Despite a drop in the overall crypto market, Loopring is up 18.9 percent today. The hype surrounding ZK-Rollups could be the culprit.
Loopring is one of several ZK-Rollup solutions designed to assist Ethereum in scaling.
Loopring Receives a 19% Rally
The cryptocurrency market appears to be preparing for a “ZK season.”
Loopring, one of Ethereum’s most popular ZK-Rollup solutions, has risen 18.9 percent in the last 24 hours, while Bitcoin and other major crypto assets have fallen. According to CoinGecko data, Loopring’s LRC token is currently trading at $2.78. It’s about 26% lower than its all-time high, set on Nov. 9.
Loopring is one of several Layer 2 projects aimed at assisting Ethereum in achieving scalability. On Layer 2, it focuses on trading and payments. It makes use of ZK-Rollups to provide users with faster and cheaper transactions while maintaining the security of the Ethereum mainnet. ZK-Rollups function by bundling transactions off-chain and generating cryptographic proofs known as ZK-SNARKs, which are then submitted to the base chain. As a result, the load on Layer 1 is reduced, allowing for significantly lower gas fees. Rollups are also available in the Optimistic flavor, which includes a challenge period for transactions, which lengthens the time it takes to withdraw to the Ethereum mainnet. The Ethereum community hopes that ZK-Rollups, Optimistic Rollups, and the eventual launch of shard chains will assist the network in scaling for mass adoption.
On Ethereum, optimistic rollups have already gained traction. Arbitrum, which hosts a number of Ethereum’s top DeFi applications and has a total value locked of about $2.46 billion, has been the most successful to date. However, in recent weeks, there has been a surge in interest in ZK-Rollups. Other ZK-Rollup projects besides Loopring include StarkWare and zkSync. StarkWare is getting ready to launch StarkNet Alpha on mainnet before the end of the month; the company recently announced a $50 million raise at a $2 billion valuation. Matter Labs, the zkSync development team, also raised $50 million earlier this month. Notably, neither StarkWare nor zkSync have launched their own native tokens, unlike Loopring.
Because of the speed with which the industry moves, the crypto space is known for its fast-changing narratives or “seasons”: during the summer, NFTs were the dominant niche in the space. In September, attention began to shift to Layer 1 networks such as Avalanche and Terra. Shiba Inu led a brief dog coin season in October, before Facebook’s rebranding to Meta sparked an ongoing Metaverse-themed token frenzy. While Vitalik Buterin has previously stated that ZK-Rollups may be the long-term solution to Ethereum’s scaling issues, it appears that the market has already turned its attention to the technology.