LTO Network AMA with Wolf Crypto
We held an AMA with LTO Network in our public Telegram channel on December 6th.
LTO Network, formally LegalThings One, is a software provider company established in 2014 focusing on digitalization of contracts and management tools. LTO moved into the blockchain space about 2 years ago to automate contracts on blockchain and make them legally compliant.
LTO Network is a hybrid blockchain for decentralized workflows: enabling B2B to collaborate on equal footing using trustless automated processes. Essentially any business process, any legal agreement or any inter-party process can be automated as a Live Contract: supply chain, third-party data handling, KYC, real estate lease agreements, NDA’s etc. Live Contracts are completely GDPR and regulatory compliant, and are also made easy for integration.
You can also visit the LTO Network Telegram channel or LTO Network website for further details.
Here’s what LTO Lead Architect Arnold Daniels, LTO COO Martijn Broersma, LTO CTO Sven Stam and LTO Strategic and Investment Relationship Lead Ivan Golovko had to say in the AMA.*
*This AMA has been edited for clarity.
WC (Wolf Crypto Telegram Member)
Welcome to another edition of Wolf Crypto AMA, this time with LTO!
Greetings Arnold, Martijn, Sven and Ivan. Arnold is the Lead Architect of LTO Network, Martijn is the VP Operations, Sven is the CTO and Ivan is the Strategic and Investment Relationship lead.
Thanks for taking the time to speak to us today.
TEAM & TEAM GOALS
WC
Can you all please tell us a bit about yourself and what led you to becoming apart of the LTO team?
AD
LTO Network started as LegalThings in 2014, which in turn was a spin-off of Firm24 (the market leader of incorporation's in the Netherlands).
We build workflow engines, initially to scratch our own itch. But we really hit a home run with the engine as partners wanted to run it for their own processes.
So by the end 2014 we had the first running MVP and early 2015 the first production ready version. All centralized (no blockchain) back than.
IG
I was previously in ICODrops and doing VC around crypto, but around April last year I was getting tired of all this hype, marketing schemes and lack of fundamentals in projects — I guess everyone can relate to that. That was the time I was going through my Masters in the Netherlands.
I randomly met LTO team at one of the NEO conferences in Amsterdam, and just learned about their product and successful company. I actually met with them to get an internship. And then it turned out that LTO had clients, its own blockchain, and a token.
From my research-analytical perspective, the project checked out ‘my gem dream box’ on everything I wanted to see in an ICO project: clients, long history, active Github, and etc. The cool part is that when I first asked the team about the whitepaper, they said “we do not really have it, we build pilots and have a functioning product” — which, as you know, very rare in this space.
So then it was a no-brainer for me to join 🙂 And have been working together since May 2018, while the team and the company have been running for a few years.
MB
I joined Firm24 (after studying law), initially digitizing smart legal templates and drafting legal documents for clients. When the LegalThings SaaS was white labeled, based on the Firm24 platform, I switched from legal business to the operational management of LegalThings & LTO Network, and have been doing so ever since!
SS
I have background in AI. I joined LegalThings in 2015, as CTO. Back then LegalThings was a workflow engine and 2017 we decided that the platform was a perfect match to combine with blockchain technology.
After researching existing blockchain tech we learned that non of the existing tools fit our needs. So we decided to build our own solution called LTO Network.
WC
Regarding your backgrounds and the rest of the teams to me it seems very stacked in business development, do you believe you have the required skill sets in blockchain technology to be able to deliver the proposed tech?
AD
Blockchain is smart combination of well known techniques known by every computer enginering student + an economic model based on game theory. None of us could have build this ourselves, but team is strong and diverse and has all the skills required.
IG
I am myself not a techie, I am a crypto dude. But I guess I can reply to this: the blockchain part (mainnet) will be open-sourced and the mainnet will be launched a couple of days prior to the initial token offering (scheduled for December 17 actually). So there is no need to ‘trust the team to deliver’ since after a few years of development… it’s just already delivered.
THE LTO NETWORK
WC
Why are you creating your own blockchain instead of leveraging a existing and proven base layer protocol?
IG
Good question. Both from the technical and the financial/solution perspectives. Tech is not everything (sorry techies!) — it also has to be good in terms of a company adoption the solution.
Here is an overview —
AD
There isn’t much available as permisionless private network. So the layer for (private) ad-hoc event chains we really needed to create ourselves.
IG
Regarding permissionless private networks there are only 3 projects: Monet Network (ages before functioning), HOLO (focus on DApps), and LTO Network. The former 2 focus on Dapps, we focus on B2B.
WC
I‘ve seen LPOI mentioned previously, this is the consensus mechanism?
Can you give a simple explanation of the advantages and how this differs from POW/POS/DPOS etc and how it functions?
IG
Consensus is Bitcoin NG, and LPOI is sibyl prevention* (I have to say this or Arnold will hit me haha).
Leased: kinda like a more lenient and nice DPOS version — lease to those who run nodes, and split rewards. Especially good in our setup.
Importance: raffle factor. So usually with a PoS model you end up with centralization (bleh!) but here the rewards take into account not only the stake amount, but how you actually use the network.
Good usage + stake = best.
Passive stake and no usage = bad.
Leasing gets to a good equilibrium.
WC
What is the relationship between LTO and the Netherlands government?
AD
We’ve won multiple tenders for blockchain pilots. One pilot for the Ministry of Infrastructure (ILT) and two for the Ministry of Justice.
A tender precedes a project and is a requirement for any European government that wants to do any kind of project. Anyone can participate on such a tenders. Your company, team, product and offer are scrutinized. That the project is awarded to one of the companies… or not.
IG
The ILT is a EU level use case among Dutch, Beligum and UK governments on the waste transportation. That is estimated to be saving 36M EURO (getting more concrete stats after the next pilot stage) a year — which is huge!
Then there is another use case involving the Dutch Ministry of Justice.
You can find more info on those here —
WC
That is a ridiculously large saving!
IG
Despite what Amazon tried to do, a blockchain cannot just be launched. It has to be distributed and permissionless to make sense (at least the settlement layer)
So you can see LTO Network as one of the many integrators on the network: getting clients and pilots, working like normal companies, where the network and the token will actually see and feel all that value capture. Making the best out of the open-source development
AD
Yes we are, and a number of integrators in our network are as well. Our solution very often fits better than other offers (typically based on Hyperledger). So we’re scooping the projects away from the big guys that typically win these tenders 🎉.
WC
So considering the above, how does moving over to blockchain affect your existing client base?
AD
Existing clients continue running via a single node, so centralized. However, if one of the parties wants to use their own node/system to participate, they can.
Because it’s a permissionless system, you don’t have the hurdles of creating a consortium as coming to some kind of agreement, accept new members, etc. If I’m currently participating via the node of the government or some big co, but I want to participate via my own node, I just can.
IG
This helps us kickstart network adoption: not just ‘we build — please come use it’ like other projects do. We move them onto our fabric 😏
WC
Are you able to give a estimate of what you believe is the size of the market this product will address and what markets in general?
IG
We have a quantitative research on this, with some projections and etc. We are just not sure how to correctly publish it to not make it look like promise of profits.
We tackle the DTM market. That is estimated to be at least 8B USD. Then we identify our market penetration estimation, and etc. It all comes from here —
WC
Arnold, you mentioned permissionless earlier, can you give some examples of how this is better than private/public/permission or is it a mix of all of the above?
AD
Anyone can spin up a node. There is a public permissionless layer, but it only contains anchor hashes (intended for verifying data and timestamping). Each (Live) contract creates a new private ad-hoc event chain. The contract defines who can access the associated event chain.
This article explains it more in depth as a general concept, not only LTO Network —
WC
Regarding the miniature private blockchains, who are the validators of the transactions?
IG
Holo is agent-centric. We are process-centric.
There are 2 layers here. On the private layer, you see and involved in the process (miniature chain) when you are supposed to be in it. Public chain is visible for everybody, it is the settlement layer
Private permissionless chains + public permissionless chain.
WC
What are the advantages of decentralized workflow systems opposed to centralized?
AD
One party becomes the owner of a system and needs to convince (or force) the other parties to use their system. Also that party needs to take care of all the integrations with external systems. Often is simply doesn’t happen and communication just goes by mail, fax, letter, etc.
WC
Ok, so how can you ensure scalability without comprising the private blockchains being built on top of your platform?
AD
All these data requests are logged on the event chain. The private chains are ‘share-nothing’, which allows horizontal scaling.
WC
So this can essentially guarantee data privacy on the LTO network?
AD
Well… it’s all in the contract. If you write a bad live contract, data might be exposed. Writing good blockchain contracts is a thing on itself. Same on LTO network.
WC
LTO claims to be GDPR compliant, can you give some more detail on how this is possible and whether attempting to be compliant will slow down growth and development?
IG
Without compliance you just can’t do any blockchain business. It’s as simple as that. And there are really maybe 1–2 functioning solutions in that area only. By being one of those, we have huge potential and advantage, which already allowed us to tap into a lot of things.
How we achieve GDPR compliance: excessively written out here —
AD
We have privacy by design. Data on the event chain is pseudonimized. To get a copy of privacy sensitive data, a node needs to do a data request at the node that is controlling the data. The possible actions (and thus reasons to need the data) are defined in the Live Contract. So the request is always verified against the contract.
When a node has performed the action, it’s required to remove the data and request it again if it needs it again.
COMPETITORS
WC
Why would a business use LTO over Hyperledger, R3 and various other projects that have created a similar solution that also don’t need a token?
MB
In regards to Hyperledger —
TOKEN UTILITY
WC
What exactly is the utility and use cases of the LTO token?
AD
The LTO token is needed to anchor events and data on the public blockchain (by submitting a hash). This is not optional, as there are not nearly enough participants on the event chain to apply a (non-centralized) consensus algorithm. All events that are received are verified and in case of a conflict, timestamping of the anchor is used to decide the ‘correct’ order of events.
So anytime someone does a step in a process, that node needs to anchor and pays a transaction fee.
WC
Is the cost of transactions at a fixed fiat cost or the price will fluctuate as the token price increases/decreases?
IG
The token price can and should fluctuate. What the Proof of Stake variation model allows to do is to not care. If you know the relative staking-network usage ratio, you do not really care as the user. The idea is to stay away from annoying recurring fees. It’s a net-zero equilibrium
WC
How are businesses brought onto the platform and will they be required to purchase tokens themselves?
IG
Good question. So token economy is something all projects disregard. I know Wolf Crypto community likes TFD, and what they did with re-shaping token economy was a good step
We worked on the token economy for a few months starting with TaaL (token as a license) and then moving onto a variation of a Proof of Stake -> our newly developed Leased proof of Importance Model*.
Any adoption will be followed by clients directly or indirectly staking tokens to run the solution, depending on what resources they need. And this is yet another article I need to write haha.
Network adoption goes in 3 ways — a project/company comes to us and has options to become:
1. New SaaS client — We build stuff for them and we stake tokens for them, they never hear about tokens, they just pay $.
2. Consulted PaaS client — We build for them and they pay us billable hours for that solution, but then they have the option of:
-> either turning to SaaS clients (pay $, never care about tokens — we stake)
-> or just buy an appropriate token stake and not pay monthly fees, which can be done via:
a) they buy on exchange (which is usually unlikely)
b) they buy OTC (we can connect them)
-> or get tokens leased
a) run their own campaign (unlikely)
b) get leased by a community node, because those want to increase their raffle factor.
3. A project/company is very smart and they just download stuff and figure out everything by themselves.
4. Integrators — They get a stake or get it leased, and then build pilots getting USD for it. So they indirectly stake tokens for their clients.
AD
For enterprise clients and government tenders it’s almost always via integrators.
Leasing LTO for a monthly (fiat) fee to your clients, is another way to monetize a project for these parties.
WC
How do node rewards work?
IG
Two things are taken into account: stake + importance (your network usage)
WC
Are the node requirements set already?
IG
Testnet is running, mainnet next week actually — you can even connect now.
PARTNERSHIPS
WC
I see the CTO of Nucypher as a advisor, is this purely for his technical experience or there will be possible collaboration between LTO and Nucypher once both platforms are live?
AD
There is a lot of synergy between LTO network and NyCypher, so we definitely want to collaborate on a project.
We only do ‘real’ projects however, so we need to win a Tender or win an enterprise assignment where these two projects can come together.
IG
There is a product idea we will be pursuing with regard to healthcare: combining FSM logic (Live Contracts) and re-encryption.
WC
Do you have any other partnerships in the crypto space?
IG
POA Network, CPChain and Waves — all for use cases. We are not printing things like crazy (maybe we should?)
ICO & TOKEN SUPPLY
WC
Considering market sentiment and ICO sentiment is quite frankly terrible at the moment, why do you believe there is a lot of hype surrounding LTO and do you believe current sentiment will impact being able to raise your hardcap?
IG
If a project is good, it will survive the bear. If not (usually due to bad token design, not the tech) — then it should be dead anyway. It is a great test for us. The hardcap is much smaller than other projects (because we actually made PnL) and went for full transparency. And if we do not sell out — unsold tokens are burned.
So imagine: 5.2M total hardcap (2 circulating probably), will turn into something even lower… 😛
WC
What is the date of the ICO?
IG
December 17 till December 19, we have a cool smart contract model in place (tweaked Fusion model if you remember that). This (rough draft) explains it — https://t.me/LTOnetwork/36293 — It starts with a 5% bonus and every next tx is with 0.05% bonus lower. It’s a little FCFS gas war within fusion model!
WC
This project is the first time I’ve heard of “troll bridge” can you explain that in further detail, it’s advantages etc and has this been used on any previous projects to your knowledge?
IG
Check this article and scroll to here: Say “goodbye” to vesting and hard cliff lockups: the bridge troll model and a fair ICO model…
Instead of locking up private investors, LTO came up with a brilliant idea of a mainnet <-> ERC-20 token bridge that chews off up to 55% of impatient investors tokens. This strips them of all bonuses.
WC
The seed round seems to made up a large portion of the entire sale, what bonus were these contributors offered, how did they contribute?
IG
Average was 40% there, many community members got in only with 20% bonus. More than 85% of the round was done in fiat, so there is no peg issue (I guess that is something you were getting to).
We kept the rounds very fair and horizontal, because usually seed <-> crowd is at least x2 or so.
WC
Is there any other news or events for LTO in the lead up to the ICO?
IG
The roadmap will be finally out next week. Mainnet will be next week most likely (it’s functioning , no need to delay anything tbh)
After that there are various tech things and plug and plays to be released, and more more bizdev and developer events. But the basic functionalities will be available form the start. And more upgrades coming after that.
CLOSING THOUGHTS
WC
Thank you the LTO guys for answering our questions today. If there are no other questions we’ll leave it here for today.
AD
Thank you all for hosting us today.
IG
Thank you guys, appreciate the cool questions.
WC
If you’d like to know more about LTO or we’ve missed a question, you can join their Telegram group here.
LTO Resources
Website: https://lto.network/
Telegram: https://t.me/LTOnetwork
Github: https://github.com/legalthings
Technical Whitepaper: https://www.lto.network/documents/LTO%20Network%20-%20Technical%20Paper.pdf
Token Economy: https://lto.network/documents/LTO%20Network%20-%20Token%20Economy.pdf
Wolf Crypto Resources
Public Group: https://t.me/WolfCryptoPub
News Channel: https://t.me/WolfCryptoAnnounce
Twitter: https://twitter.com/WolfCryptoGroup
