Polygon vs. Loopring: L2 Security Solutions

The growing use of DeFi continues to drive up fees on the Ethereum network, shedding light on the top 2 protocols that offer working solutions.

Consider two protocols that have become L2 security solutions leaders with work platforms. Let’s take a look at the Loopring vs Polygon confrontation. Let’s look at what unique two-tier approaches each offers, thereby helping to reduce high traffic on the Ethereum network.

What is Polygon (MATIC)

To address the scalability issues of Ethereum, a project called Matic Network was created in 2017. The throughput of the second-tier project is increased through the integration of sidechains. Before the Ethereum blockchain processes transactions, they are processed by the Matic Network protocol. It significantly speeds up their permeability.

In 2019, the Matic ERC20 token was created based on the Ethereum blockchain to raise funds for the project’s development.

In February 2021, Matic Network underwent a rebranding and changed its name to Polygon. The platform also updated its functionality. The main goal of Polygon is to create an ecosystem of blockchains consisting of a large number of chains compatible with Ethereum. The framework of the platform is the primary tool in this process. It allows developers to launch any blockchain compatible with Ethereum using the Polygon platform.

Technological Features of Polygon

The Polygon platform implies the use of two main components that complement the functionality of the leading Ethereum network:

1. Plasma Chains – the second level of the Ethereum network, implemented using the Polygon project, aka MATIC;
2. The PoS Chain is a fork of the main Ethereum blockchain, powered by the Proof-Of-Stake consensus algorithm. It is a unique Polygon blockchain that can be used both independently and in conjunction with Ethereum.

Polygon Advantages

The main features of the platform include:

1. Low commission on the Polygon network. One of the main goals of creating the protocol was to lower prices for transactions on the Ethereum network.
2. High transaction speed. Polygon developers aim to increase TPS to 7000.
3. Work under the Proof-of-Stake protocol. No mining, but there are validators (become part of the consensus mechanism) and delegates (staking) on the network.

What is Loopring (LRC)

Loopring is a second-tier solution that is specifically geared towards building DEX. One of the primary sources of congestion on the Ethereum network is the ever-growing activity of popular DEXs such as Uniswap and SushiSwap. A separate sidechain explicitly built for stock trading can help reduce network congestion, and that’s what Loopring is committed to providing.

Loopring features

The overall goal of the Loopring Protocol is to combine the benefits of decentralized exchanges with liquidity. Centralized exchanges offer order book management to help improve order execution efficiency and increase the liquidity of the DEX ecosystem.

Critical features of Loopring payment protocol:

1. A security layer based on the security of the Ethereum blockchain.
2. Crypto assets are 100% user-controlled.
3. Batch processing of thousands of requests at a time, which provides highly scalable decentralized exchange. The process is independent of the performance of the underlying blockchains. Loopring 3.0 can make up to 2025 transactions per second.
4. Low cost of operations – because Loopring performs most of the operations outside the Ethereum blockchain, including order matching and trade settlements, gas costs are significantly reduced. The total estimated transaction value is reduced to less than a cent. The estimated cost of a million transactions is only $ 150.

Exchanges that use this protocol as a basis can further reduce settlement costs if they use cheap cloud servers or low-cost algorithms.

It is possible to trade on a decentralized trading platform with MetaMask and some other WalletConnect compatible wallets.

How Loopring Works and Benefits

Orders placed on the Loopring platform are processed automatically. Trading funds remain under the control of users, although a smart contract blocks them. The mechanism that manages the site breaks orders into several components and then determines the time and place for trading these fragments.

The project uses the advanced logic of game theory to optimize the results of operations. It is important to note that Loopring is compatible with almost all types of blockchains that support smart contract technology. As soon as one or a different kind of digital currency connects to the service, you can exchange any of its tokens based on the ERC20 standard using Loopring.

The second distinctive feature of the project is the focus on the ICO of new developments. With the growing interest in cryptocurrencies and digital technologies, the number of new startups has also grown. Some of them became fraudulent scams, which undermined the confidence of many investors in the ICO.

In this context, the Loopring developers strive to optimize the system for the initial placement of coins based on smart contracts and create a safe and reliable platform for ICO new projects. Such development will be equally beneficial for new startups that can raise funds through a reliable resource and investors who receive guaranteed protection against fraud.

Loopring platform processes cryptocurrency exchange orders automatically. At the same time, compatibility with most blockchains is maintained, which significantly expands the project’s potential. It also provides a toolkit for users to create decentralized exchanges.

Thus, the following features of Loopring are:

• zero risk;
• decentralization;
• splitting an order;
• ring mapping;
• multi-platform protocol.

Security measures applied by the protocol:

1. Loopring 3.0 uses smart contracts to store trading assets.
2. All exchanges using the protocol in their architecture automatically inherit 100% security guarantees at the Ethereum level.
3. The platform does not rely on any external crypto-economic solutions.
4. Zero-knowledge proofs ensure the validity of transactions.

According to the developers, Loopring v3 offers users the same level of security as the underlying Ethereum blockchain, especially if On-Chain Data Availability (OCDA) is enabled.