Loom Network — Gamifying scaling & mass adoption of Ethereum — Analysis of Business Model & Token

During the late 2017-early 2018 bull-run, the volume of transactions on the Ethereum blockchain increased to a level where the limitations became painfully apparent.

Published in

Trivial.co

11 min readNov 21, 2018

Transaction costs rose to unreasonable levels as the network couldn’t properly scale to cope with its popularity. This scalability issue has been well-documented within the community, and came as no surprise to certain projects working on second-layer solutions to segregate the bulk of transactions from the main blockchain.

Loom Network is one such project, and they are creating a platform that allows easy development of dApps on their own sidechains, while using the Ethereum network as its base layer. The team describes it as a type of “build your own blockchain” generator. Loom is notable for having released a working product with functioning Decentralized Applications (DApps). The core component is a Software Development Kit (SDK) that allows integration of Javascript, Phaser, Golang, and Unity and supports all the other tech built on top of it.

In addition to solving scalability issues, Loom is also trying make DApps easier to develop, and to drive adoption of DApps through a seamless user experience.

How it works

Loom utilizes sidechains (which it refers to as “DAppChains”) — second layer blockchains that will host the DApps. Each DApp will have its own sidechain running parallel to the base Ethereum network, which allow for high levels of scaling while still maintaining public shareable data, reasonable security, and decentralization.

The platform has integrated Plasma Cash to allow for transfer of digital assets onto sidechains. This sidechain is appropriately called PlasmaChain, and effectively acts as a bridge to the Ethereum mainnet with a built-in Decentralized Exchange (DEX), that other sidechains can use for faster and cheaper transactions without ever touching mainnet.

For example, the collectible card assets (ERC-721 tokens) used in the Zombie Battleground game are expected to be purchased and played with on the CryptoZombies GameChain, but the cards can also be transferred to the Ethereum mainnet to be stored securely, traded, or even transferred to another sidechain for some other potential functionality.

While PlasmaChain is the most ground-breaking implementation of the sidechain experiment, there are a couple of other significant sidechains operating within the Loom ecosystem.

GameChain is optimized to run interactive mobile games without any sacrifice in performance due to blockchain latency. It’s a sidechain of PlasmaChain, and doesn’t connect directly to the Ethereum mainnet. It’s being used to run the alpha version of Zombie Battleground.

GameChain is important as it allows users to earn items while playing, and then trade them on the marketplace instantly, without having to worry about paying for gas. Taking the game Zombie Battleground as an example, it is on GameChain where all the matchmaking, tournaments, ladders, player rankings,and individual moves in the matches themselves take place — basically everything that would traditionally happen on a backend web server.

SocialChain has been used since March 2018 to run DelegateCall, which is a blockchain Question & Answer portal where users can earn tokenized karma. In the future, there are plans to open up SocialChain to other social network DApps that share similar feature requirements, such as ERC20-based karma, sybil resistance, or reputation-based transaction limiting.

The Loom Network also features DPoS (Delegated Proof of Stake) functionality. DPoS is a staking mechanism where users select “witnesses” to validate transactions. Only the top witnesses will validate transactions and be rewarded with associated fees, and the community voting mechanism can kick out bad witnesses. Initial validators on the PlasmaChain include Mythos, Bitfish, Bixin & MW Partners.

DPoS allows for significant scaling and lower transaction costs. It does however lack decentralization, considering that only a handful of the witnesses will be voted to validate transactions. This is a major reason why Loom focuses on gaming and social networking; the data in these types of applications are less sensitive. It should be noted however that each DAppChain will be allowed to choose its own consensus algorithm.

A major differentiator that has led to Loom’s popularity is the team’s track record of releasing tangible and useable software. The beta SDK was released in March 2018, offering a scaling solution that took the community by surprise, as it came ahead of more well-known projects such as the Raiden Network and Plasma. The Loom team prides itself on their action-first mentality, maintaining that no white paper needs to be written based on this belief.

On the other hand, it should be noted that Loom’s expedient release is largely due to its centralized nature. Their approach is to release something tangible first, and then fine-tune the security and decentralization later, reflecting their belief that the community will appreciate imperfect releases rather than delayed promises. Up and running products include:

CryptoZombies.io — interactive DApp coding tutorial
Zombies Battleground — collectible card game
DelegateCall — social Q&A site

Zombie Battleground

Zombie Battleground is the first major game release by the Loom team that aims to propel mobile blockchain gaming into the mainstream. Its essentially a collectible card game in the style of Magic the Gathering, where assets and game data are stored the blockchain. The game has raised over $320,000 in funding from Kickstarter, and is currently in alpha testing stage, but there is plenty of anticipation, with over 22,000 people waiting to play once the game is opened up.

The blockchain transactions are be completely invisible to the player, and someone who has never even heard of blockchain will find that the game is easy to pick up with performance similar to any other comparable mobile game. When users decide they want to trade or sell their cards, then they will discover and learn how to carry out blockchain transactions to securely interact in the marketplace.

Loom has underlined its belief that games are the best way to encourage mass adoption of blockchain technology, and while Zombie Battlegrounds is only one of the team’s various DApps, it is being pushed as a potentially “Killer App”.

The LOOM Token

The LOOM token is utilized both by users and by developers.

For users, the LOOM token represents a membership pass that allows DAppChain assets to be transferred between the sidechains and the Ethereum mainnet. It should be noted that the token is not used as a currency; there is no spending of this token for transactions. Rather, as long as you hold a minimum amount (one token as of writing), you are permitted to perform cross-chain transactions. The platform can also integrate staking of tokens for various DApps. For example, Zombie Battlegrounds will allow LOOM stakers access to free cards on a monthly basis. The team is also consider various other ways these tokens can be used.

For developers, LOOM tokens will be required for access to the SDK at cost of 10–10,000 tokens, depending on the level of deployment. The Loom team is also offering enterprise support at a cost of 100,000 LOOM per year.

Notable Partnerships

Trust Wallet — A big focus for Loom Network is allowing easy integration of DApps into mobile. Trust Wallet is a mobile ERC-20 wallet recently acquired by Binance, that is working on easy interaction between mobile apps and the Ethereum mainnet. It aims to reduce the friction of somewhat unintuitive implementations such as Metamask.

Cocos-BCX — Cocos is a game engine utilized by popular games such as Angry Birds and Clash of Kings. Cocos-BCX is the blockchain development arm of the team, and is aiming to develop the definitive game engine for DApp games. It should be noted that Cocos-BCX has also partnered with other major platforms such as EOS, Ontology and NEO. The Cocos SDK is currently available for the Loom Network.

Roadmap — Where are we?

Loom Network does not have a whitepaper, but releases limited roadmaps via blog posts.

A number of important milestones have been hit recent months:

The public beta SDK was released in June, and a number of games are building using the SDK, including Axie Infinity, Neon District, CryptoWars, Coins & Steel.
Plasma Cash implementation in June, allowing the use of ERC721 non-fungible tokens on sidechains
Zombie Battleground game alpha release in August (Windows, Mac, iOS, Android)
PlasmaChain launch in August
ERC721x , a new token standard to allow for batch transfers and gas efficiency, while maintaining full backward compatibility with ERC721

For Q4 2018 / Q1 2019, Loom plans to:

Add more utility to the LOOM token
Open up staking later to become a validator of the PlasmaChain
Develop the Marketplace and game mechanics for Zombie Battleground
Develop new features within SDK & Plasma Cash

Stats & Metrics*

*(as of 21 November 2018)

Marketcap — $35,909,000

Price Chart

Cost to join Vladimir Club (own 0.0001% of tokens): $3,591

Circulating Supply — 604,116,333

Total Supply — 1,000,000,000

Unique Addresses holding tokens — 6,957

Top 20 Addresses hold 76% of the Supply.

*Defined as “**distinct senders that sent the tokens using ERC20 transfer() method**”. NOTE — it only includes onchain transactions.

The Team

Matthew Campbell, CEO & Cofounder — Software developer who has worked for a broad range of companies including Gucci, Bloomberg, and Thomson Reuters. His longest stint was as a principal at Hyperworks, Inc., which is a CAE software company still active today. He is a graduate of Georgia State University.

James Martin Duffy — Co-Founder — Software developer who has worked in various start-ups throughout his career. Starting as a freelancer, he was lead developer for Casual Steps, Inc., a South Korea-based ecommerce platform. He founded KoreaJobFinder.com, an English to Korea job portal, and Auragin, a herbal supplement brand. He holds a B.S. in Mathematics from Virginia Tech.

Luke Zhang — Co-Founder — Software engineer who has worked for various companies/projects which include Workopolis, Elemica, and Blockmason. Blockmason is an accounting blockchain protocol; Mr. Zhang left the project shortly after ICO to join the Loom team.

Overall, Loom has an extensive team of ~50 employees. The team includes divisions for game development, blockchain development, artists, marketing, and operations. The group is broad in scope, and appears just as focused on marketing and mainstream accessibility as technical excellence.

Competitors

The Loom Network provides a broad scaling solution for all types of DApps, and at its core competes by offering an easy-to-use implementation of second layer DApps. While the network is not restricted to any particular type of DApp, the Loom team has focused on gaming and social networks, with significant investment into art and design that appeals to that market. As such, the Loom Network can be viewed as competing in both the scaling platform space, as well as the decentralized gaming space.

Enjin — Enjin is a longstanding community management services platform for games that originated in 2009. It is best-known for providing websites, forums, and other community-based services to gamers. The Enjin Coin hopes to integrate a decentralized currency into the Enjin platform, allowing payments, subscriptions, and virtual good purchase/sales through the crypto rather than fiat. While Loom Network provides a platform for building dApp games via side chains, Enjin focuses more on integrating existing games into blockchain.

EOS — EOS is a dApp platform that utilizes DPoS and aims to incorporate various features and technologies to make it superior to Ethereum and all other networks. In comparison, the Loom Network is built on top of the Ethereum network, and hence is largely dependent on the popularity and developer support for Ethereum. In general, Loom has incorporated many of the features of EOS through its use of side chains, although the charge of centralization that is frequently levied against EOS could also be applied to Loom DappChains.

Raiden Network — Raiden Network offers a different type of scaling solution than Loom. While Loom Network utilizes sidechains for transactions, Raiden Network aims to utilize state channels, which are direct transactions between two parties that take place entirely off-chain. These two technologies are largely complementary, and many other projects are investigating the usage of state channels such as Lightning Network and Trinity.

Concerns

No whitepaper / Lack of defined roadmap — The Loom team has always stressed their focus on producing results instead of promises. From the beginning, the team differentiated itself through no whitepaper and minimal roadmap. This has made it difficult for investors to track the project’s development from a macro perspective, while also freeing the team from keeping up with deadlines and expectations. The inability to hold the team accountable to a long-term plan is certainly a risk, although the team has produced meaningful releases consistently with ample community updates and good communication.

Token pricing — One of the most befuddling aspects of the Loom Network has been around token pricing. Until recently, the token was sold directly on the Loom website for a premium well above the listed price on exchanges. The community pointed out this discrepancy, questioning the morality and business acumen behind this decision, and subsequently it is no longer possible to buy Loom directly from the site. One argument for why Loom did this is that an average user may have found it difficult to sign up to an exchange and go through the process of making the purchases, hence Loom was simply providing an easy gateway to purchasing their tokens, although at a high cost.

What is the core focus? — On a more conceptual level, a concern about the Loom Network is that there is no definitive focus. The team is developing the Loom Network platform, while also trying to release high-quality mobile games, while also working improving UI/UX , while also developing scaling solutions via Plasma. With lack of whitepaper and definitive roadmap, there is risk that the team may end up not staying on the same page, or being too dispersed for meaningful development. On the other hand, the development team is quite large, and progress thus far has shown the team is capable of managing different projects.

Summary

The Loom Network has provided the community with the first major platform to ease Ethereum scalability issues through the usage of sidechains. The team has also proven to be very industrious, with a comprehensive SDK, clever implementation of Plasma Cash, as well as alpha release of the Zombies Battleground game.

On the other hand, the extent to which the Loom Network provides a solution for scaling that is truly secure and decentralized still remains to be seen. Developers of DAppChains will be able to choose their consensus algorithm, and modify the number of validators, so the level of decentralization and security will presumably differ across various sidechains.

There has been significant investment into the Zombie Battleground mobile game, however, it is notoriously difficult to predict the popularity of such endeavors. If the game does not take off then it will be back to the drawing board in terms of adoption. At least with the SDK this problem is being outsourced to other professional game developers, and in time, one of them could hit it big and bring the benefits of blockchain to the wider gaming community.

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Let me know what you think of LOOM in the comments?

I’ll try to update this review periodically to keep it relevant, but please feel free to help me by notifying me of any updates to the project, or offering any corrections/suggestions to improve the analysis!