Is Loopring A Good Investment?

tl;drLoopring is a protocol built on Ethereum which allows for the quick and easy creation of low-cost and highly-efficient order book-based decentralized exchange (DEX). The project's goal is to be the foundation for a new era of DEXs that will be faster, offer more liquidity, and provide unparalleled security of user funds compared to centralized exchanges. Combining the elements of centralized and decentralized cryptocurrency exchanges to utilize their advantages and eliminate ineffices is what makes Loopring unique. Loopring's Return On Investment (ROI) over the past year was 143%, way below its similar projects' ROI that saw an average ROI of 318%. Also, it underperformed compared to the market's top 1500 project with an average ROI of 13,938%. Loopring's market capitalization rank followed an overall declining trend over the last five months, starting at the rank of 128 on Aug 31, 2021, reaching 152 by the time of writing this post (10/20/2021) with an approximately $531 million market cap. Moreover, its liquidity score is 55% above the market's average score, making it relatively easier to sell in bear markets.
Is Loopring A Good Investment?
Is Loopring A Good Investment?
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Introduction

LRC is the cryptocurrency token of Loopring, a protocol built on Ethereum which allows for the quick and easy creation of low-cost and highly-efficient order book-based decentralized exchange (DEX). It is an important point to note because most of the Ethereum-based DEXs like Uniswap are automated market makers. It means that they use the ratio between assets in each pool to determine their price.

Loopring has been around since August 2017 and was created by Daniel Wang, the former Senior software engineer at Google. The project's goal is to be the foundation for a new era of DEXs that will be faster, offer more liquidity, and provide unparalleled security of user funds compared to centralized exchanges. Although the Loopring Foundation, which develops Loopring, is a non-profit organization registered in British Virgin Island, the Loopring team operates out of Shanghai, China. Since its inception, the Loopring had kept a relatively low profile, and in almost every interview, Wang repeatedly admits that the project has not given much attention to marketing. 

The project has made incredible leaps in development since its 2017 release. For example, the transition from Loopring 2.0 to Loopring 3.0 saw a nearly 1,000 times improvement in its efficiency. Specifically, they increased transaction speed on the Loopring protocol from 2-3 transactions per second to over 2000 transactions per second. Then Loopring announced the Loopring 3.6, which is expected to be released by the end of this year. This will raise the number of users the protocol can support from 1 million to 4 billion. It will also increase the number of tokens supported by DEXs built on the protocol. Also, it will even support the Defi integration, such as flash loans.

How Does Loopring Work

Combining the elements of centralized and decentralized cryptocurrency exchanges to utilize their advantages and eliminate ineffices is what makes Loopring unique.

A big portion of cryptocurrency trades are performed on centralized exchanges, which have some major problems such as the risk of hacker attacks to the central databases and lack of transparency.

To address these problems, the new kind of exchanges are developed; Decentralized exchanges. Although DEXs solve the custodial and transparency problems, they still suffer from inefficiencies. Loopring tries to keep the advantages to decentralized exchanges while reducing inefficiencies using a hybrid protocol.

Loopring does so by managing trades in a centralized manner but recording the transactions on-blockchain. Its unique protocol allows breaking the strictly one vs. one trading pairs manner, combining up to 16 orders into circular trades. Loopring tries to increase the efficiency executing of orders and improving the liquidity of DEXs.

Financial Analysis

Loopring's Return On Investment (ROI) over the past year was 143%, way below its similar projects' ROI that saw an average ROI of 318%. Also, it underperformed compared to the market's top 1500 project with an average ROI of 13,938%.

Projects with public Github account have more transparency and reliability. Generally, investing in projects with multiple contributors and commits is considered a safer and better investment (this means they are busy working and building the project). According to its Github account, there are 20 contributors to the development of Loopring, who have done no commits over the last month.

Loopring's market capitalization rank followed an overall declining trend over the last five months, starting at the rank of 128 on Aug 31, 2021, reaching 152 by the time of writing this post (10/20/2021) with an approximately $531 million market cap. Moreover, its liquidity score is 55% above the market's average score, making it relatively easier to sell in bear markets.

Another critical factor in the success of any project is gaining public attention. Our data shows that Twitter and Telegram saw a growth of 28%, 22%, respectively, over the last months. However, Reddit saw a decrease in Loopring's popularity with 18% decline during the same period.

You are saying that Loopring is the best cryptocurrency to invest in?

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