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As (ETH) breaks through $1,000, Ethereum is becoming more and more congested, and the price continues to rise, making Gas fees soar. A Defi transaction can be as high as tens of dollars. Wang Dong, the founder and CEO of BitTweet, told BitTweet that the Loopring Protocol can help users significantly reduce costs, and said that if you want to realize the large-scale application of blockchain, you really want Ethereum to change everyone’s life in the future. The only solution.
For more information, you can watch the interview excerpt below, or read the complete interview record at the end of the article.
Loopring Protocol is a Layer2-based decentralized transaction protocol whose main purpose is to help users better manage fees and use ZK Rollrup leverage to avoid network congestion. With the price of Loopring Token() rising 2.5 times since the beginning of this year (compared to 25 times in January 2020), Loopring Protocol has recently received a lot of attention in the crypto community.
By using the Loopring protocol, users no longer need to spend dozens of dollars in fees to complete a simple transaction. In the past, decentralized exchanges can cost as much as $50 for a single operation at peak congestion, but the Loopring protocol reduces it to less than 1 cent. Through the Loopring Protocol, users who are unwilling to pay high fees can also use the blockchain for transactions. Undoubtedly, the Loopring Protocol is extremely important in helping Ethereum achieve the goal of “world computer”.
Wang Dong said that the Loopring protocol is a combination of a smart wallet and a Layer 2 solution. Through this combination, users can implement flash and low-cost transactions in the Ethereum blockchain through ZK rollup technology. However, in fact, the Loopring Agreement did not set its goal here when it was first born.
“We started to do on-chain order matching, but soon we discovered that expansion was a problem, so we transferred the underlying technology to Layer 2. Currently we provide a Layer 2 solution based on ZK Rollup, serving transfers, AMM swaps, and order books transaction.”
ZK-rollup is currently one of the advanced rollup methods that can expand the capacity of open contracts on Ethereum. Because the ZK-Rollup system uses ZK-SNARKs, a zero-knowledge proof system that is easy to verify, it is also called zero-knowledge rollups (zero-knowledge rollups).
At present, Ethereum can only process ten transactions per second, which makes it sometimes necessary to wait 30 minutes for a simple payment. ZK rollup can “roll up” hundreds of thousands of Ethereum transactions by issuing assertions on the chain, making it a large single transaction to be sent on the chain. Through this technology, the Loopring protocol can process 3000 transactions per second, which greatly reduces the time and cost of users.
Loopring Agreement Twitter, image source: Twitter
Loopring Protocol, as a decentralized transaction protocol, can also enable users to have the same experience as Uniswap and EtherDelta, but avoid the high Ethereum fees.
Loopring Protocol is not only committed to achieving fast and low-cost transactions, they are also committed to maintaining the security of the protocol at the same level as Ethereum. Wang Dong said that the security of the Loopring protocol is the same as that of layer1. In other words, the user’s storage of funds in layer2 and Loopring wallets will be as secure as Ethereum. In the blockchain, if there is no reliable security, faster transactions are meaningless.
The security guarantee prevents users’ funds from being attacked or lost. Because of this, the Loopring protocol gives users peace of mind when using the layer2 solution, and it has been successful. As of January 2021, more than 10,000 addresses on Ethereum have used Loopring’s ZK rollup technology.
The Loopring Protocol’s token, Loopring Token (LRC), has been rising in price over the past few months. In fact, users do not need to pay Loopring tokens to complete transactions using the Loopring protocol, but Loopring tokens provide users with a possibility of gaining revenue.
Wang Dong stated that they plan to build a token economy for Loopring tokens in the next few weeks. It can be seen that based on the new token economy, some users’ speculative strategies for Loopring tokens will further increase the price of Loopring tokens in the future.
Unlike most other projects in the field of cryptocurrency, Loopring Protocol is completely result-oriented. They focus more on products rather than others. Funds for Loopring’s initial currency offering (ICO) are basically spent on engineers and developers, who almost never spend on advertising.
Wang Dong said that he believes that he has made the right decision in the past, which has allowed the Loopring Protocol’s technology to have extraordinary progress. But he also indicated that 2021 will be a year of overall growth, and the Loopring Agreement also plans to implement more promotion, marketing and public relations strategies.
Price changes of Loopring tokens, data source: BiTweet
In the next few years, Ethereum 2.0 is about to come out. The expansion plan of Ethereum 2.0 will fix most of the current expansion problems in Ethereum. Wang Dong believes that Ethereum 2.0 does not conflict with Loopring Protocol.
“We believe that the Ethereum 2.0 sharding solution and the ZK rollup ending plan are actually complementary to each other and can further realize the expansion of Ethereum. Sharding and ZK rollup are not in conflict or competition.”
Although the current Loopring protocol mainly provides a layer2 solution, Wang Dong is very humble and said that this is not eternal. He believes that the landing of layer2 does not mean the end of the Loopring Agreement project, but creates a space for continuous improvement.
“In the field of blockchain, we need to have the ability to learn quickly. We also need to admit that there are too many smart people here. Sometimes we need to follow them, sometimes we need to learn from others. We need to continue Thinking, and dare to innovate in the future.”
The following is the complete interview record:
Bitpush: Hi everyone! Welcome to join us. My name is Lincoln Murr, a data analyst and editor of BitTweet News. Today I will interview Mr. Wang Dong, the CEO and founder of Loopring Protocol. Please let me talk about Loopring Protocol first, some viewers may not be familiar with it.
Wang Dong: Good. We say that the Loopring Protocol is a decentralized transaction protocol, but the underlying technology has changed a lot in the past few years. Initially we are a DEX 0x protocol, we do on-chain order matching. But then we discovered that expansion was a problem, so we transitioned to layer 2. Therefore, we now provide a layer 2 expansion solution based on ZK rollup, especially for AMM swap transactions and order book transactions. We also provide layer1 smart wallet applications. We have released an Android version and are currently developing an iOS version. We hope that around the Spring Festival, we can launch the first app beta version on the iOS platform. So in simple terms, the Loopring protocol is a combination of smart wallets and Layer 2 solutions.
Bitpush: This is awesome! So perhaps one of the most difficult problems in developing this layer 2 solution is how to make more users accept and use this concept. So does the Loopring Agreement have any plans to solve such problems?
Wang Dong: Yes. If you have been paying attention to DeFi in the past few months. You will find that DeFi is really a hot topic. A lot of people are flocking to DeFi to gain revenue. However, the more applications of DeFi, the more users come in. We found that the gas price of Ethereum continues to rise, this is because layer1 will have expansion problems. We believe (if we want to) go further. If the blockchain will really change the life of every user, it will change the lives of thousands or even hundreds of millions of people. Then, expansion is a problem that no one can ignore. Now is the time to try and solve these problems, and we need to go further.
We believe that expansion must be completed before the blockchain can be adopted on a large scale, especially in the public chain that anyone can access. Therefore, we want to make expansion as our primary goal first. Because I feel that if we can use our technology to solve practical problems, we will become truly valuable. This is why we have been committed to becoming a pioneer in this field. But we are not a general purpose ZK rollup, because we think that a general purpose ZK rollup will take longer, and (using a general purpose ZK rollup) more factors need to be considered to make a successful application. Therefore, we only focus on the most important things. Now in the DeFi field, value transfer in any form of transaction is the center of everything. They just reflect in the form of transactions. So this is why smart protocols are our most important business core.
Bitpush: This makes sense. If there is no quick and cheap transaction method that ordinary people can use, then it seems that Ethereum is still far away from the goal of becoming a world computer. In order to make it clear to those who are not yet familiar with the Loopring Protocol, (so to put it simply) Loopring Protocol is to help retail investors reduce gas costs, right?
Wang Dong: Yes. In fact, expansion provides some (required) features. The first is throughput, which means that we need to have the ability to process as many transactions as possible to ensure that more users can use the infrastructure. The second is to ensure that the transaction costs are affordable. If you look at yesterday’s DeFi, the general transaction costs several dollars, even dozens of dollars. This is too exaggerated, it is unreasonable. We say that we want to beat the traditional banking system, but the transaction costs of banks are not so expensive, right? We need to achieve the same level of cost (and banks) so that blockchain-based payment facilities have room to make a profit. Now, it is difficult to make a profit, because just paying the settlement cost on Ethereum costs dozens of dollars.
The most important thing is that while achieving these goals, we have a major premise (that is) everything must be safe. Everything must be as safe as layer 1. If not, we will introduce another layered network that is agreed upon. That means that for security, there may be errors. This is why the side chain is not a good solution for expansion, because it lacks basic security guarantees.
Of course, there is another goal that is more difficult to achieve, that is, user learning and user experience. By providing a Layer 2 solution, you inevitably have to introduce some new ideas, some new ideas. In fact, the blockchain is already difficult to explain to ordinary users, and it will undoubtedly be more difficult to explain to everyone what ZK rollup is. In fact, many engineers in the blockchain system, if they are not developing expansion solutions, they may not know what ZK rollup is. So it takes a long time for (users) to learn.
Bitpush: This seems to be a very difficult problem to solve, but it is a great thing to guarantee security. After all, once everyone understands how it works and starts using it, there can be no more errors. There is a special issue here. Loopring coins have seen some interesting increases recently. We are curious whether there has been an attitude change in the Loopring Protocol team. Do you think your work is finally recognized by retail investors? Or without mentioning the token price, does everyone in your team still focus on launching the final product?
Dong Wang: We are actually not very concerned about the changes in the price of tokens, because Loopring coins have actually been low in price for a long time. Our team is very stable and no one has left. We are actually hiring more people to ensure that everyone on the team has enough resources to do research and development. So our team is expanding. I think people (in the team) are very concerned about the time and energy they put in instead of paying attention to the price of tokens every day. They never do such a thing. We chose to issue tokens to our engineers as rewards, in fact, to keep them in the company for at least two years. They need to constantly redeem rewards from smart contracts. So when we saw the token price increase, we were very happy, but this does not mean that we are free, or financial freedom. For our engineers, it takes time to realize tokens.
To be honest, I designed this system to ensure that everyone truly understands the investment and efforts they have made for the project in the past. So everyone in our team is very optimistic about ZK rollup. They think this is the future. We had some problems with usability before. So we need to make an explanation. We need to use mathematical support, and we need to make a lot of observations to ensure that they integrate our technology smoothly. But now, we have smart wallets to solve these usability problems. So we feel that this is the future. This allows a non-technical or user-oriented wallet to integrate through layer2’s ZK rollup. We believe that this is the future, so I think the team is actually very optimistic.
Bitpush: This is a great and exciting thing, especially in a speculative-oriented community like cryptocurrency. There are some tokens whose prices keep going up and down, but when your team can focus on the results, it looks like you have achieved some results so far. I am very happy to see these.
Wang Dong: I would like to add a few more words to the answer to the previous question. Most of our team are engineers, so this may be why everyone finds me and then we talk about prices. Everyone talks about the code, they rarely talk to me about the price of the token. So I think that when our team has more engineers than non-engineers, it makes us different from most product teams. And engineers have power, they have the right to speak in the team, not the operations staff (who have power). So our engineers are very directional. They will choose their own direction and lead the whole process instead of our supervisors (to do these things). In fact, we do not have a supervisory level, we have a flat structure.
Bitpush: This is a very good point! Regarding the fact that the Loopring Protocol has hardly advertised so far, do you think this strategy is to bring about technological progress? Or can you not do this?
Wang Dong: Regarding this matter, I think it does bring about technological progress, but if we want to go further, because our focus has always been on products, user experience, and user acquisition. We need to make some noise in the market. We can’t continue our “engineer style” in the matter of acquiring users, it won’t work. So the next step will be more promotion, more marketing, and more public relations strategies. So next year, keywords will grow. This means we need to do something different. It is no longer (just) research and development. I mean development is still very important. But we now need to adjust the direction a little bit to get more users and serve more users.
Bitpush: Interesting! This sounds very exciting to work on Loopring. So, if it were possible, how would you imagine Ethereum users interacting with LRC tokens?
Wang Dong: Good question! In the past three years, we have actually not changed the tokens on the economic level too much. We didn’t do much design in this area, because we (more are) changed our tools, we changed our technology from layer1 to layer2 solution. Now in order to match the new technology, we really need to adjust the economic design of the token. So we are preparing our new design, which may be completed in the next two weeks. (New design) A new token economy will be realized to ensure that Loopring Coins will first incentivize users’ behavior to benefit the Loopring Protocol ecosystem, and their tokens can help them capture (value) growth.
Therefore, in the system we designed, I hope that through the use of tokens, users can gain revenue. And they will get more benefits as we grow. Many token holders are looking for profit, but we have not achieved this for them. So now we have added this matter to the center of our marketing and operations to ensure that we make users really profitable. Otherwise, (prosperous users are active) will not last.
Bitpush: Yes, it makes sense to keep token holders or the entire community satisfied.
Dong Wang: So our priority is the user first, and the token holders are the second with the same difference. If there are no users, there will be no mass, then there will be no source of revenue, and nothing will happen. But obviously, because the second priority is the token holders, we must consider their investment.
Bitpush: It seems that this is a great priority list, which ensures that you have users and that token holders will be satisfied. So let’s talk a little about the future. Loopring Protocol recently released version 3.6. So what are your plans for the future of this project?
Wang Dong: We have some very interesting ideas, but I think it is too early to say these. When we developed our wallet and ZK rollup separately, they were not connected. They can be integrated into one product. But they are separate technologies. One is Ethereum and the other is ZK rollup. But we feel that perhaps we can deeply integrate these two technologies into a better solution. There are still discussions within our team. But if we can design such a solution, the wallet will become smarter. It is too early to talk about more details, but we feel that this is something we might explore in the next year.
We hope this will eventually become a solution we have never seen before. Of course, these are all from the perspective of research and development. From the perspective of user experience, we very much hope to further simplify the UI and user interaction of our smart wallet to ensure that we hide as many details as possible from end users. We hope that they can use the app intuitively , Do not need to realize that this applies ZK rollup technology, no technical knowledge is required. Compared with developing some new things in technology, this is actually more challenging for us. But we must solve all user experience problems. Otherwise, this is still a barrier to future large-scale applications.
Bitpush: This makes sense. In fact, many people may not know the principle of credit cards, but they still use credit cards to pay every day. I believe that the final form of zk rollup will achieve the same effect. We know that the Loopring Agreement reached a huge milestone recently, and you have 10,000 accounts in the layer2 solution. So, what are your digital goals for the coming year? How much user usage do you want to reach?
Wang Dong: We do have some numbers in our minds, but I don’t want to make them public. That is a very ambitious goal. As I said, we prioritize user acquisition and transaction volume. So we have digital goals in these dimensions. I hope we can reach our goal. Going further, we will not operate as a project. We intend to operate as an Internet company. Blockchain, ZK rollup, and Ethereum are the open source infrastructure we want to use.
But in the end, we hope to become an Internet company to serve people all over the world, especially people in China. Because they are eager to invest in cryptocurrencies, they need good tools, so the great Chinese market will be our focus next year.
Bitpush: This sounds great. I feel that even if you mention these ambitious goals, but in fact you didn’t say that the most ambitious and interesting goal will most inspire your team. You just mentioned China and investment. If I remember correctly, you have returned some ICO profits due to regulatory policies in the past. So have you completely overcome this dilemma? Or is it that you are still in trouble and therefore created the Loopring Agreement?
Dong Wang: Actually this is shocking. We still have some balance in ICO capital. In fact, we didn’t spend much money. We are very cautious about cooperation in spending, marketing, or some token exchange listings. We don’t want to pay too much money. We don’t have much money. Therefore, based on our current funding, I think we can still operate (at least) 2 years. Therefore, we do not have too much pressure on funding. But as I said, in the future, if marketing and user acquisition are needed, the company may raise more funds. After all, every new user will have additional costs.
So if we really target thousands of users, we need more funds. For this big goal, our remaining funds may not be enough. But from a product point of view, I think we have enough funds to deliver Android applications and even further develop new web applications that will be delivered on exchange.loopring.io next year. So I think we are currently working well. Much better than some teams that have spent a lot of money on making market noise.
Bitpush: This is very good. I feel that so far your team not only has very good control in terms of technology, but also performs well in terms of budget and other aspects of successfully operating cryptocurrencies. Apart from marketing, what other aspects would you choose to focus on? In other words, at the moment, what do you think your team has inadequate?
Wang Dong: Security. If there is a problem with security, or the user suffers a cyber attack, it will be the worst I can imagine and the last thing I want to see. I don’t want this to happen. Therefore, we are willing to pay more for security review or provide higher rewards for vulnerability reporting. We want to make sure that everything else is based on the premise that the agreement and smart wallet contract are sufficiently secure. This is very, very important. We cannot lose our reputation just because someone has hacked into our system and taken away funds.
Of course, this is not accurate, because our system does not store users’ funds. But if they find a loophole in the smart wallet or ZK rollup, then there will be security issues. Although based on the results of our current security review, we have not seen any serious problems, but security is still a matter of critical concern to me.
Bitpush: Indeed, you need to ensure that the security is perfect, especially in the field of cryptocurrency. In fact, there is no tolerance for security issues. Next is the last question. Looking forward to the next one to two years, after Ethereum 2.0 and sharding will be realized, what do you think will happen to the role and goals of the Loopring Protocol?
Wang Dong: We believe that the sharding solution and the ZK rollup solution can complement each other to further expand Ethereum. They do not conflict or compete with each other. I think maybe from a single application perspective, ZK rollup is a way to expand, but if you think of Ethereum as an ecosystem, then sharding is a way to expand. But I can’t imagine that a certain application will expand in all shards.
It will be very difficult to manage. So maybe every application will choose a certain slice as the main slice, and then use ZK rollup to expand on that slice. But I may also be wrong, because the world of cryptocurrency is changing so fast that it exceeds everyone’s imagination. There are too many genius ideas here.
Dong Wang: So we must have the ability to learn quickly, and we need to adapt to the reality that there are too many people smarter than us. Sometimes we have to follow, sometimes we have to learn from others. We have to think more and dare to innovate in the future. For our team, it is not correct to only short-term development in the next two months, is it? If we pay too much attention to some details and some minor adjustments, we may miss bigger opportunities.
So maybe next year, we need to calm down and take a look around and see what everyone is doing. Perhaps the same is true in the far future, so that we can ensure that we do not lose too much due to small mistakes and focus on the right things in the overall view. I am very optimistic about ZK rollup and Ethereum. I think we will continue to work on Ethereum. We have confidence in Ethereum. We love Ethereum.
Author: Sara Zhang