With the entire crypto market spiked last day, the Ethereum network is congested.
The average gas fee users paid last night was close to 500 Gwei, which means it only costs $ 10 to ship ETH from address to address. To put 500 Gwei into context, here are some more statistics:
- $ 30 for the second of an ERC-20 token from address to address
- $ 60 to trade on Uniswap, assuming only one trade pair is used
- $ 100 for a deposit in a Yearn vault
- And a lot more to do more complicated tasks in DeFi
While many users were able to handle these fees when they were making money on their trades, users had to sit with just a few hundred dollars on their coins.
This trend led to a narrative development regarding the need for Ethereum scaling solutions, especially since the next bull run has apparently arrived in full and private investors are getting involved.
One project seems to benefit from this narrative, Loopring.
Loopring is an Ethereum scaling protocol that has started a decentralized second-level exchange apparently inspired by Uniswap. The protocol is based on zkRollups, a technology that tries to migrate much of the transaction needs to a second level
Loopring sees traction on the day the Ethereum is congested
Loopring has strong traction as Ethereum is overloaded.
Investors took note of Loopring when Matthew Finestone discovered that exchanging LRC to ETH through Loopring exchange, which incurs no gas fees, costs $ 0.0125.
The tweet announcing this went crypto-viral as many users expressed their concern about spending so much on transactions in Ethereum.
The gasoline cost for a swap at Uniswap is currently ~ $ 47. (500 Gwei, 100,000 gas, ETH 955 USD). + 0.3% LP fee. Other L1 AMMs are even more gas-intensive and expensive.
Loopring L2 AMM: 0.25% fee. No gas.
Here I exchange $ 5 LRC for ETH. I pay a fee of $ 0.0125.
Nobody is priced on L2 ✊ pic.twitter.com/dZtHVYUgA7
– Matthew Finestone | 3body.eth (@finestonematt) January 3, 2021
Later that evening, Loopring also announced that the volatility of the platform at just under USD 2 million had resulted in the “highest volume day of all time”.
It turns out that wild volatility + super high gas prices are a recipe for L2’s success.
Our highest-volume day of all time at Loopring Exchange (even v1). We feel enthusiastic and grateful ?
We know this is only a small time, but imagine if Ethereum zkRollups invade everything ? pic.twitter.com/zIfXD1eO4F
– Loopring (@loopringorg) January 4, 2021
While this is a far cry from Uniswap, which handles more than $ 300 million a day, the market is responding by buying the local loop ring coin LRC.
According to CryptoSlate market data, the Ethereum-based coin is up 50 percent in the past 24 hours as it rose to $ 0.33.
The cryptocurrency is up 70 percent in the last month and over 1,300 in the past 12 months.
The market is likely to bid the coin higher if the narrative about second tier scaling solutions continues.
The hype about other scaling solutions is growing
The hype is also growing around other scaling projects.
Optimism, an Ethereum development team, is expected to release a beta or soft version of its scaling solution called Optimistic Ethereum on January 15th.
Optimism is expected to launch Optimistic Ethereum with support for Synthetix, the decentralized platform for exchanges and derivatives.
There are also rumors that Uniswap will start some kind of Layer Two test or version for Optimistic Ethereum, although this has not yet been confirmed.
The full version of the solution is expected to be released on March 15th.
Loopring, currently 55th in terms of market capitalization, has risen 45.35% in the past 24 hours. LRC has a market capitalization of $ 399.03 million with a 24 hour volume of $ 300.74 million.
Loopring price table
TradingView LRCUSD Chart
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