Loopring is one of several ZK-Rollup solutions built to help Ethereum scale.
Loopring Posts 19% Rally
The crypto market appears to be gearing up for a “ZK season.”
Loopring, one of Ethereum’s top ZK-Rollup solutions, has rallied 18.9% in the last 24 hours while Bitcoin and several other major crypto assets are down. Loopring’s LRC token is currently trading at $2.78 according to data from CoinGecko. It’s about 26% short of its all-time high, recorded on Nov. 9.
Loopring is one of several Layer 2 projects focusing on helping Ethereum achieve scalability. It focuses on offering trading and payments on Layer 2. It uses ZK-Rollups to offer users faster and cheaper transactions while benefiting from the security of Ethereum mainnet. ZK-Rollups work by bundling transactions off-chain and creating cryptographic proofs called ZK-SNARKs, which then get submitted to the base chain. This in turn reduces the load on Layer 1, allowing for significantly reduced gas fees. Rollups also come in the Optimistic variety, which have a challenge period for transactions that increases the withdrawal time to Ethereum mainnet. The Ethereum community is hoping that ZK-Rollups, Optimistic Rollups, and the eventual launch of shard chains will help the network scale for mass adoption.
Optimistic Rollups have already gathered momentum on Ethereum. The most successful to date has been Arbitrum, which hosts a number of Ethereum’s top DeFi applications and has a total value locked of about $2.46 billion. However, interest in ZK-Rollups has also started to pick up in recent weeks. Apart from Loopring, other ZK-Rollup projects include StarkWare and zkSync. StarkWare is preparing to launch its StarkNet Alpha on mainnet before the end of the month; the firm just announced a $50 million raise at a $2 billion valuation. Matter Labs, the development team behind zkSync, also raised $50 million earlier this month. Notably, unlike Loopring, neither StarkWare nor zkSync have launched their own native tokens.
The crypto space is known for its fast-changing narratives or “seasons” due to the speed at which the industry moves: throughout the summer, NFTs were the dominant niche in the space. In September, interest started to move to Layer 1 networks like Avalanche and Terra. October saw a brief dog coin season led by Shiba Inu, before Facebook’s rebrand to Meta kickstarted an ongoing Metaverse-themed token frenzy. While Vitalik Buterin has previously stated that ZK-Rollups could be the long-term fix to Ethereum’s scaling woes, it seems the market is already turning its focus to the technology.