As the world of Ethereum Layer 2 comes into focus, one player that contributed to solving scaling problems on the eternally clogged network is a Chinese home-grown protocol called Loopring.
Loopring just released a new payment product called Loopring Pay, which aspires to be kind of a PayPal for crypto. Built on top of Loopring v3.0, an ETH Layer 2 scaling protocol using zkRollup, Loopring Pay allows users to send ETH and ERC20 tokens without worrying about Ethereum’s usual congestion and expensive gas fees.
Loopring is not the first to experiment on Ethereum with zkRollup. The tech allows Loopring to batch-process thousands of requests off Ethereum mainnet, while still allowing users to maintain custody. But Loopring was the first to actually push out a real product based on the technology.
“Our team chose zkRollup, or specifically zkSNARKS, for its low cost and high throughput,” Jay Zhou, COO of Loopring, told Decrypt.
The Loopring story
Founded in 2016 by Daniel Wang,a former technical lead at Google, Loopring is registered in the British Virgin Islands, but has a team of predominantly Chinese developers in Shanghai.
Wang had initially wanted to build a decentralized exchange but couldn’t get over Ethereum’s clogged network issue. As a result, he decided to find a new throughput solution to fix Ethereum first.
After Loopring cracked the scalability issue, the team set to work building two products on top of the protocol. First, it launched a decentralized exchange in Dec 2019 that’s 100% non-custodial and performs at a throughput 1000 times greater than the current layer-1 competitors. After the exchange was established, a natural extension was to build a payment system so the same user could trade on the exchange, and transfer money via payments. One stone, two birds.
PayPal for ETH
Zhou says that building out a seamless payment system is Loopring’s big opportunity. “I used to work at Paypal and can definitely see Loopring becoming the PayPal for crypto,” he said. “We are also going to release a new smart wallet, called Hebao, which will allow users to create an account using an email address. No more remembering private keys.”
Compared to its product development, Loopring had a bumpy fundraising journey. After raising almost 120,000 in ETH in 2017, Loopring had to refund quite a bit of the money due to regulatory pressure in China. Despite the funding hiccup, the team continued to build.
The Loopring exchange also has its native token LRC, a token similar to most exchange tokens that allows users to stake and pay fees associated with trading and transfer.
Loopring will not be the last ETH layer 2 solution that solves Ethereum’s network issue. What differentiates one product from another will not only be the technical advancement, but also go-to-market strategy. If the real world already has Paypal, let alone other instant payment products, Loopring needs to identify use cases that will differentiate its innovative tech.