Last Edited: 4/1/2022 -- So many things…. I’ve been slacking!
Last Edited: 1/11/2022 -- New CEX to Loopring L2 Feature!
What is this about
This is being written to hopefully address any questions that an individual may have in regard to the world of today's up and coming financial overhaul with DeFi (Decentralized Finance) and Cryptocurrency. I will end up focusing on the Ethereum blockchain as a whole and dig more specifically into how Loopring, which is built on top of the ETH blockchain functions from a new user's perspective.
At the end of the day, I plan to hand something like this off to my older relatives to see if they can use this document to grasp what all of this means and what the future holds in store.
Why bother writing this?
Ultimately, I am writing this so that I can get a better grasp of how this work myself while hopefully bringing sense to others as well. I am by no means a programmer or coder in a technical regard. I want feedback from the public eye to correct me where I am wrong so that I can get a better understanding of this as well as expand the adoption of the idea of DeFi. I don’t plan on going much into DeFi in this article but is an important idea in regard to crypto.
My career has been in and around IT for more than a decade now and have recently received my Bachelor's in Systems Administration with a focus in Cybersecurity. If there is something running in an enterprise, I have touched it at some point in time. This includes Servers, Phone Systems, Networking, Cybersecurity, etc. Log4J has been real fun the last few weeks...
Any videos or anything like that are from Loopring themselves I am just trying to get this all into a single document. You can find a lot of this same information within the Loopring site and their discord server as well.
Full Disclosure
I am an Ape from reddit, and I do own both GME and LRC and while of course I would love to have the money to buy a home for myself and my family, I also strongly believe in the ideology of DeFi and crypto. DeFi is what will allow the individual to have control of their assets. I also mention Coinbase a lot through this document as they are the only CEX I use and thus I am most familiar with. Any CEX you use I imagine would operate similarly.
Obligatory that this is not financial advice and to do your own research. There is so much depth into the world of cryptocurrency and I have only been deep into it for a few years. Also never spend any more money than you are willing to lose.
Vocabulary
Within the world of crypto there are many acronyms that to many are completely lost in the sauce. Acronym soups are always staggering and can mean many things in regards to the context of what you are reading. It is imperative that you have at least a basic understanding of the verbiage used throughout this document.
Blockchain:
Think of this as a ledger, that depending on which Blockchain technology used dictates how the ledger is handled. When you hear of blockchain you think of things like Bitcoin or Ethereum as these are public blockchain technologies. This means that anyone, from anywhere, at anytime can view transactions that take place on their respective blockchain.
There are others from the likes of companies like Hyperledger that are focused on being a private blockchain(s). Use cases for these various blockchain technologies differ from one to the other.
Cryptocurrency (Crypto):
These are a currency built on the technology of blockchain, think Bitcoin or Ethereum. Every crypto currency has a blockchain but not every blockchain has a cryptocurrency, however that is more in depth than I plan to get into in this article.
Decentralized Finance (DeFI):
Although this is not a topic within the article, it is a strong ideal behind cryptocurrency. It is the ability to rely on ourselves as individuals when it comes to our finances utilizes technologies like crypto. The idea is that we would no longer have to rely on financial systems that have been in place for centuries or banks to hold our own money.
LRC (Loopring Coin):
LRC is the token for Loopring. Token being the keyword here. Token meaning that it was built on top of another blockchain, in this case that is Ethereum; more specifically LRC utilizes the ERC-20 token standard and utilizes zkRollups as opposed to their own side chain.
Fiat Money:
Fiat money is a legal tender, which is a currency declared legal by the government, and its value is backed by the issuer (the government).
CEX/DEX (Centralized Exchange/Decentralized Exchange):
A CEX is what most people are familiar with, this is something like Coinbase where you can buy and exchange cryptocurrencies through an intermediary party; I.E. Coinbase.
Whereas a DEX is an exchange where you can trade/swap with individuals directly eliminating the need for a third party.
Smart Contracts:
Smart contracts are code that are written that dictate what and how an application interacts with the ETH blockchain. Think of it like signing a document; the ETH blockchain is a fancy, digital notary that also outlines details of an agreement between parties.
If you want a deeper understanding here is a great article on it: What is a smart contract? | Coinbase
Transaction:
A move of an asset from one location to another. I want to send 1 LRC from entity to another. I.E. I want to move my assets from a CEX to my wallet. Note that a Smart contract, swap contract, etc. is much different than a traditional transaction of a cryptocurrency.
In Ethereum transactions cost GAS/GWEI, which fluctuates depending on the current load on the network.
Gas/GWEI:
It costs gas to transact on Layer 1 of the Ethereum blockchain. Deploying a smart contract, sending crypto, activating features within the Loopring smart wallet, etc. You can view gas prices here: ETH Gas.watch.
Different types of transactions can cost more than others. I.E. Moving ETH from Coinbase to your wallet may cost $5. But deploying a smart contract (like the looping smart wallet) costs a lot more.
Ethereum Layer 1 (ETH L1/L1):
This is the base level that the Ethereum blockchain operates on, each transaction is costly and 'slow' compared to other solutions. Throughout the rest of this article Ethereum Layer 1 will be referred to as L1 or Layer 1.
Ethereum Layer 2 (ETH L2/Loopring):
These are applications that are built on top of the existing ETH blockchain, each application providing their own unique benefits. There are different ways of going about a second layer on top of Ethereum. I.E. Polygon is a chain all of its own on top of the Ethereum blockchain. While Loopring utilizes zkRollup, explained below. Throughout the rest of this article Ethereum layer 2 will be referred to as Layer 2 or L2.
zkRollup (What Loopring uses):
This is what allows Loopring to keep its TPS (transactions per second) so high with also extremely low fees. You can think of this simply as Loopring is bundling 100 if not 1000s of transactions on their side into one single transaction that is then written to the ETH blockchain.
Imagine Starbucks; they have 1000 customers come to the store every day and without zkRollup each of those customers would have a L1 gas fee associated with them. With zkRollup Starbucks can do all of their transactions in-house (Starbucks being Loopring in this scenario) and then send a final transaction to the bank (Eth L1) at the end of the day. Starbucks knows they served 1000 customers and did that ledger in house, then at the end of the day they send a transaction to the bank saying they are up or down an amount of LRC.
This works with Ethereum because transaction fees are based on gas and demand on the chain and not a static percentage of each purchase. Which is why something like this doesn’t work with a credit card company like Visa or Mastercard where they just charge a 3% fee on everything.
NFTs (Non-fungible tokens):
The big buzzword now-a-days, NFTs! This is a way to tie a digital asset to a unique individual (technically a wallet) that is on the ETH blockchain. We currently see these used a lot with Artwork on sites like OpenSea but we are only just beginning to get into the potential of what a NFT has to offer.
Wallet:
A wallet is a private key that you/your device contains that gives it unique access to your publicly known wallet address. Without your private key your assets in the wallet would be lost. There are many different wallets out there. Always remember; not your keys not your coin.
The most ideal wallet to work with Loopring is the Loopring Smart Wallet which you can find on the IOS/Google app stores.
Swap:
This is swapping one crypto, say USDC to another, say LRC. You can do this on really any exchange. Some exchanges like Loopring ONLY allow swaps between cryptocurrencies while a CEX like Coinbase lets you use fiat directly to purchase/swap crypto.
Ethereum
I don’t want to get into too much detail of what and how Ethereum itself works as this is focused on Loopring, but as Loopring is based on Ethereum it is important to understand the basic.
Current State
Ethereum currently computes transactions with Proof of Work (PoW), this requires a lot of computational power on the network. When you are paying gas, you are paying for a CPU cycle on a machine within the network. This price fluctuates wildly depending on the current demand on the network.
You can see gas prices here:
https://etherscan.io/gastracker
Future Plans for Ethereum (aka Eth 2.0, hopefully)
Ethereum is going to move to a proof of stake (PoS) model, where people will stake their own ETH coins for this computation. As this does not require near as much computational power the gas price of each transaction will decline.
Even if gas prices on L1 dropped to $1 each, Loopring still benefits from this because of the way zkRollup works. If L1 ETH transaction costs $1 each the cost of Loopring’s L2 transaction cost wouldn’t even cost $.01. Ethereum 2.0 also does not solve for the TPS problem while Loopring would still be capable of the 2000+ TPS.
Token Standards
There are multiple token standards in use on the Ethereum chain. The main being ERC-20, which are other tokens based on Ethereum (Loopring being one of them). There is also ERC-721 and ERC-1155, which are both NFT standards in use on the Ethereum blockchain. Remember, smart contracts are just code that are run on the Ethereum network.
Loopring
Why hype Loopring, what makes it so special?
There are already so many individuals focusing and talking about LRC and my plan was to never go in-depth into the technology itself in this document but to explain how to use their platform as of today.
Pros and Cons
There are Pros and Cons to using Looping just like anything else in life, let me detail a few here:
Pros
- Once you are on Layer 2 transactions are nearly instantaneous and extremely cheap compared to L1 and other L2 solutions.
- You can swap to various other token directly on the Loopring DEX which from my experience has extremely low fees compared to any other solution.
- Loopring Smart Wallet has additional security features not found in other Crypto Wallets, namely the ability to recover and lock your wallet with guardians.
- Any improvements in L1 only amplify the benefits of Loopring due to it utilizing zkRollups instead of its own side chain.
- Privacy, your wallet is not tied to you directly. Unless you’re like me and tie your twitter or other various platforms to your wallet address. Who says this is my only wallet? ;)
Cons
- If you need to cash out to Fiat from L2 you have to transfer to L1, which can be costly depending on the current L1 network load.
- UPDATED 4/1/2022: Off-ramp is in the works! You can actually see this on https://beta.layerswap.io! Just remember this is currently in beta
- You are responsible for your own funds and your wallet which for some is daunting. However with the guardian feature in the Loopring smart wallet it makes it less daunting.
- Initial on-boarding can be expensive, as well as unlocking the various features within the Loopring Smart Wallet.
- The counter-factual wallet (talked through below) helps to alleviate this to a degree.
Helpful Links
Don’t trust only me, some random guy on the internet. DYOR (Do your own research), check multiple sources, read content directly from Loopring themselves. This is something important that anyone should do with any piece of information.
Loopring’s OG Welcome to Loopring
Purchasing Loopring
This is the most important part for a new user as there are multiple ways to go about purchasing LRC but depending on what your end goal is can vary slightly on what you may want to do.
Small One-Time Purchases (<$300 USD)
If you are wanting to make a small purchase of LRC and the end goal is to get them directly onto Layer 2 you should use the fiat on-ramp method. This can be done within the Loopring Smart Wallet found under add assets. This can be done with a credit/debit cards and bank transfers; keep in mind that this will vary on country AND the bank you use.
When you purchase through ramp you will be avoiding the two fees that plagues the traditional method of getting LRC onto Layer 2. HOWEVER, ramp does have fees of their own which is why if you want something onto L2 quickly and a small amount they are the best method. From my experience every $100 USD comes with ~$5 in fees.
Update 4/1/2022: Now with Layerswap… if you want to move assets to L2 utilizing Layerswap is even cheaper than Banxa/Ramp! Moving 100 LRC via Layerswap is a ~2 LRC fee associated.
Medium Purchases ($300-$15000)
Layerswap.io is now a GREAT solution for medium sized purchases. The limit of now 5000 LRC at a time is amazing, and as of time of writing (4/1/2022), the fee is ~21 LRC per 5000 transferred. This is significantly cheaper than moving to L2 via the smart wallet; even doing some multiple times. If gas is low it may be cheaper to move to the Loopring wallet and then move them to L2.
Large Purchases (>$15000)
You will want to purchase assets on a CEX like Coinbase, yes you will have to pay two L1 fees. One from Coinbase to your wallet, and another to move them from L1 to L2. Make sure to keep an eye on the gas prices and time it for low gas prices.
How I do it
If you plan to HODL your LRC until it is a DeFacto way to exchange goods and services I would DCA. Purchase small amounts (I.E., $300/m) every so often from a CEX like Coinbase and when it becomes a large amount (I stick with >$1500) I would then transfer it to the Loopring smart wallet. You can still then leave it on L1 and time your L1 to L2 move as well. From my experience transferring from Coinbase is cheap.
Once you have the LRC in your L1 account on your Loopring Smart Wallet. I would try to time the move from L1 to L2 accordingly, as the gas + swap contract price varies as well. It tends to be the lowest around Sunday night or very early Monday morning (PST).
Selling Loopring
I hate to tell you the best way to do it but I understand, sometimes you need to have that filthy fiat in your hands to buy a pack of smokes while the world implodes around us. There are future plans to make this process a lot smoother from L2 assets.
Selling to Fiat
Unfortunately, I DO NOT recommend do this now if you plan to withdraw <$300 dollars.
The only way you can do this is to transfer assets to L1 (a fee if they are on L2) and then another fee to transfer those to a CEX to then sell into your native currency. If the assets are on layer 2 that means you have two large transactions and depending on the current prices can get expensive quick.
It is on Looprings’ roadmap to have a solution that would let an individual off-ramp their assets directly from Layer 2 to fiat.
Swapping
This is “selling” your LRC and converting it into another cryptocurrency for a small fee (VERY small fee on Loopring’s DEX). You could swap LRC to a stable coin like USDC, You could do this if you are uncomfortable with the volatility that may currently be happening in the market. Just keep in mind that if LRC price does increase you may have the USDC but you lost the gain from LRC.
Moving Loopring
This will detail the various methods of how to move LRC from one location to another.
Moving from a CEX (Centralized Exchange)
There are two ways to go about this right now, the second method Layerswap being very new. There are plans to increase limits and expand tokens that can be moved directly from CEX to L2.
Traditional Way
This can be quite costly and involves multiple moves, assuming your end goal is to get your assets onto L2. There are going to be two transactions that need to take place.
- CEX → L1 Loopring Smart Wallet
- This fee isn't too bad as it’s just a typical transfer. It will cost whatever the current gas rate is.
- L1 → L2, Within Loopring Smart Wallet
- This is the cost of gas + the cost of the swap contract. The best times to do this is typically Sunday nights or Monday mornings.
How to ‘Move’ Assets from L1 → L2 in Looping Smart Wallet
This same method works moving L2 → L1, just press the arrows on step 3. Be wary of the fee associated with the move.
- Select the Asset you want to move to L2
- Select ‘Move’
- Ensure it says from my Ethereum Account to my Loopring Account
- If you select the arrows, it becomes a L2 → L1 transfer.
- Put in the amount you would like to move and select next, NOW WAIT!
- BEFORE you click confirm you can see what the current fee will be for this transfer.
- This fluctuates depending on gas, again you can wait it out and wait for a lower gas price.
- If you’re happy with the fee price, click confirm!
New way with Layerswap -- 0.15 ETH Limit (Currently)
As of today, January 11th, 2022 you can utilize Layerswap to move assets from a CEX like Coinbase to L2 directly with USDC, ETH, and LRC! Allowing you to skip the expensive L1 to L2 transfer fees. There is currently a limit of 5000 LRC, .15ETH, or 1500 USDC. I recommend just moving LRC and then if you want utilize the Loopring DEX to swap to whichever crypto you want.
How does this work? Here’s a very simplified version of how I understand this works. Companies like Layerswap work with a company like Bransfer. Bransfer provides the ‘physical’ crypto as a service, they have a pool of assets on Layer 2 that they have converted in bulk for a single transfer from L1 to L2. You are sending them Layer 1 assets into their L1 account, and they are then forwarding L2 assets to your wallet. You DO pay a fee to utilize Layerswap as there is a cost associated with it. However, for small amounts of L1 assets this is very cheap than doing a L1 transfer yourself. This also avoids the gas fee of moving from the CEX to your personal L1 wallet.
Here’s a step-by-step video on how to use the bridge by @NewLooper - https://www.youtube.com/watch?v=r5QKSgxniJ0
Loopring Layerswap Link:
https://www.layerswap.io/?destNetwork=loopring_mainnet
Bransfer account creation link, however if you don’t already have one it will guide you through this when you attempt to transfer on Layerswap:
https://connect.bransfer.io/Auth/Login?ReturnUrl=%2F
Loopring DEX - Loopring - Ethereum Layer2
There are two ways to access Looprings' DEX. You can access it through their webapp (loopring.io) utilizing a wallet like MetaMask, MetaMask having the ability to access Layer 2 as well. You can also access it directly within your Loopring Wallet on your phone itself however if you want to use it to do serious trading and for things like limit orders let me explain WalletConnect.
Why a DEX > CEX? Well with Loopring's DEX you can utilize assets on Layer 2 resulting in a massive discount in swap fees and trades. They also have some fun other quirks like their swap tournaments. You CANNOT sell your assets on Loopring's DEX directly to a fiat currency.
WalletConnect
Once you are looking at the Layer 2 application in your browser. Before starting this you should ensure that anything that blocks Ads is disabled.
- Click Connect Wallet
- In the window that pops up, click WalletConnect.
- A QR code should show up in the browser, MAKE SURE YOU ARE ON HTTPS://LOOPRING.IO
- I also have noticed that it doesn’t always like to pop up the QR code the first time I click on Connect wallet. If you close and reclick connect wallet the QR code then pops up. Also disable AdBlocker if you have one enabled. (I use PiHole on my local network)
- In your Loopring Smart Wallet app on your phone, select Scan.
- Scan the QR code, your phone will then ask for you to approve this.
- Once approved your wallet is connected to the web application, but your wallet is still locked.
- Where you previously clicked connect wallet, you should see unlock wallet, click that.
- You should have another prompt on your phone, click unlock.
- Now you can trade/swap your crypto within the Web App.
Loopring Smart Wallet
Layer 1 (Ethereum Base Layer)
What is Layer 1? This is the bare Ethereum blockchain where everything you do is an expensive gas fee. If you want the full functionality of the Loopring smart wallet than you must pay a few fees for various actions.
Functions that require a fee within the Loopring Smart Wallet
- Guardian Addition
- Layer 1 Wallet Activation
- If you wanted to xfer assets from the Loopring Smart Wallet to a CEX like Coinbase you would have to transfer them from Layer 1 or send assets to other not already on Loopring.
- ENS name registration
- A simple name to address your wallet by.
Layer 2 (Loopring via zkRollup)
The Loopring smart wallet allows you to utilize Layer 2 with LRC as well as access to the Loopring DEX from a mobile device. Full functionality of this wallet requires that you have a L1 and L2 account open. If you only want to utilize Layer 2, which is cheaper and can be on ramped directly read about the counter factual wallet below.
Activating your L1 wallet does provide more functionality within your wallet. Namely around recovery of your wallet and a few other various features. When it comes to account protection and recovery L1 will allow you to add guardians, as well as be a guardian yourself.
AMM Liquidity
If you want to take part in Liquidity your assets MUST belong on Layer 2. What you are doing is providing liquidity from your own market into the Loopring system. This allows your crypto to be used within the Loopring DEX for trades, swaps, etc.
What do you get from contributing to the liquidity pools? You get a percentage of all swaps based on what percentage of liquidity you are providing.
Say you provide liquidity for LRC/ETH; if there was a total liquidity of $10000 in value and you are providing $1000 of that, you would get a part of the trading fee (.20% in Loopring’s AMM Liquidity) and then 10% of that. Effectively meaning you would get .02% of every swap of ETH/LRC.
ENS Address – L1 transaction fee
This is a simple name for your wallet. Would you rather memorize seattle.loopring.eth (my ENS address) or 0xec62aaf37b10ad286fc86c3e9b662c75a958b40c?
Guardians – L1 transaction per Guardian
A guardian is a third party that can lock/unlock your wallet address, help recover your wallet, and allow you to spend over your daily quota (daily quota is set by oneself).
For any of the operations above to be put in place the is a formula: (N/2) + 1. This means that more than half of your guardians must agree on what is being requested. Loopring themselves are a guardian free of charge when you make your wallet, unsure if that will continue into the foreseeable future or not.
You can protect others, and you can request others protect you. The wallet requesting to be protected is the one that must pay the L1 gas fee.
Counter Factual Wallet
Create a free (Loopring L2) Counterfactual Wallet (+ stop paying Ethereum gas fees!) [QUICK GUIDE]
This is the same exact application as the existing Loopring Smart Wallet. However, you can utilize the app without the L1 functionality. Which means that (at the time of writing) to activate this wallet you need to deposit 50 LRC that ALREADY exist on Layer 2 to activate this wallet. There are two ways to achieve this, have a friend send your address 50 LRC or you can purchase L2 LRC directly with Ramp. In the (hopefully) near future you may be able to use a DEX to purchase LRC directly on L2, but it is currently not an option.
Once the wallet receives the 50 LRC that WERE ALREADY on Layer 2, your wallet will be active, and you will now be able to transact directly on Layer 2.
When you are ready you can activate your L1 wallet with funds from L2, but it will require a L1 transaction cost (gas) to do so, which can be costly depending on the current gas fees.
Possibilities
Wow great, I have been rambling on this whole time.... so, what can we do as a society with technology like this? There are obviously many other use cases that my tiny smooth brain cannot comprehend.
NFTs
Digital licensing... this is huge. Imagine if you were to purchase something like a Video Game, Song, Audiobook as a platform agnostic NFT. That copy of Assassin's Creed you bought with LRC and is now tied to your unique wallet could then be tied to your Steam account, PlayStation account, Microsoft account. That single purchase would allow you to play that game on any platform.
What if we were able to get rid of these various middlemen platforms like Steam and were able to purchase games directly from developers. What if you were done with the game and then you were able to sell your own NFT back to someone else, allowing you to sell your digital content.
NFTs are after all just standards (smart contracts) written on the Ethereum Blockchain. There can be new standards that are made for their own specific use cases.
BYOB (Be your own Bank)
No, not beer. Ya bunch of alcoholic apes.
This is what excites me the most, the ability to no longer rely on a centralized form of finance (Ya, DeFi duh). It kills me that I must pay a charge to pull out cash from an ATM that is not my own bank, it is my money why must I pay to have my own thing given to me. I have a distrust in the financial system as a whole and giving me the ability to control my own assets digitally, anywhere, and instantly would give me comfort that before this kind of technology was impossible minus stuffing cash in your mattress.
FAQs
Crypto Questions
Alright boomer, let's do this.
- Why is crypto worth anything at all?
- Why is the USD worth anything at all? Because people BELIEVE it does (and it's backed by the US government, and capital assets, etc). I may have oversimplified the last sentence but it is what I believe. Imagine what would happen if tomorrow the rest of the world refused to take USD and only accepted Euro? That wouldn't end well for the US at all. Crypto has it's worth because the people give it its worth.
- Why should I care?
- Crypto could become the future of finance. Remember when the USD was actually backed by gold? I don't.... but you probably do. Money is an ever changing landscape just like anything else. It should be everyone's responsibility to stay relevant in today's world.
- How is crypto a finite resource?
- Unlike the USD there is a finite amount of each cryptocurrency. Each one has their own limit and SOME do not due to the code written into them. Just like commodities crypto very much deals with supply and demand, especially the longer it is in existence. I.E. There can only EVER be 21 million bitcoin in existence, each bitcoin being able to be broken down into a satoshi ( one one-millionth of a single BTC). Currently there are nearly 19 million in circulation.
Loopring
Loopring it a crypto token on the Ethereum blockchain. It’s own Layer 2 application, the token being LRC.
- How many total LRC tokens are there?
- There are a total supply of 1,373,873,440 LRC, while 1,245,991,468 of those are in circulation. Maximum supply of LRC that could possibly ever exist is 1,374,513,896 LRC.
- What can I do with my LRC once I have it?
- You can utilize the Loopring CEX as well as have access to things like AMM liquidity and Red Packets. At some point once Loopring has established partners you would be able to utilize LRC with them as well.
- How does Loopring operate?
- Loopring utilizes zkRollups to interact with L1. This allows 1000s of transactions to be bundled into a single L1 transaction.
Loopring Smart Wallet Questions
Most of the questions below have to do with transaction fees. I just want to state that Loopring is actively working on more and more ways to avoid L1 transaction fees at all costs. As time goes on it will only improve. I cannot also state enough how great the community is on the Loopring discord server; if you have a question, ask! You can also open a ticket directly with Loopring here:
https://loopring.zohodesk.com/portal/loopring/en/home
- I have sent funds from my Layer 2 account to Coinbase, but I have not seen them come across.
- Unfortunately, Coinbase does NOT support Layer 2 transactions and in this scenario your precious LRC/ETH may be lost in the abyss. Your best bet is to reach out to Coinbase support and see if they can do anything.
- I sent crypto from Coinbase to my Looping CF Wallet, why don't I see the funds in my wallet?
- What you did in this situation is activate your L1 account within the application, good for you! If you did not mean to do this it is too late as you have already paid the gas fee for moving the crypto.
- I have the CF wallet setup, but I need to off-ramp my crypto to fiat.
- Loopring is working on a way to off-ramp L2 crypto directly to Fiat but now you would have to xfer funds to L1 and then xfer those assets to a CEX like Coinbase. This would cost two layer 1 transactions to get them to Coinbase, but there is the added benefit of doing this the first time would activate your L1 account.
- Why do I have to pay to move assets from L1 to L2?
- First off, I would not do a L1 to L2 transfer until you have a good amount of assets to move. That way the gas fees are a smaller percentage of what it costs to move everything. But this is a requirement of any asset move from L1 to L2 and vice versa. Loopring is working on way to avoid L1 fees as often as possible.
- Why do Layer 1 transaction fees change?
- The transaction fee is a moving target, you can track the current gas fee here: ETH Gas.watch. If you scroll down on the page, you can see historical pricing and try to time your next move based on that data.
- Why are certain features so expensive to setup?
- This is a great question. It is because not everything is a simple transaction on the Layer 1 blockchain. The deployment of a smart contract (adding a guardian, ENS name, activating Layer 1 wallet, move from L1 to L2) costs a lot more than say sending ETH from L1 to another L1 account as that is a simple transaction.
- Do I have to pay to setup my Loopring Smart Wallet?
- Yes. If you want to start with the counterfactual wallet, you must deposit ~50 LRC into the account. This can be done via ramp and right now would cost ~$100. Ramp has a few fees but the remainder of that money is then put directly into the wallet .The only money you pay are the fees to Ramp. If you want to setup the Layer 1 wallet then yes this will require the deployment of a smart contract on L1 and costs a good chunk of change.
- What is a red packet?
- I'm not sure if this is only in the loopring smart wallet for the holiday season, but it is a gift. It's a way to send someone an amount of assets. You can send someone a QR code and make it private or you can make it public and some lucky ape will get some free assets! It's called Holiday spirit!
- Can I use existing funds from another wallet/platform with Loopring Smart Wallet?
- Of course! If you haven’t already you can send funds from a CEX like Coinbase to your Loopring wallet. If you don’t already have a L1 wallet activated the funds will be automatically deducted from the transaction to activate L1 within the Smart Wallet. If you already have L1 activated it is just the cost of a gas transaction.
Speculation
GameStop
You did not think I would go all this time and no mention how GameStop could play a role in all of this? It is one thing to be a middleman for the purchase of new games but there could be a huge potential for the reselling of existing digital assets; think of it like Amazon versus Ebay. You do not go searching on Amazon for that old collectible that is not manufactured anymore but you can find things like that on Ebay.
If GameStop got their foot down on the floor in regards to NFTs and digital rights to video games there is room for huge potential there. This level of digital licensing will require a lot more than collaboration between LRC and GameStop, but is a future I would welcome to see.
Updated 4/1/2022 -- CALLED IT! beta.nft.gamestop.com is live and you can connect your Loopring Smart Wallet to it via Wallet Connect. Remember this is still in a beta.
Future Features
This is a highly active project. The best way to keep up with this would be to follow the discord server, twitter, website, etc. I will note exciting features coming that will improve the adoption of Loopring for the average person as well as the usability of Loopring itself.
TL DR:
Buy Loopring and HODL, and welcome to the future.