What is Loopring?

Loopring is an open-source protocol that can be used to power decentralized crypto exchanges. The technology underpinning the protocol centres around Layer 2 rollups, or solutions that allow for transactions to be executed off the underlying blockchain (Layer 2) while still posting all required data to the main chain (Layer 1, or Ethereum.) This maintains the immutability and security of blockchain transactions while enhancing speed and efficiency. Loopring’s goal is to bring scalability to decentralized exchanges by batch processing transactions off-chain by leveraging rollup and zero-knowledge proof solutions.

Loopring was founded by Daniel Wang and the protocol is still maintained by the core development team, and is structured as a non-profit (The Loopring Foundation.) The team plans to launch a DAO, decentralized autonomous organization, in 2022. The team did an Initial Coin Offering in 2017 and raised Ether in exchange for Loopring’s utility token, LRC, and the protocol was launched on the Ethereum mainnet in 2019. As of early 2022, Loopring is operating on version 3 of its protocol.

What is LRC?

LRC is an ERC-20 token that powers the economic model of the Loopring protocol. Loopring Layer 2 charges a small protocol fee (essentially a subset of the transaction fee) which is paid in LRC and distributed to LRC liquidity providers, node operators, and voting participants. 10% of protocol fees are burned with each transaction which acts as a deflationary measure.

In addition to staking and node operator rewards, LRC holders can vote on community proposals to making changes to the protocol, and will reportedly soon be able to earn rewards by contributing LRC to an insurance pool, and participating in DAO governance.

Risk statement

Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform. 

Wealthsimple has performed an assessment of whether LRC can be supported by Wealthsimple’s platform, including whether LRC is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.

We evaluated LRC based on publicly available information, including (but not limited to):

• The creation, governance, usage and design of LRC, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created Loopring;
• The supply, demand, maturity, utility and liquidity of LRC;
• Material technical risks associated with LRC, including any code defects, security breaches and other threats concerning LRC and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
• Legal and regulatory risks associated with LRC, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of LRC; and
• Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether LRC, or generally about whether the type of crypto asset, is a security and/or a derivative.

Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to LRC may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support LRC.

Like all other crypto assets, there are some general risks to investing in LRC. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.

We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading LRC. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.

Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision). 

The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.

 

Last updated: January 1, 2024