees and zero-knowledge proofs, creating an extremely secure system in which every transaction can be trusted without the need for mining or staking.
What are the features of Loopring?
Loopring is a decentralised exchange built on the Ethereum blockchain and provides users with the ability to trade tokens quickly, securely and at low cost. Not only that, but Loopring also facilitates payments via ETH or ERC20 token transfers – all in an incredibly efficient manner.
The Loopring Network is powered by the LRC Token, which facilitates all activity on the network. This includes paying fees when making trades, rewarding liquidity providers, and staking LRC enabling users to earn a passive income in return for their liquidity provided. 80% of these trading fees are used as rewards for those providing liquidity while 20% goes towards insurers and The Loopring DAO. By staking your tokens you can receive ongoing rewards for helping keep this system active.
zkRollups provide tremendous value to Loopring in terms of scalability for the entire Ethereum network. With zkRollups, multiple trades can be packaged into a single bundle and processed securely without any need for validation. This secured method helps greatly enhance the scalability of transactions on the Ethereum network.
How does Ethereum get better with the help of Loopring?
Loopring has helped tackle some of the major issues faced by Ethereum, including network congestion and high transaction fees. Its payment system makes it so that anyone using Ethereum can transact without paying exorbitant amounts in gas fees. Additionally, Loopring set a new standard for decentralized exchanges (DEX) with its zkRollups technology which has since been adopted by many other developers who have seen its success.