"Not your keys, not your coins" is a phrase which has proved to be true so many times (coughs Celsius). Holding your coins over a centralized exchange defeats the whole purpose of having decentralized blockchain in the first place.

To be the owner of your own coins, you need to use a non-custodian wallet (also called Externally Owned Account). Here, you will generate a Public - private key address pair. Anyone can send the assets to your public key that can be only redeemed by using the corresponding private key. So, if your private key remains private i.e., only you know the secret private key, no one else can withdraw your funds.

There is no possible way to recover a private key once lost so they must be stored securely. Since, the private key is a random sequence of characters, chances of any mistake happening while writing it down becomes exponential. So, a mnemonic phrase is used in the crypto world. Mnemonic phrase is a set of ordinary words that if used in a meaningful sequence can generate associated private key(s). But storing mnemonic phrases securely is still an issue and you need to make sure no one else ever gets their hands on it. This is the reason why most people tend to stay with the exchanges because it provides a sense of security in the sense that you do-not consistently need to worry about your mnemonic phrase being phished from you etc.

Vitalik Buterin published an article regarding the need for wide adoptions of Social Recovery wallets which you can read here. Instead of having a standard EOA wallet, there are smart wallets that are actually smart-contracts deployed on the blockchain which store user's fund. The user can then communicate with the smart-contract to send and manage their assets. So many big words huh! Let's go over them slowly and try to understand what is so good about smart contract wallets? And what's so special about Loopring's smart wallet?

Note: This blog is about the benifits of Loopring smart wallet and not an instruction guide. I will be linking all the instruction guides on how to use the wallet at the bottom.

Smart contracts (on Ethereum): So, smart contracts are like real life contracts. In real life, they are written agreements between two parties and are enforced by law. In blockchain, smart contracts are coded and enforced by the blockchains immutability. So, basically, smart contracts are just a piece of code that people can interact with on the blockchain. Smart-contracts can hold assets too. For example, I can deploy a smart contract that will have 100 nft of some random cat pictures. I can code the smart-contract in such a way that if someone sends 0.1 Eth to the contract address, the contract will send the person 1 NFT. There are some other conditions like, what if someone sends less than 0.1 Eth and so, that are to be coded too. But essentially, smart contracts are just code written on blockchain address that can be communicated with.

Smart wallets: Smart wallets creates and manages the smart-contracts holding funds for user. The owner of the particular smart contract can interact with it using the smart wallet. Using Smart-contract opens up a lot of options for what you can do with your account and how the funds will flow. Each account on a smart wallet is associated with their unique smart-contracts address. So, only the smart-wallet app (which contains the private key) can interact with the smart-contract and you will not even need to remember the key because it is baked into your wallet account itself.

Loopring Smart wallet: Loopring is a ZK-based Layer 2 roll-up protocol that runs on Ethereum. Roll-ups allow you to tranfer funds on Ethereum with minimal fees with the security on Ethereum Layer 1 itself. How layer 2 works requires a different blog so I will not be delving into them here. For now, if you do not know about Layer 2, you can think of them as an express-way laid over top of Ethereum's street that allow you move very fast from one point to another. They require very low fees and ZK-based rollups gurantee that even though your funds on Layer 2, the Layer 1 is constantly aware of all the assets you hold by submitting very efficient and clever proofs on Ethereum.

To use Layer 2 of Loopring, you need to move your funds from Ethereum to Layer 2 by paying standard gas fees. This can be thought of like a one-time gas for your vehicle before you jump on to the Layer 2. Once you are there, enjoy the clear roads, beautiful sky, driving at 180kmph while paying almost a penny as a gas fees for each transaction.

So, Loopring's Smart wallet is an Ethereum Smart contract based wallet. When a user signs-up for the Loopring wallet, loopring's protocol creates a smart contract for the user. That smart contract will hold the assets for user. The information about how to interact with the smart contract is baked into the user's wallet app itself. So, user need not worry about the private key and stuff. A user can sign-up with their Email address or mobile number. This authentication proof is the primary way using which you can recover your wallet incase you loose your phone or uninstalled the app.

Once, the contract is deployed, the L1 + L2 contract (more on this later), you can trade on layer 1 (directly on Ethereum) or layer 2 (loopring's expressway over Ethereum). Not only that, following are the further features you will be provided with that are just not possible with a standard EOA wallet:

• Social Recovery: So, you deleted the app and now there is no way for you to interact with the smart contract and no private key to recover the wallet. How do you get ahold of your funds? Well, this is where social recovery comes in and is probably the greatest feature of the wallet. Each user of the loopring wallet can choose their "Guardians". Guardians are just Ethereum accounts (can be EOA or smart contract based) that are owned by the account owner or maybe their relatives or friends etc. So, you can set-up any number of guaridans for the wallets. In case your wallet is lost, you can ask your guardians to recover the wallet for you. If 50% or more allow the recovery, your wallet info will be added to the wallet app from where you start recovery.
  Every wallet on Loopring has one guardian by default and that is Loopring itself. So, if you loose your wallet, Loopring can help you recover that. How so? Remember the Email / mobile number you provided earlier? If you are able to authenticate that you own the Email / number, the wallet will be recovered for you.
  
  
• Migrate Wallet: What if you want to change your smart phone? Well, you can migrate your wallet. Just scan the migration code of the wallet from your new phone. Done! Do-not take screenshot of the migration QR (or store it somewhere safe). If someone gets a hold of your migration QR, they can migrate your wallet to their smart-phone.
  
  
• Withdrawal Limit: Since, the account is smart-contract based, it can be coded in such a way that you can only withdraw upto a certain amount from your wallet daily. The smart wallet app allows you to do that too. 
  
  
• The Layer 2: Loopring has been one of the cheapest  and the fastest Layer 2 on Ethereum. L2fees.info is a great website to see the statistics live. Transactions on Layer 2 are near instant and costs about $0.01 usually. Lots of cryptography goes on behind the great looking wallet. Being ZK based rollup, your assets are secured by Ethereum's security. Even if loopring went bad some day and decided to not allow you trading, you will be able to move your funds back to Layer 1 without requiring any authorization from Loopring or any third party. Your funds are always yours :-)
  
  
• Force Withdraw: Suppose you accidentally sent your funds to an Ethereum address from Layer 2 which does-not use Loopring technology maybe some Centralized Exchange (but I do-not know why you will need to send funds to them). You can force withdraw the fund from Layer 2 to Layer 1 by paying Ethereum fees. More on this can be found here.
  
  
• The NFTs: Gamestop Marketplace is built on loopring and some great NFTs can be found here. Not all of you might be a fan of collecting NFTs but once you start using the Layer 2 of loopring, there is no going back. Loopexchange, Uptick are the other two great marketplaces built on Loopring. Do check them out.
  
  
• Trade: You can trade on Layer 2 without paying half of your daily income as Ethereum fees. Loopring Layer 2 supports both AMM and orderbook trading. AMM trading fees is 0.25% only and no gas fees whatsoever. 0.15% of that goes to liquidity providers and remaining goes to relayer and protocol fees. In orderbook trading, maker receives a rebate of 0.02% which means you will be getting paid for trading :-)
  
  
• Providing Liquidity: As I told in my previous point, 0.15% of each trade goes to liquidity provider. The rewards are paid at the end of each month. I recommend learning about "impermanent loss" before providing liquidity though.
  
  
• Loopring ENS: If you have setup a full wallet, you can buy "loopring.eth" domains. Unlike, general ".eth" domains, the "loopring.eth" domains never expires! They are yours for the lifetime. 
  
  
• Loopring Points: Loopring points are rewards you recieve for using your app daily. All you need to do is press notification icon every day and you receive up to 100 points. These points can be used to pay fees when sending funds from your Layer 1 to Layer 2 or to other address, buying "loopring.eth" domains etc. The value of points vary and it is about 0.001754 USD  per point as of now.
  
  
• Eth Staking: Staking Ethereum (using LIDO) is also available on Layer 2. Staking APY is at 3.8% as of now while providing liquidity generates 6.6%. 

L2 only wallet: To use the full wallet i.e., allowing trading on Ethereum layer, the Layer 1 address also needs activation. This requires paying a gas fees on Ethereum. Not everyone wants that, not everyone can afford that. This is where Loopring's (L2 only) wallet comes into picture. Here, user can enjoy the Layer 2 features without interacting with Layer 1. L2 only wallets are a great way to understand the L2 ecosystem of Loopring before moving yourself completely to the fast-lane.

As of now, Loopring allow creating L2 wallets for free i.e., they will deploy the smart contract for you for free. To activate a loopring L2 only account, user need to fund the newly created wallet with more than 50 LRC. The 50 LRC is not a fee. These will be transferred to your account post activation. The limit is there to prevent bots creating spam wallets.

Once Layer 2 account is activated, you can enjoy all the features that do-not depend on layer 1. So, you can swap, trade, provide liqudity, buy/sell nft, collect points and stake ETH. Other features like guardians, loopring ens requires activation of layer 1. You can activate layer 1 any time by paying the gas fees and then enjoy all the other features.

To transfer funds from Centralized Exchange to Layer 2 of loopring, use layerswap. You can also use layerswap to move funds back to CEX. 

Instruction guides: Manual

• Set up counterfactual wallet. (You can use my invitation code: 040552)
• Using Loopring Layer 2 Exchange.
• Adding Guardians.
• Migrating your wallet.

If you have any feedbacks or suggestions, let me know in comments. Tips are very much appreciated. You can tip on loopring l2 too amorfati.loopring.eth once you are there ;-). I will send you some NFTs to activate your nft hoarding mode on loop's layer 2. See you on the bright side.