Bitcoin went beyond its 60k ATH this week! The cryptoverse is brewing with opportunistic energy and the bull run is in full swing. LTO was primarily prepping things behind the scenes and had some nice spikes too, but breaking that 30c–40c zone is proving to be difficult. Here is a quick overview of LTO’s activity:
At the start of October, it was announced that LTO was updating their ERC20 smart contract. It’s a minor change to remove some permissions from the bridge that are not needed, but a necessary one in order to allow LTO to reach its full potential.
Where at first an automated swap was planned, the community’s feedback quickly made it clear it would not be fair for those providing liquidity on UNISWAP, as they would have too little time to unstake/get informed, and thus run the risk to lose access to their LTO.
As a result, LTO has worked together with the exchanges and community to come up with a better way (though slightly longer planning wise) to do the swap; a soft swap.
The final audits are taking place on the new smart contract and soft swap contract. More information should follow this week, but here is a few quick pointers about the things I know:
- People will need to swap their own ERC20 LTO tokens for the new ERC20 LTO variant. IT will not be automated.
- Exchanges will partake in the swap, so if you have LTO there, keep an eye out for their updates on how they will do the swap.
- Mainnet and BEP2(0) LTO tokens are not impacted, once the new smart contract is live any tokens that move from Mainnet to ERC20, will be the new version LTO. This includes those tokens moving from BEP2(0) to mainnet and then to ERC20.
- A website will be available where people can do the swap.
Additional details will follow soon.
The other big happening was the LTO Townhall meeting. During this open discussion with the community, Arnold (LTO’s Lead Architect) brought forth a number of obstacles that the LTO Network team is looking to solve on the adoption side. The three topics discussed were: Volatility, Transaction Fee and APY vs Deflationary. As context is important, I suggest to read the full event here.
The first two topics are more or less needed for LTO to move forward with the big companies out there in the real world. They are looking to keep price of transactions less volatile, without trying to control the price of the LTO token. The transaction fee structure will be adjusted so that bulk usage becomes a possibility for companies, which in turn will open up the gates for more adoption and higher usage.
The volatility could be tackled by things like regular (automated) node voting on the price, or by introducing a second layer FEE structure, where LTO can be used to buy FEE and FEE in turn might be used for transactions at a more stable price. It would be a secondary choice, as you could also still pay for transaction with LTO itself but would give companies a better indication of the longer running time costs.
Now, I’m sure there will be a few articles coming out about it, because it is all too long and technical to jump into it during this update, but it is clear these type of changes (when a choice has been made on how to solve things) will be implemented. Once they do, we should see a lot more usage come in, which is great. It is best to keep your eyes open for additional updates to come.
The third topic is really a community question: As the above solutions would (temporarily) decrease the APY of the network (with a bulk anchor structure it would cost a lot less to do high volume of anchoring), LTO is exploring possibilities to compensate that loss of APY until activity grows large enough to give a reasonable APY again by itself.
Now, there’s not a lot of chains out there that have the deflationary approach that LTO has, and it is one of the things I’ve always loved about LTO. So, perhaps it is not even needed to change anything. If the nodes and leasers accept that the APY drops down for a couple of years, while the total supply of LTO keeps being deflationary, that is just fine. People who trust that LTO’s token will grow in price over time, because of usage and being deflationary, often think the APY is just secondary and a nice bonus to get.
However, another approach would be for the nodes to vote and make LTO (temporarily) inflationary again. There’s dozens of chains out there that are highly inflationary and are doing really well price wise, as people don’t really care about deflation or inflation. They are just looking for a high (double digit) APY. So, making LTO inflationary has the potential to pull in a lot more investors, as the APY would be more attractive.
The inflation examples that are currently being given in the community are all temporary inflation, where it would be something like 10, 20 or 30 million LTO being minted for a number of years to cover APY. Range chosen right now is about 10 years, which makes things overseeable and is also a long enough period in which the usage/adoption of LTO has time to grow to new levels.
In my opinion, this would not really be a lot. With many times that in tokens unlocking these years, I think it would be a minor amount in the face of the whole picture.
As the transaction burn will be kept (though burn will go slower because the txs fee payments will become lower with bulk structure), it’s expected that over time the adoption and usage grows large enough again to completely negate any temporary inflation chosen. Even before the end date of the inflation is reached, making LTO complete deflationary again.
There’s some people that would not like to see LTO be turned (temporarily) inflationary. They believe inflation will take away one of the bullish characteristics of LTO, but I disagree. There’s plenty of chains out there that are highly inflationary that have billions of marketcap in them, leading me to believe that many in the cryptospace don’t care about inflation or deflation at all.
In general, I’m pretty impartial to either camp. I think LTO can try to stay deflationary, lower the APY and see if the nodes present keep running without any objections. Should running the nodes start to cost too much, nodes might choose to increase their node fees to help compensate this. It would in turn stimulate some people to run their own nodes, helping increase decentralization of LTO Mainnet.
However, if we see network health lower because nodes are leaving, I have no problem with the inflation part. It would allow LTO to compete with other high APY chains out there, while still allowing LTO’s adoption to grow (and likely at a quicker rate than it does now). That in turn should also simulate people to stake on LTO mainnet, helping increase decentralization if they start nodes. Demand for the LTO token would rise from investors side, pushing the price up.
The number of tokens being brought into existence would be limited. And the change could be hard coded into LTO that the supply would never be able to increase above a certain limit. In the long run, adoption would pick up enough to fully provide a decent APY for stakers and leasers, so it is purely that in-between period of time that the team is looking to safeguard network security and decentralization.
Interesting things to think about; the path toward growth. And a choice has yet to be made. Whichever it will be, more adoption will mean more companies using LTO. More partner projects, also in the crypto space and more exposure for LTO because of it. All that to me is just bullish. 😎
That’s it. See you all next time and may the growth continue!
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