How to Trade Loopring in Canada

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Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.

Loopring (LRC) is the cryptocurrency that powers a suite of products that make it cheaper and faster to transact on the Ethereum blockchain (we’ll get into that more below.) It’s appealing to some investors who believe that technologies that make Ethereum more cost-effective are crucial to making the blockchain popular with the masses. Right now, Ethereum is comparatively slow and expensive. Here’s how to trade it.

How to buy Loopring

The most common way to buy Loopring is to use a centralized exchange. Canadian exchanges are better integrated into Canada’s financial system than many international crypto exchanges. Case in point, Ontario banned Binance, plus a handful of popular derivatives exchanges, in 2021, and many more pulled out of the province to avoid incurring the wrath of its securities regulator.

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You can check which platforms support the LRC crypto on sites like CoinMarketCap. A reputable exchange with lots of liquidity is what you’re looking for, but note that most platforms are not fully regulated and deposits are rarely backed by government schemes. Your capital is at risk.

If you’re okay with that, the next thing you’ll need to do is create an account, and then submit some form of identification. Then you’ll need to choose between a platform’s brokerage service, where the platform itself is the counterparty, or its “Pro” trading engine, which pits you peer-to-peer against other traders. The Pro sites are generally cheaper, but you will likely have to convert funds to an intermediary cryptocurrency first, like USDT or Bitcoin, since Loopring is not large enough to justify markets with fiat currencies. Brokerage services let you pay with regular money, but usually charge a few percentage points on your sale or a flat fee of a couple of dollars for the convenience. If you’re trading frequently, it’s probably cost-effective to use a matching engine; they are far less daunting than they look.

You can also trade on a decentralized exchange (DEX), including Loopring’s own decentralized exchange, which is confusingly also called Loopring. Different platforms will charge vastly different fees. Those native to Ethereum, i.e. those that do not run on Layer 2 solutions like Loopring or Polygon, will charge you Ethereum’s fees. These could be anywhere from around $30 to $200, depending on how congested the network is. Loopring’s platform, which is full of liquidity for LRC by its nature, charges no gas fees whatsoever apart from a one-time fee to deposit funds. Once you have connected your wallet to Loopring’s platform, you only have to pay a small fee comparable to that charged by a centralized cryptocurrency exchange.

There are a couple of caveats to trading LRC on Loopring. First, you need LRC tokens, since fees are denominated in LRC. Second, decentralized exchanges do not accept regular money, like the Canadian dollar. To trade on a DEX, you’ll need to send crypto you’ve acquired or bought to a non-custodial cryptocurrency wallet, then connect this wallet to Ethereum.

What can you do with Loopring?

Once you’ve bought your LRC, you can do a number of things with it. You can hold it for speculative purposes, exposing yourself to the token’s volatile market and trying to profit off of gains or losses. You can, as mentioned, use it to pay fees on the Loopring exchange. You can use it within Loopring’s decentralized autonomous organization (DAO) to vote on the future of the protocol. You can stake it within Loopring’s proof-of-stake network to earn extra LRC; staking functions a little like mining on Bitcoin or Ethereum, only rewards are more likely to go to those with the most coins rather than the most powerful computers. You can earn yields elsewhere by providing liquidity to any number of decentralized exchanges, yield farms, or lending protocols. Some centralized exchanges will let you earn extra LRC directly within their platforms.

The history of Loopring

Loopring runs on Ethereum, so to really understand it, you need to understand Ethereum. Ethereum is a blockchain network, just like Bitcoin. But unlike Bitcoin, Ethereum can do more than just transfer money. It can run things called smart contracts — coded agreements for things like loans that are automatically processed after certain conditions are met. As of April 2022, ETH is the second most popular coin, in terms of market cap, after Bitcoin. But with that popularity comes challenges. Namely, Ethereum can be slow and expensive to use. When the network is congested, it’s not uncommon to have to pay $200 to process a single transaction.

An upgrade is coming, but it’s been promised for a very long time. Until it finally arrives, developers and traders have two choices. The first is to build and trade on rival blockchains, like Avalanche, Solana, Polkadot and Cosmos — new, rapidly growing ecosystems that could rival Ethereum’s dominance over decentralized finance, especially if they become interoperable.

The second is to improve the current version of Ethereum by building adjacent blockchain networks (called L2s) that are faster and cheaper to use, but route back to the main Ethereum blockchain. Loopring is one of those L2 networks.

Loopring claims to be able to hit peak transaction speeds of about 2,100 per second, and transactions cost less than a cent. It functions by processing batches of transactions on proprietary transaction networks, then either feeding information about these transactions back to Ethereum, or bundling up lots of them into a single transaction, which is processed on Ethereum.

Loopring’s magic comes from a technology called ZK-SNARK. This technology is a variant of the zero-knowledge proof, which minimizes the amount of information that Ethereum has to know about a transaction before it is validated. More broadly, zero-knowledge cryptography is a way of verifying that a message is true without providing extraneous information about that message. An example of zero-knowledge proofs in action would be a system that confirms the legitimacy of your birth certificate without sharing your name, age, or address.

Loopring uses this technology to power a decentralized exchange, also called Loopring, that launched in February 2020. The innovation of Loopring’s exchange is that unlike decentralized exchanges native to Ethereum, Loopring doesn’t charge the ETH denominated “gas” fees required to process Ethereum transactions. Instead, Loopring’s exchange charges a small fee — which for all but the whales of the crypto industry is smaller than the fee you’ll pay on an ETH-native exchange like Uniswap. You will, however, have to pay gas fees to deposit funds onto Loopring for the first time, similar to how you have to pay one-time gas fees on NFT marketplace OpenSea to register your wallet to the service. Even this one-time fee is likely to be lower than a single Uniswap trade.

The currency that powers the Loopring protocol is also called Loopring, or LRC coin for short. It’s an ERC-20 token, meaning it runs on Ethereum and is compatible with any decentralized finance protocol that chooses to integrate it. Loopring is a deflationary asset, meaning that the number of LRC tokens (almost 1.4 billion, as of January 2022), decreases over time. Lots of crypto assets, including Ethereum, are deflationary; in Loopring’s case, the supply decreases whenever trades are processed on the exchange, plus when validators act out of line (a punishment known on proof-of-stake networks as slashing).

Some analysts are concerned that the Ethereum upgrade will wipe out the need for scaling solutions like Loopring, but Ethereum co-founder Vitalik Buterin thinks that scaling solutions will co-exist with Ethereum’s upgrade. Rival scaling solutions are far more popular than Loopring; as of January 2022, Loopring is the 72nd most popular coin. And rival Layer 1 blockchains, like Solana and Avalanche are even more popular—a testament to the demand for reduced costs on Ethereum, and the growing need for a decentralized finance ecosystem that is usable by people for everyday trades, not just those rich enough to stomach Ethereum’s bloated fees.

That said, in 2021 a completely unexpected rumor drove up the price of the Loopring coin: GameStop. Rumors emerged in The Wall Street Journal suggesting that the meme stock company had partnered with Loopring, purportedly to power its upcoming NFT marketplace. Hobbyist GameStop sites linked to code in GameStop’s GitHub page. Another Dow Jones publication, Barron’s, reported that GameStop had even tried to buy Loopring, but talks fell through. Gamestop became popular after traders on social media, mostly on Reddit’s WallStreetBets subreddit, bet big on the struggling videogame brick-and-mortar chain to challenge the hedge funds who had shorted it; the Redditors won big time before the stock fell, though its price remains almost ten times higher than it was in October 2020. Loopring’s price rose after the rumors broke out. As of January 2022, Gamestop has confirmed its intentions for an NFT marketplace but not officially named Loopring as the primary technology.

Frequently Asked Questions

You should DYOR (do your own research). Understand what role Loopring plays within the crypto economy, and try and discern what kind of things influence its price and the ecosystem it powers. Understand its utility—a governance token that serves as the backbone of a gasless decentralized exchange. You can find out about this by checking Loopring news (from reputable outlets), by reading the Loopring whitepaper, or by reading articles like this one. Check the size of the market by comparing its market cap to other coins. Know that you can also stake LRC, or plug it into Ethereum-based decentralized finance protocols, to earn extra returns—but that these protocols could be risky. Then, understand that LRC is a volatile token that is beholden to the highs and lows of the crypto market, and that you could lose money just as easily as you could make it. Making a Loopring price prediction is a particularly tricky thing to do.

LRC is a token that runs on the Ethereum blockchain. Ethereum supports the creation of an unlimited number of tokens, and LRC is one of many. These tokens are called ERC-20 tokens. Loopring, confusingly, is also the name of the company that creates a wider ecosystem around the protocol (also called Loopring), including a decentralized exchange called—you guessed it—Loopring. These tokens can be held in the company’s proprietary wallet, Loopring Wallet. This is a self-custodial wallet from which you can interact with the Loopring exchange.

Crypto platforms add and remove tokens all the time. You can check the largest markets by heading to sites like CoinMarketCap or Coin Gecko and clicking the “markets” tab under the Loopring price page. As of January 2022, major exchanges like Binance, Coinbase, Uniswap, and KuCoin offer the token.

Last Updated May 5, 2022

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