Disclaimer
This is a long read (4k+ words). Just a heads up.
None of the information in this report should be constituted as near/mid/long term financial advice OR financial advice for that matter, cryptocurrency investing is highly risky and speculative and there is a chance you may lose most of your initial investment.
I won't provide any TLDR for this post because it is worth reading all of it, since it is a good idea to know what you are investing into.
Also DON'T give me awards.
I hold a significant Loopring investment, thus this may be a biased analysis.
(Edit 1: Added an extra section analyzing market cap of NFT)
Introduction
Loopring is an open protocol for building decentralized exchanges initiated by Daniel Wang. The protocol is free, extensible, and serves as a standardized building block for decentralized applications (dApps) that incorporate exchange functionality. It is operable on Ethereum and Qtum while NEO is also under construction. (Reference: Bitcoin Wiki).
Loopring is a no-brainer investment at these price levels and here is why:
Loopring is an engineering first team
Probably the most important thing that gets overlooked in an initial investment thesis, is the management. Good management is absolutely pivotal to a business/technologies success.
Loopring is an engineering first development team, meaning they are made up of mostly engineers(95% of the team are engineers). Now you may be asking, isn't this a problem… it's not, you always want a team that is as technical as possible, a good product will always sell itself, look at Tesla, mostly engineers and 0 marketing. Good management, is the cornerstone of a company and the value it will deliver to its investors. (Source: Loopring Medium Article, Finestone's parting words)
Some of the most successful companies on the planet, are engineering first companies, with a rich focus in R&D (Research and Development). I can list many but here is a few
- Palantir
- Amazon
- Tesla
Loopring's lack of media presence, may seem bearish to outside investors or on a short time frame, BUT to me, it is a sign that they are focused on delivering industry changing products that will accelerate mass adoption to cryptocurrencies, metaverse and NFTs. There is no need to endlessly hype your products, there is no need to go on million dollar marketing campaigns. If a product is good enough, it is only matter of time before it is noticed by the cryptoverse and the masses.
Further-more Loopring have highlighted that they plan to go on a stringent, marketing campaign in starting in 2022 as stated by Daniel Wang the CEO
Deep Dive into the CEO
Daniel Wang an Ex-Google and Boston Scientific Senior Engineer turned Crypto aficionado with a history of working in digital trading field (LinkedIn)
Disclaimer: Although, working at these companies is not a good measure for how successful a company/start-up will be, it is however a good example of technical acumen and expertise the management/executive team brings in terms of software and technology development.
Daniel Wang is the CEO of Loopring, an ex-Google Senior Software Engineer. Google is one of the most difficult software development companies to get into, essentially the holy grail for Software Development. Google alumni have gone on to do many great things.
Daniel Wang has worked on some of the most important infrastructure that underpins Google’s products and offerings, including but not limited to Google Ads and Google Search on top of this he was a tech lead, meaning he led a team of Google Software Engineers. Daniel Wang also completed his education at one of China’s top universities, in a country where the population is nearly 1.4 Billion and college examinations are intense/have led to suicides.
Daniel Wang left Google and eventually ended up starting his own thing, as a result he founded Loopring.(Source: https://www.linkedin.com/in/dong77/?originalSubdomain=cn)
Co-workers of his have stated how it is like to work with him,
To Daniel specifically: we first spoke because I found Loopring interesting, and I wanted to write the English whitepaper. Fast forward, and it is incredible how far we’ve come. It’s impossible to describe how much I’ve learned from you. You like to say you are ‘just an engineer’, but you are the best business mind and leader I have ever had the pleasure of working with. You inspire confidence in everyone around you because you are bright, humble, and hard-working. Most importantly, though, you are so kind. You’ve had a massive impact on my life, and are forever my friend and mentor.
Source: Finestone's Thank you post on Medium
Finestone's Bullish Outlook.
Mathew Finestone, served as the head of business at Loopring (Source:Linkedin) and has taken up a position at GameStop. His parting words with Loopring, speak for themselves. But here are some key highlights
I joined Loopring shortly after its inception, and have seen it grow from a fledgling idea, into a leading Ethereum project, helping solve one of Ethereum’s most pressing problems: scalability. If you think about it, Loopring started as an orderbook DEX protocol, and ended up being the first rollup on
Ethereum, absolutely crucial to the layer-2 story — what a wild journey. And it is really just beginning.I had the best team building some of the most innovative and important tech in the space, and I was just there to help spread the word as best I could. Because of this front-facing role, I have developed such a tight bond with our community, adjacent communities, and our users, and so I felt doubly due to pen this post.
To the Loopring team: As I said above, I had it easy representing and evangelizing the technology we have built. You are all world-class. From smart contracts, to ZK circuits, to backend relayer, to web and mobile products — it is unbelievable what we have accomplished. I think many people don’t realize the scope of the engineering effort that is Loopring. Implementing the first zkRollup on Ethereum, a smart contract wallet, and products that tie it all together.
Development team are consistently iterating and improving on Loopring's products
The Loopring development team, have spent countless hours improving their project and ironing out any issues, highlighting the fact that Loopring is here to make a lasting impact in the crypto-space and continue a sustained long term growth. Most of their products are open-source and the code can be viewed on their Github page, with a bit of diving in, it is very easy to see a high degree of transparency, regarding their development, the team intermittently, submits Pull Requests, these are reviewed by the team or other freelance developers and are vetted and merged to the final code-base. The open-source nature of Loopring, allows a high degree of transparency, not only for people who use the De-centralized Exchange but also for partners who wish to understand how the protocol operates with their current infrastructure.
The Loopring team is far from dormant, through a very simple analysis of contributions on Github we can find that
Over the course of development several engineers have iteratively worked on and improved Loopring’s product, highlighting the fact there is sustained growth of the project and protocol. Winda Tang has made over 2051 contributions to the Loopring Repository this year.
And that is just ONE Developer; a similar analysis of Brecht Devos highlights that Devos made over 192 contributions in 2021 with many contributions last year and throughout 2019**(**nearly all are related to Loopring).
In addition to this Daniel Wang has made 1000 contributions to the Loopring Repo ONLY in 2020 and has made 1000s almost each year ever since their inception. All progress of the development team is viewable on the Github page of Loopring. The project is completely open-source and being improved on a day by day basis.
So what does it mean for investors?
In GitHub, each contribution can be anything from fixing a typo to working on a major feature release; these contributions mean that the Loopring protocol is being improved on a rolling basis. Meaning you are getting your money’s worth regarding your investment. The team is not sitting on their asses and doing nothing with your hard earned funds, rather they are working hard to improve the Loopring Protocol and generate value for their token holders. And change the crypto-space for the better. This not a dormant project that hasn't been touched for a year or two, the team is hard at work, improving their products and APIs to provide a seamless exchange experience and lower gas fees compared to L1 Ethereum.
Loopring IS NOT a project that has been silent from a development perspective. They have been consistently iterating and improving their end product, the protocol itself and the DEX
Loopring IS A project that has TANGIBLE products that you can see and use right at this instance, the project is not running on hopium and hype. The products you see today are being used by potentially hundreds and thousands. And will go on to shape the crypto space as we know.
Several companies are already collaborating with Loopring.
Loopring is severely undervalued at these prices, if you liked LRC at 3.82 you will love it at 1.35-1.55. Loopring already has a prominent number of partnerships with crypto and non-crypto firms utilizing one or more of their technologies or undertaking research to better understand the crypto-space
Partnership 1: PriceWaterhouseCoopers (PwC)
Loopring has entered a research initiative with PriceWaterHouseCoopers. The aim of this partnership
Quote: The initiative is tasked with understanding the key factors and practices essential for building confidence and trust in the future crypto ecosystem. Areas of focus will include standards and practices relating to security tokens and stablecoins, as well as the enabling blockchain technology.
Source: https://medium.loopring.io/pwc-hong-kong-collaborates-with-loopring-foundation-c7004571e792
Research Paper: https://www.pwc.com/us/en/industries/financial-services/library/pdf/pwc-loopring-stablecoin-paper.pdf
Partnership 2: Blockchain At Berkley
Quote: The initial focus of this collaboration will involve researching and testing more robust Loopring relay infrastructures. The first step of this will include benchmarking the current IPFS based relay implementation used by Loopring. This will then be compared to other models including a single/centralized relay, and consortium-blockchain based relay networks powered by Hyperledger Fabric and/or Onchain’s DNA technologies.
Source: https://blogs.loopring.org/loopring-partnered-with-blockchain-at-berkeley/
Partnership 3: Jibrel Network
Quote: The Jibrel Network's CryDR Switch will use the Loopring Protocol to eliminate counterparty risks.We are pleased to announce our partnership with Jibrel Network, the first decentralized agreement to store and process traditional financial assets on the Ethereum blockchain.As the Jibrel Network expands globally, the partnership will reduce the risk for both traditional and institutional investors, increasing liquidity and equity. With Loopring, members are protected from threats such as swapping bankruptcy and DDOS attacks.
There are many more partnerships with Loopring, however if I listed all of them this post would simply too long, but in a nutshell these are the partnerships that have not been covered. These include but are not limited to
Bitfwd , TokenMarket , Changely , Chainlink , Coral Financial Technologies SECBIT Labs , 03 Wallet, Morpheus Wallet , YBF Ventures , Dolomite , WeDex , Rails and Gitcoin
Why a failed acquisition attempt made me as bullish as ever.
Now I understand that people are skeptical of the report, however I am going to assume it is true, and why it is in-fact a good thing.
- Talks did not break down due to the fact the technology was poor.
- Talks did not break down due to the fact the team was not experienced.
- Talks did not break down due to the fact Loopring did not have the infrastructure in-place.
The only reason the acquisition did not go through is that Loopring was based in China, which….makes sense it is difficult to undergo a M&A of a company based in China. Due to several regulatory concerns. Operations in China can also be very difficult due to its current socio-economic situation as well as its competing with state backed competitors who are destined to succeed over its foreign counterparts.
Partnership vs Acquisition
It is important for starters to clear a few things up on what a partnership and acquistion means in this case
Partnership: A partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities.In a general partnership company, all members share both profits and liabilities. (Investopedia)
Acquisition: In an acquisition, a new company does not emerge. Instead, the smaller company is often consumed and ceases to exist with its assets becoming part of the larger company. (Investopedia)
In this case, GameStop would be absorbing all of Loopring's assets and technologies. Now why is this bad, because by doing so, GameStop would have complete control over who can utilize Loopring's technologies and API's in the near future, marginally reducing its adoption rate by other partners.
Ultimately, I strongly believe that acquiring Loopring would have been a move, where Loopring turns out to be the loser. You do not want Loopring’s technology to ONLY be limited and accessible to GameStop, from a value perspective, it is much better if GameStop were to partner with Loopring, in order for strong growth in the long term, retrospectively, it simply means Loopring can open itself up to bigger partner’s in the future. (Imagine Loopring partnering with Alibaba, Gamestop and Bank of China; it won’t be able to do this if it’s acquired by GameStop, due to regulatory and legal concerns).
Ask yourself this, if Loopring did not have anything of value, would GameStop reach out?, why reach out to Loopring when they’re are other protocols and competitors such as (Note: Some of these are side-chains thus are not direct competitors per say) Arbitrum, dXdY, MATIC. GameStop knows that Loopring is ahead of the pack compared to the rest of its competitors in this space.
In a nut-shell, the fact that GameStop reached out for an acquisition attempt, means that they see something of value, and it is only a matter of time big partners jump on board, to join the NFT and collectibles train. Market-wide adoption for NFTs are still in its fledging stages, keep reading and I will analyze this further.
Development of bleeding edge technologies, positions Loopring to quickly challenge the status quo regarding the limitations of existing technologies.
Disclaimer: I am not going to go on a deep-dive mathematical analysis of Loopring’s technologies, I am here to explain why it stands apart from the rest of the pack, and why you should seriously consider it as an investment, don’t expect this section to be technically heavy.
Let’s understand some of the problems Loopring aims to fix.
Problem 1: CounterParty & Exchange Risk — With Loopring, we’ve managed to remove this risk entirely because digital assets are never locked by orders. Therefore, rather than depositing assets on a third party exchange, they can stay in individual’s wallets
In a nut-shell: Loopring is a decentralised exchange meaning they are a type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary.An intermediary is simply a middle-man, in this case Binance/Crypto.com are middle-men because they hold your funds and simply match you with a seller OR buyer. Loopring uses zero-knowledge proofs. This is a method of processing transactions privately. It allows one party to prove to another party that something is true without providing any extraneous information about the transaction itself.
Zero-knowledge proofs are important for cryptocurrency protocols that don’t want to leak excess information to third parties or trust a central organization in case something goes wrong.
So why is it a big problem?: Security, your funds are at risk, with Loopring it's not.
Your funds are much much much safer on the Loopring De-centralized exchange than they are on a centralized exchange. Over the years there have been many breaches of security from popular exchangesI won’t list all of them because there are too many but in a nut-shell
- Binance 40 Million Stolen
https://www.wired.com/story/hack-binance-cryptocurrency-exchange/
- Kucoin 275 Million Stolen
https://blog.chainalysis.com/reports/kucoin-hack-2020-defi-uniswap/
- Bitmart 196 Million Stolen
Loopring solves this problem, since your assets are never handled by Loopring itself, rather they are stored in your Loopring wallet and then matched using it’s relayers and liquidity pools to a relevant seller or buyer.
SECURITY IS SANCROSANCT TO LOOPRING!!!!
Media manager being firm on Loopring's bottom line.
Investors were recently impatient due to the counterfactual wallet launch, however one of the media managers, gave an update
Use case: Say you are a prominent partner(Gamestop) and you wish to create an exchange to handle funds, however you obviously don’t want to hold assets on behalf of the user due legal issues .The solution would be to create a Decentralized Exchange using Loopring and using the Loopring wallet the user would be holding the asset on their end.
Problem 2: High gas-fees when processing and validating transactions on the Ethereum Block chain
On a good day, to transfer ethereum from one wallet to another it would cost approximately 16% of the transaction. This is a best case scenario, if the network experiences high load gas-fees can be up to 50% of the transaction….imagine paying 50 dollars to sell a 100 dollar shoe.
Loopring solves this issue. Think of Loopring as the high speed rail-way that runs above a busy highway, both take you to the same destination. Loopring utilizes Zk-Rollups an encryption technology which reduces the amount of information flowing through the network. Loopring boosts the speed of transactions going on Ethereum by bundling them into single batches. These are then fed back to Layer 1, the Ethereum main chain.
It costs only $0.31* to transfer tokens in Layer 2 compared to Layer 1.
Loopring is the chemical that catalyzes the mass adoption of NFT’s by reducing gas-fees related to NFT transactions. GameStop/Premium partner is the drug that delivers that chemical to the masses
We are early….so so early. Here is some statistics, on NFT adoption and just how early we are
The Philippines has the most NFT owners (32%) out of the 20 countries compared, followed by Thailand (27%), Malaysia (24%), the UAE (23%) and Vietnam (17%). (Yahoo Finance). The United States is third last on this graphic, showing that this market still has a long long way to go, until it matures. As NFT adoption increases, Loopring is perfectly positioned to be integrated into a exchange that supports NFTs, think about it like this. Loopring’s protocol reduces gas fees using ZK-rollups and being built on top of Layer 1, by reducing gas-fees users are paying much much much less for a transaction. GameStop is the frame/body of a car whilst Loopring is V8 engine under the hood, moving the vehicle along.
There is a strong likelihood that NFT adoption is being hindered by hidden fees from traditional exchanges such as OpenSea. As a result, an exchange that can minimise gas-fees and hidden fees will be a significant threat to the current players in the market.
There is where Gamestop comes in, GameStop’s partnership with Loopring will allow it to create a marketplace that allows purchase and selling of NFTs at minimal cost by utilizing the Loopring Layer 2 network and technology. Currently there are over 55 million power up users assuming that even 1% of those users use the platform that is over 1.35 million users just from GameStop’s power up rewards program.
A premium partner will catalyze wide scale adoption of Loopring Layer 2 protocol for non-financial use cases.
Institutional investors want security, what better way to prove that something works, by deploying it in a platform that will be visited by millions each month. Once Loopring is demonstrated to have value in non-financial use-cases such as trading NFTs, the value of the token will see long term growth.
Long term adoption of cryptocurrency and NFTs in general should prove to be very fruitful for the Loopring token, the NFT market is still in its fledging stages. A NFT marketplace using Loopring's technology will propel it to mainstream adoption, and Gamestop is uniquely positioned to take this role.
The total value of the NFT market place is 41 Billion (https://markets.businessinsider.com/news/currencies/nft-market-41-billion-nearing-fine-art-market-size-2022-1)
In one year, it has managed to near the total size of the Fine Art market, now imagine the growth that is possible in the future, not only from art but, collectibles, gaming, cosmetic items, all backed by a near gas-less protocol, running on a decentralized exchange that understands its target market, with millions of customers on tap.
Institutional Eyes are on Loopring and Whales are jumping on board.
Grayscale has recently considered Loopring as an asset to be added to one of its financial products. Now is the chance to load up on Loopring, while the mass amount of investors are ignorant about the market shaking impacts that it will have.
The adoption and future of the NFT Market and Loopring's place in it.
Starting from July 2020, the market has experienced a dramatic growth, with the total volume exchanged daily surpassing ∼ 10 million US dollars in March 2021, thus becoming 150 times larger than it was 8 months earlier. ( Nadini et Al 2021). Until the end of 2018, the market was fully dominated by the Art category. It is only a matter of time before large AAA game companies jump on the NFT train and kick start a whole new market cycle.
A cycle that doesn't only encompass JPEG images, but rather tangible products users can use in the metaverse and in their favourite games, NFTs are already being used for Ticketing and Events, Music, Metaverse and this is just the beginning in a market that is only 2 years old.
Monthly trading volume of NFT Marketplaces .
Some of the most popular crypto projects, have had daily volumes of under 1 million, in comparison the daily volume of the NASDAQ is 4 billion, this in itself should show you how much future growth can be expected from the NFT and collectibles market.
Where does Loopring fit into this?
Loopring's current protocol technology, positions itself to allow mass adoption, by eliminating OR majorly reducing gas fees. This adoption will be magnified 10 fold, by an established partner that understands the collectibles and gaming market.
Gas Fee's are a major turn off, to individuals not versed in the crypto-space
Loopring directly solves this issue.
Conclusion
As always do your own research and cross-check sources. I strongly believe the market cap of Loopring will rise significantly in both near and long term time-frames, especially as NFTs and crypto gains widespread adoption. I have no price targets other than the price to be higher than what it was yesterday.
References
https://www.linkedin.com/pulse/four-major-challenges-nft-mass-adoption-boz-zou-msc-ma-bsc-/
https://finance.yahoo.com/news/country-seen-biggest-nft-adoption-130021004.html
https://www.statista.com/statistics/1278047/global-nft-adoption-by-country/
https://www.bworldonline.com/phl-tops-nft-ownership-out-of-20-countries-finder/
Mapping the NFT revolution: market trends, trade networks, and visual features
Nadini, Matthieu ; Alessandretti, Laura ; Di Giacinto, Flavio ; Martino, Mauro ; Aiello, Luca Maria ; Baronchelli, Andrea
American Banking and Market News - American Consumer News: NFT (NFT) Market Capitalization Achieves $6.40 Million
