Stake and Trade Loopring Coin

Loopring is a protocol designed to increase the speed, security, and efficiency of decentralized cryptocurrency exchanges (DEXs). The Loopring protocol offers a number of advantages for decentralized exchanges including zkRollups, No Knowledge Proofs, and an increased TPS over existing systems, but what is more relevant for our discussion is the fact that the Loopring protocol allows holders of Loopring to stake LRC and earn a portion of the protocol fees that flow through Loopring based exchanges. The primary purpose of this video will be to show you how to stake Loopring coin and earn protocol fees, but I will also briefly clear up some confusion regarding the "fee less" nature of the Loopring exchange. 

Staking Loopring Coin

In the past, staking Loopring coin was a difficult process, and users had to manually interact with the LRC contract on Etherscan.

Thankfully, times have changed, and there is now an easy to use GUI that enables users to effortlessly stake Loopring coin as well as claim their rewards and withdraw Loopring Coin from the pool. This GUI can be found by visiting https://staking.loopring.org/login. The first step to stake Loopring Coin is to login with a supported wallet. For the purposes of this tutorial, I will be using MetaMask. 

After logging in, you will see three separate options. The first option is to stake Loopring coin. This will deposit your funds into the pool so you can begin earning rewards. The second option is to claim your rewards. Claiming rewards will add them to your existing stake in the pool. Think of this as a dividend reinvestment if we were talking about traditional stocks. Lastly, you can withdraw funds. One important thing to be aware of is that your coins must be staked 90 days before you can claim a reward OR withdraw them, so make sure you aren't staking coins that you would need to sell at short notice. After selecting the Stake option, you have to agree to the pool rules, select the amount of Loopring coin you want to stake and approve the transaction.

Unfortunately, gas fees on the Ethereum blockchain are quite high right now, so it will cost a bit of ETH to initialize the contract and deposit your Loopring coin into the pool. 

Once you click on confirm, the transaction will begin to process, and in a few minutes, you will see that your funds have been deposited into the pool. 

Quick Note On "Fee-Less" Loopring Exchanges

One of the main selling points of the Loopring protocol is the claim that it enables instant fee-less transactions. If you are looking for a great, step by step guide on how to trade on Loopring based exchanges, I'd recommend checking out this article by Dzoelx on Publish0x.  One quick point that seems to cause confusion among some users is that even when trading on "fee-less" Loopring exchanges, users will have to pay gas to register their account. This is just like when you have to pay a small gas fee to unlock a token on a DEX or initialize a contract on a protocol. This isn't Loopring trying to "get one over" on us, but rather, an unavoidable part of operating on the Ethereum blockchain. 

Wait a minute. If Loopring is "fee less", then where do the staking rewards come from? Can Loopring be both fee-less and pay a protocol reward to stake holders? The answer is yes. As you can see from the fee chart. Loopring is fee-less for makers, but takers have to pay a .1% fee. As shown in this screenshot, there are indeed "no fees" for market makers, and the documentation states that the cost of the registration fee goes towards paying ETH gas fees (as well as avoiding a Sybil attack). So, Loopring can be both "fee-less" for some traders (makers)  while also paying out rewards to stake holders from its other (non market maker) fees.

Again, gas prices are quite high at the moment, so it could cost quite a bit of ETH to enable your account on the Loopring exchange. As I was creating the staking video, I was playing around a bit with the Loopring exchange and found that the fee to create the account would have been about $2.35 even using the "safe low" gas price.

Each user will have to make their own choice, but I'd advise that users should weigh the fee savings of using the Loopring exchange against the costs needed to register an account. For very small transactions, the fee savings are likely to be outweighed by the costs needed to register, but the fee savings are likely to be magnified as the size of the trade increases. Although the primary focus of this article was to demonstrate how to stake Loopring coin, I felt that it was important to clear up a bit of the confusion regarding the "fee-less" nature of the Loopring exchange. 

Summary

Even as someone who doesn't get too deep into the technical details of crypto projects, I'm excited about the Loopring protocol. I believe that decentralized exchanges have significant advantages over centralized exchanges, and I'm quick to support a project that aims to increase the speed, security, and efficiency of decentralized exchanges. Not only does Loopring offer advantages on the technical side, it also offers users an easy way to earn passive income by staking their Loopring coin and earning a portion of the protocol fees. 

*I'm trying to move away from YouTube and embed my videos via the crypto based LBRY platform instead. Feel free to let me know if there are any quality issues with the LBRY videos or join me on LBRY. 

References

https://loopring.io/document/fees

https://medium.com/loopring-protocol/lrc-staking-and-claiming-instructions-91fd80e1af98

https://www.publish0x.com/scripts/how-to-perform-instant-and-fee-less-transaction-on-the-ether-xqoendo