Loopring starts with Ethereum’s massive size (and flaws)

We first need to understand that ethereum is the most used blockchain today by far. It boasts the most developers, most decentralised apps and most exchanges by far.

Eth’s smart contracts enable the existence of DEXs (decentralised exchanges) which fill the role of banks so you and I can buy crypto using other crypto.

SushiSwap and Uniswap (DEXs built on ethereum) alone have a 24-hour trading volume of $3.5 billion. That’s a lot of activity!

Apps and DEXs on ethereum have basically recreated the traditional financial system we have now.

But like a highway in constant rush hour, ethereum isn’t made to handle transactions by millions of people around the world simultaneously.

Ethereum has a low TPS (transactions per second) of around 15 which makes it easy to get congested and traffic to build up.

Eventually each transaction will go through, but there are downsides.

And these are transaction fees, or gas.

Transactions need A LOT of gas on ethereum, whether you’re doing something small like transferring from Wallet A to Wallet B, or something big like exchanging your family’s savings for tokens in Uniswap.

Look how huge ethereum’s fees are right now compared to other blockchains (smaller is better):

• Eth: $4 (on the “low” side)
• Cardano: $0.27 (93% cheaper)
• Tezos: $0.10 (97.5% cheaper)
• Algorand: $0.002 (99.99% cheaper)

And here's the speed difference in transactions per second (higher is better):

• Eth – 15 TPS
• Tezos – 40 TPS (166% faster)
• Cardano – 250 TPS (1,567% faster)
• Algorand – 1,100 TPS (7,233% faster)

Loopring builds a highspeed skyway above ethereum’s congested highways

And the name of this skyway is ‘zkRollup’.

One of the things zkRollups do is group hundreds of transactions and process them together instead of individually – and on a separate layer of the blockchain called Layer 2.

This new layer is capable of handling up to 2,000 transactions per second.

This means gas fees are slashed because:

• Carpools (transaction bundles) are now available so there are less cars (transactions) causing traffic on the main highway (the Ethereum blockchain)
• There’s also a carpool lane open for further decongestion (Layer 2)
• Transaction speed on both layers is increased

Less gas fees means developers can experiment and build apps and users can exchange tokens without spending a ton to further grow adoption.

TLDR:

Would you rather take the express skyway or commute through traffic congested highway every single day?