In the third quarter of 2022, we hosted an AMA on Reddit to let the community get deeper access into some of the minds at the Loopring Foundation.
The following is a summary of some of the questions and answers from this AMA, along with an additional updated message from Loopring Foundation’s CEO, Steve Guo.
Since the conclusion of this AMA (below) earlier this month, a lot of progress has been made by the Loopring Foundation on delivering on the messages below.
Currently we are heads down developing many new features and products to bring Loopring L2 to life and make it a one stop shop for all crypto users as we transition slowly into another bull market and another large adoption cycle for the whole industry.
Some of these new products/features include:
1) 2FA security enhancement
Security is always the essential part of any wallet product. Loopring has just added 2 factor authentication support to enhance this security. With more trusted authentication sources added, it’s now able to update the registered smartphone number, email etc. information in case it’s changed; also it’s safer to conduct some sensitive operations such as forgot your password, recovery etc.
2) NFT Collection support
Collections on Loopring Layer 2 have now been officially supported. Newly created NFTs can be easily categorized into the desired collection now.
3) Dual Investment product integration
The most popular earn product in traditional CEXs has now been introduced onto Loopring L2 in a trustless and pure decentralized way. It provides a Buy Low or Sell High opportunity; giving users a remarkably high APY incentive. More importantly, we support LRC-USD products which is a great fit for our community. Moving forward, Loopring will continue integrating more DeFi earning products directly onto L2.
Along with these newly released features, there are more coming soon, including:
1) Cloud back-up
2) Multi-language support
3) Dark mode
4) NFT ERC721 support
5) Stronger password type support
6) Off-ramp support
7) More DeFi products + integrations
We are excited to be able to share more with you in the coming weeks and months. We know bear markets can be hard on some but we just continue to build and I am confident there are some promising times ahead on our mission to make Loopring L2 the top application specific rollup on Ethereum and to truly help the world become their own bank.
— Steve Guo, CEO
Reddit AMA Summary💙
We hear WAGMI a lot, but I’d like to understand specifically how we are going to make it?
Loopring’s success will be measured in how much activity + volume the Loopring L2 ecosystem can attract, which then gets distributed back to LRC holders through the protocol fees and through DAO/tokenomics mechanisms, all of which we are planning to revitalize and expand upon.
The Loopring team will continue to build consumer facing applications and attract innovative partners to help build applications and tools that will attract large amounts of users and drive activity to the Loopring L2 ecosystem with this end goal in mind — to drive activity + volume, which will translate into protocol fees for the DAO and LRC holders.
Crypto as a whole is still in its very early stages as far as wide adoption goes. When the world inevitably moves to the new crypto rails we are building, we want to have the infrastructure + applications/wallets in place to make this transition as seamless as possible, being at the forefront of this adoption.
The trading volume increases that came with the new NFT marketplace partnerships comes mostly from NFT trades, as you can see from onchain data, the total trading volume is already above 20M USD. Basically the settlement fee for an NFT trade is set as 1%. The protocol fee includes 10% of NFT trading volume. So roughly 0.1% of total NFT trading volume will enter into protocol fee sharing. Looprings Partners are accepting LRC as the settlement token eg, LoopExchange and Uptick. I see this being the trend going forward, as the majority of Loopringers hold LRC on L2.
The current bear market will definitely influence each exchange platform’s trading volume. As we can see, the volume has already dropped 80% compared with a few months ago. To increase DEX trading volume, the critical parts are to attract more liquidity. We have plans to increase some AMM pool assets and invite more market making partners to provider liquidity for orderbook.
We are approaching this via various steps:
- Enable more trusted DeFi services via Layer 2;
- Work w/ more partners in a smarter way to provide more liquidity;
- Enhance our user experiences and provide app accessibility to more users (including HW wallet and EOA wallet users).Smartly wrapping services in a truly DeFi mode; allowing users to access rich services w/o forfeiting control of their assets — we are working hard to make Loopring a thriving ecosystem and dapp environment.
When will the team start working towards marketing and brand awareness?
While we do have plans ready to put more heavy resources towards PR/marketing activities, we do not feel the timing is appropriate at the moment to be using large amounts of valuable runway and resources on this.
Bear markets are for building out products, features and the overall L2 ecosystem, so that when the next bull market arrives, we are prepared to throw resources at marketing to attract the masses of users who will join the crypto space and get them into the Loopring ecosystem.
In the meantime, we will still deploy smaller amounts of marketing capital as best as we see fit, whether that means ecosystem grants for gaming, working with metaverse/gallery companies to expand on the NFT experience, or pouring incentives on for user acquisition and liquidity.
How/why do you see Loopring beating other L2's?
The main advantage Loopring has over other L2’s is our application-specific nature, allowing us to highly optimize the rollup to fit specific applications and use-cases, making our applications faster and cheaper to use than alternatives.
We are really just scratching the surface of the applications that are possible on Loopring L2. More DeFi and other use-cases will be coming to Loopring over the coming months and years.
Steve likes to compare us to being the Apple of L2s, while most other L2s strive to be more like Android.
You can think about Loopring as iOS in blockchain, while other L2 as Android in blockchain. We are focusing on building some of the best core products by ourselves, while also being open for any ecosystem partner that wants to work closely with us and highly optimize their application.
Is there any talk with other BIG partners?
We are working with some other partners already around the Loopring ecosystem, although may not be as famous as GME. The aim is simple — to bring more use cases to Loopring, and to provide more useful functionalities to Loopring users.
We are also building a full stack for L2 NFT marketplace, including both the front end and backend system, all will be open sourced soon, which will help other commercial partners launch their own marketplaces more seamlessly.
However, we don’t only want to work with big and established partners, we also are working to incubate new up + coming projects to get them to build with us on Loopring L2 to expand the ecosystem. We are working to launch a new incubator program with a partner in the coming future, so stay tuned for this as well.
Based on the Q2 report it seems like you are not intending on other projects to build on top of Loopring, isn’t that a big opportunity loss then for adoption? What exactly is the exact plan then for mass adoption?
This has been semi-addressed in other answers already, but it’s good to reiterate.
We are definitely still actively working with and seeking various partners to enrich the Loopring ecosystem. The difference being that we work closely with our partners to build, develop and highly optimize their applications, something other L2s don’t have the opportunity to do.
Our advantage is that when we work closely with partners, we can optimize their apps to perform exceedingly better than they could on other L2s.
The Loopring community will see more and more DeFi products available on L2 rolling out over the coming months and years.
Can you speak on the current tokenomics of Loopring?
Currently, Loopring’s tokenomics allocate certain transaction fees in Loopring L2 as protocol fees, which are used to incentivize active community participants like liquidity providers.
We are strongly considering revitalizing the tokenomics to encourage more initiatives in our community (ie. LRC staking) and to help onboard the Loopring ecosystem. However, any changes will require thorough consideration and the consensus of the DAO.
It seems like Loopring is investing resources and energy heavily into NFTs when in reality DeFi is most likely the future, what are your plans regarding DeFi?
NFTs are and will continue to be a massive use case for Loopring L2. As we have the advantage of being highly optimized for the specific applications built on our protocol, we are able to deliver a superior NFT experience compared with other rollups. The possibilities for NFTs are endless so we want to be at the forefront of this trend as it is only just beginning.
That said, DeFi is also one of our major focuses moving forward. We just brought ETH staking onto Loopring and will introduce more and more trustless services into L2 to give users a full one stop solution for all things decentralized finance.
Will we be able to stake the LRC token itself without the risk of impermanent loss that the AMM pool provides? If that happens wouldn’t that kill liquidity on the DEX since most people would not want to risk impermanent loss with the AMMs and would just stake their LRC instead?
We are considering enabling staking LRC in Layer 2. The incentive is still undetermined though.
We are also currently developing a new asset-lock feature on Loopring L2. With this underlying new feature, we can bring more DeFi use cases to our L2. On top of staking, Borrowing/Lending is also doable.
The incentive to attract users to join AMM should still be there. And the participant should treat such an activity as a pure investment behaviour. If the potential loss due to impermanent loss is bigger than LP incentive, a wise user won’t join the AMM.
Take ETH as one example, we have enabled ETH staking in Loopring L2, while ETH-USDC pool is still a large pool in Loopring L2 and there are still many users who want to participate in this program. In the same way, staking LRC won’t kill the LRC related liquidity.
When will we have an actual DAO and not just voting on AMM incentivization?
We are well on the way. Voting on AMMs, especially considering the integration of both L1 and L2 LRC holdings (for voting) is just the first step. We will soon have more serious topics listed as proposals, asking for DAO’s consensus. We just need to gradually build the transparency and process to let it run more smoothly and steadily.
We appreciate all feedback given for the 1st snapshot DAO vote. We are taking a close look to optimize the LP voting so things can run smoother. We are thinking about reducing the amount of pool options by placing a minimum $ liquidity threshold, and also looking into allowing LRC LPs to vote. Beyond LP incentives, we would like the community to have a say into which tokens will be supported by Loopring, among other things.
I was excited to see the discussions around LP voting in the DAO Discord channel and on Reddit and look forward to seeing how the LRC community and DAO will incentivize certain parties to grow the Loopring ecosystem.
How are you going to bring mass adoption?
It’s important to emphasize that we are still in the very early days of crypto as a macro trend, and our main goal is to build out the infrastructure, applications and products that consumers will love so that when the trend finally reaches the mass adoption phase, we are ready to onboard them.
That said, our main focuses now are:
✅ To ensure we have top quality services available on L2 (apps, products, integrations, tools)
✅ To ensure we have enough liquidity to make these services seamless and inexpensive to use
✅ To provide these services in an intuitive way, like a one-stop-shop for the consumer
With all of this accomplished, we are confident that the masses will want to come aboard to truly “Be their own Bank”, leaving the traditional rails behind for faster, cheaper and more convenient crypto rails.
How will Loopring/ Loopring community benefit from Taiko exactly?
Taiko being neutral allows it to potentially grow much bigger than if Loopring directly developed the zkEVM itself.
The split will allow us to compete with other L2s as one of the main L2s for all dapps, not just the L2 of Loopring apps. Taiko, a general purpose EVM-equivalent zkRollup built for developers to supercharge their apps, without sacrificing security or decentralization. And Loopring, geared towards advancing our application-specific advantage and building applications targeting end-users.
This will allow both projects to grow their respective scopes even larger. We had to make the hard decision to split both efforts but we do believe this will be worth it for both Loopring and Taiko, and we believe that it can be done in a way that would be accretive to the Loopring community.
Loopringers being a part of the Taiko token distribution means that they will be a part of both networks and will share in the success of each network.
The Loopring community will be an important component in helping bootstrap the Taiko network by way of the token distribution. As development progresses, potential benefits could include deploying Loopring’s smart contracts (smart wallets, etc), becoming a node operator, or acting as an L3, all on Taiko.
BRECHT (on Loopring being an L3 on Taiko):
There is nothing really stopping us from running the Loopring zkRollup on Taiko directly if it is significantly more efficient than using L2 smart contracts (also less work on Loopring’s side because everything remains the same, just cheaper vs running on L1 directly).
We’ve seen a lot of conversation about MEV recently… what benefits does Loopring have [in regards to MEV protection]?
We don’t have such MEV issues compared with L1. The Loopring relayer backend system will always execute transactions according to the receiving timestap on the relayer side. No other operators will be involved in the system.
Loopring is an Ethereum Layer 2 zkRollup protocol for scalable, secure DeFi and NFT applications. Loopring builds non-custodial, high-performance products atop our L2, including the Loopring Wallet — a mobile Ethereum smart wallet, and the Loopring L2 web app — an L2 orderbook and AMM DEX. To learn more, follow us on Medium or see Loopring.org.