0x and LoopRing: Harnessing Network Effects

State of the market:

For new readers:

Cryptogram is my personal journal of thoughts about cryptocurrencies and related topics. See the bottom of the post for more information.

Getting into it...

So far, the project that I think has the best chance to harness network effect in the crypto field, (besides BTC and ETH,) is 0x ($ZRX). 0x is a decentralized exchange protocol. What it does, is provide a pre made set of code that when implemented into a relayer connects to a liquidity pool of every application running the 0x protocol.

https://0xproject.com/

This is powerful because every app that uses zrx adds to the liquidity pool making it more and more functional with better exchange rates and more trading options. Furthermore, they don't rely on any sort of app, they rely on other apps implementing their code.

0x already has a huge set up development teams using 0x protocol on their apps. As these apps come online, it will continue to raise the value of each individual zrx token and add functionality to the pool.

Now, ZRXs primary competitors are other decentralized exchange set ups. However, the competitor that provides the most similar service is LoopRing ($LRC) (in my opinion.)

Loopring Website:
https://loopring.org/en/index.html

Loopring article:
https://www.coinist.io/loopring-the-biggest-decentralized-exchange-idea-of-2018/

Loopring pulls liquidity similar to zrx, which is where they got their inspiration from. Loopring claims to have improved upon the protocol code used by 0x. If this is true, it is great, but it may be too little too late. ZRX currently has a large network of developers using their code on many apps that will be upcoming soon. Basically - zrx has a huge head start. For Loopring to beat this head start, they will probably have to be significantly better than zrx which i dont see happening.

However, there are a few unknowns:

1. If a problem with zrx code causes people to lose their money or has a vulnerability, people may change their code to loopring.
2. loopring has a team that is well connected, and they are more or less the chinese version of zrx. Country loyalty may inspire asian developers to work with loopring instead of zrx.
3. People writing decentralized exchange apps may try and use both sets of code giving users the best experience, pulling liquidity from both pools.
4. Their may be enough market share for both to be successful from their current value - so both coins have alot of room to grow.

In summary, both loopring and 0x are attempting to harness network effects in a very direct and efficient way. The more people that use their code, the better the code works, and the more valuable the coin becomes. Both have potential to be huge piece of the crypto market. 0x has a head start, but that doesn't mean both coins wont go up 10x in value or more.

I know loopring has some exciting announcements coming up in feb, so could be an interesting time to get in.

Disclosure, I own zrx and don't yet hold any LRC, but i do plan to buy some LRC in the future.

Thanks for reading

• libertyhound

Purpose of CryptoGram:

Currently in the crypto space it can be difficult to remember what you have discussed or been thinking from one week to the next. The rapid development of, and many changes in the space keep everyone on their toes. Now that I have been financially involved in the space for roughly a year, I realize that I would love to have my thoughts from 2017 written down somewhere. I believe having this information will help me stay focused, avoid repeating past mistakes, and hopefully help some other people, (anyone who decides to read this,) from making those same mistakes.

Briefly, I need a place to record my train of thought and that place will now be dubbed "CryptoGram"

My thoughts on the structure of this post are:

• About 500 words.
• Frequency of once a day to once a week.
• Each post will have a number and date.
• A snippet of top 5 cmc coins for price reference. (state of the market)
• I will always use these 5 tags, three of them will be:
  • bitcoin cryptocurrency ethereum
  • the other two will be topic specific