Loom Network Roadmap 2021+ — Enabling multi-chain DeFi
A retrospective
Loom Network was the first to implement a sidechain to Ethereum (now known as Basechain), and one of the first to launch a working transfer gateway that allowed anyone to transfer tokens between our sidechains and Ethereum.
In 2020, our main focus was on building out our enterprise platform by running a number of pilot projects in collaboration with local hospitals. On top of the technical and administrative challenges, we also had to contend with the unique challenges posed by the on-going pandemic. We’re quite proud of what we’ve built so far, and seeing our tech alleviate the drudgery of hospital staff has been quite rewarding.
This year we’ll continue improving our enterprise platform, and expanding its reach to new hospital departments. However, it would be foolish of us to ignore the explosion of activity around DeFi any longer. Many popular DeFi applications are now hitting the limits of Ethereum, faced with high protocol fees, and network congestion — developers are looking for ways to improve the usability and scalability of their applications. Loom Network has been building scaling solutions for years, it’s time for us to come off the sidelines and enter the fray!
Our vision for 2021 and beyond
Many of our founders’ predictions from 2017 have become a reality: Ethereum gas prices have skyrocketed, and the need for sidechains / L2 systems is more important than ever. Today, no widely usable L2 systems are running in production yet, though there has been great progress with more constrained single-purpose L2 systems (mainly used for building DEXs). With Ethereum straining under the weight of its own success alternative networks like Binance SmartChain and Polkadot have started to gain traction. Some have criticized us back in 2018 for building interconnections to Binance Chain and Tron, but it appears that we had the right idea all along, there will be no one network to rule them all.
We got into the sidechain business pretty early on, so by the end of 2019 we realized that the real limiting factor of a blockchain wasn’t developer adoption but rather cross-chain communication. Oracles have been used to great effect, and ingenious workarounds have been implemented in the never ending struggle to access off-chain data from smart contracts that must run deterministically. But, there’s still no sidechain infrastructure that supports this kind of data access at the protocol level.
Last year we started work on the next major version of the Loom protocol that will power Basechain going forward, creating a solid foundation for a more interconnected platform. We incorporated zkRollup architecture at the protocol level — creating the zkLoom protocol, which gave us the ability to spin up sidechains that didn’t need to rely entirely on their own unique set of validators for security. We also incorporated storage tech we built during our projects with hospitals into the core protocol, making it easier to reference off-chain data on-chain.
The LOOM token swap plays an important part in rolling out these Basechain upgrades, and with the token swap now underway let us share some details about what we’ll be working on in 2021.
DeFi Platform
DeFi (decentralized finance) encompasses a wide variety of blockchain based applications, including distributed exchanges (DEX), stablecoins (pegged to fiat currency), lending platforms, and prediction markets.
The new wave of DeFi applications have a myriad of distinct features, but the architecture of these applications is fairly common, and usually consists of one or more central DAO/pools/vaults into which users can deposit tokens. On Ethereum, users interacting with these applications often have to pay extremely high protocol transaction fees (i.e. gas fees), mostly because many interactions require calling one or more oracles from other contracts.
A DAO (decentralized autonomous organization) is usually implemented as a smart contract that allows holders of a governance token to control certain aspects of the organization’s operations through voting.
Decentralization comes at a price, but at the same time, users only trust DeFi applications because their assets are in the custody of a smart contract that operates according to known rules, rather than under the control of some central authority that may one day decide to run off with all the deposited funds.
Is there a way to build secure DeFi applications without exorbitant transaction fees? We think so, Basechain will allow developers to use a new architecture, where custody of funds and core application logic can be handled by different networks — leveraging the best features of each network to build secure and accessible DeFi applications.
What’s the safest place to store funds? On the most capitalized network, where the cost of an attack on the network is beyond reach of most adversaries. Today, the most capitalized network capable of running smart contracts is Ethereum mainnet, long may it reign.
What’s the best place to run application logic? On a developer friendly, interconnected, smart contract capable network, with minimal transaction fees… Basechain, of course :). Powered by the zkLoom protocol, which is built on a zkRollup architecture where resource intensive smart contract execution can be offloaded to a sidechain while leveraging the security of Ethereum.
Protocol Level Oracles
One of the biggest difficulties with building applications that span across multiple networks is that transferring data (as opposed to just fungible tokens) is often difficult, slow, and expensive. In some cases bots may exploit the delay to their advantage , at the expense of users — especially when dealing with financial data, time is money.
We’ll be expanding the capabilities of our transfer gateways to allow timely data transfer from other networks to Basechain. Soon developers will be able to seamlessly access data from any smart contract on Ethereum in their smart contracts running on Basechain.
While we’re big fans of Ethereum, we’re not zealots, so we’re happy to build new interconnections to other networks favored by developers. Previously we’ve built transfer gateways to Binance Chain and TRON. In the near future we plan to rollout new transfer gateways for Binance Smart Chain, and a bit further down the line, Polkadot.
But wait… there’s more! We’ll be adding a new feature to the zkLoom protocol that will allow bundling transactions together with oracle interactions, those transactions will then only be executed if fresh data is received within a specified time. For example, if you build a yield farming application on Basechain you can allow frequent portfolio re-balancing across multiple assets without resorting to slow epoch-based approaches, because transactions on Basechain are low cost.
Anonymous Contract Interactions
Tornado Cash enabled anonymous transfers on Ethereum, but if you want to interact with a DAO, you can’t do so without revealing your wallet address. A curious person can then use your wallet address to check the balance of any tokens you own.
Basechain will grant developers the ability to separate contract logic from the store of value, making it possible to interact with contracts anonymously. A user could, for example, farm CAKE without his Bitcoin maximalist friends making fun of him.
Modernizing LOOM Staking
The LOOM token plays a key part in our vision of Basechain as a multi-chain platform. With the zkLoom protocol, Basechain can operate securely with only a small number of validators. This will free up significant amounts of capital to use as rewards to bootstrap liquidity.
We’ll be deploying LOOM on all the major networks we plan on connecting to Basechain —starting with Binance Smart Chain, then Polkadot and others. On each chain, we will create liquidity pools and a simple reward contract for LP staking. The rewards will be based on a bonding curve which we’ll release further down the line.
Developer Outreach and Education
CryptoZombies was one of the first projects we shipped at Loom Network, and according to the latest Solidity Developer Survey it remains a valuable learning resource for new blockchain developers. Previously we tried spinning it off into a separate entity, but ultimately decided to bring it back in-house, perhaps the best people to build blockchain development courses are blockchain developers!
We occasionally see people asking:
Why are you still working on CryptoZombies, shouldn’t you be focusing on your bread and butter projects?
First, we’ve hired some very promising graduates that found out about us through CryptoZombies. Finding new talented developers is no easy task, so that alone has been worth the time we spent on building the courses.
Second, we’re in the infrastructure business, we build blockchain based platforms that other developers can use to build their applications. What better way is there to introduce developers to our platform than to help them start building blockchain applications through our courses?
That’s why we’ll continue updating CryptoZombies, and plan to expand the course offering to target new networks — in collaboration with other blockchain companies.
TLDR;
In 2021 Loom Network will be focusing on transforming Basechain into an interconnected DeFi platform in order to address the scaling issues plaguing today’s DeFi applications.
