LowSea Leasing Node update (1st of January 2022)
Happy New Year! I hope these last few weeks of 2021 treated everyone well and that you were able to have fun and spend it with those close to you.
With 2022 now officially started, it’s looking to become an interesting crypto year. Will the bull run continue for the majority of the year? Will we simply never see a bear market like in previous years, but only lesser downs and ups now that VC/Institutional capital has clearly entered the game? And what about the metaverse? How far will things develop and expand?
I, for one, can’t wait to find out. But first, let’s focus on LTO and see what happened these last few weeks.
New Tokenomics Proposal
There’s been two major events these last two weeks. First, the new tokenomics. After being discussed during an open community townhall meeting a few months back, it has now officially been presented. These changes will need to be accepted through node voting later in the year, once the structure is build.
There’s a lot to digest, so let’s break things down a little.
Aim: Securing the rewards (APY) for stakers/leasers so that the public chain gets sufficient nodes (and thus security) while creating lower and more stable running costs for projects that wish to use LTO.
Reasoning: LTO wants to attract a lot more adoption and activity now that it is not only catering to B2B processes but properly moving to a layer-1 approach that will support peer-to-peer Privacy Aware Decentralized Apps (PADA). In order to do so it will have to be able to compete with other emerging layer 1 protocols on the topic of running costs.
The new tokenomics will create a base layer of rewards separate from the rewards the nodes get from the transactions in a very similar way to Solana. The level of rewards chosen means the APY will increase a great deal if the current level of total staked coins remains the same; from 3,6% APY to about 17%.
It’s expected that this increase in APY will attract additional people that wish to lease, increasing the total staked supply, so 17% will likely slide down as a result, but that is the entire point. Where other staking protocols have 60–80% of their supply locked in staking, LTO’s is only around 30%. In my opinion this creates unnecessary price pressure, and it is clear the team wants to draw in people that are more invested in the health of the network than concerned with playing the price movements.
From Deflationary to (Temporary) Inflation:
Up till now, LTO has always been deflationary. Meaning the total supply was always shrinking due to the transaction burn that was taking place. This is good for investors as less LTO tokens would make LTO more valuable over time.
The burn will continue under the new tokenomics, but in an adjusted format. The burn will be changed from a static amount of LTO per transaction burned (currently 0.1 LTO is burned per transaction) to a percentage burned of the transaction costs. A whopping 50% as a matter a fact.
With all the new types of transactions being added to LTO these last few months (think sponsored accounts, decentralized identities, claim, register, association, etc.) that have very different costs to the simple anchor transactions we mostly see happening, this will prepare the burn functionality to act according to the usage taking place.
So, if a larger part of the transaction costs are burned, where do the increased rewards for the nodes (APY) come from then, you ask?
Well, they will be minted. In other words, new LTO tokens will be created to act as the base layer of rewards for nodes as described above.
A set number of LTO will be created over 8–10 years, which will act as the rewards for nodes.
Currently, LTO has about 400,000,000 LTO as total supply due to various burn events these last 3 years, while 500,000,000 LTO is the max supply LTO can ever be. With the new minting proposal 500M LTO will still be the absolute maximum for the supply, which would give room to mint 100M LTO over the next 14 years in order to establish a higher APY level for the nodes.
Should this maximum of 500M LTO ever be reached, the number of minted/created tokens would default to the number of burned tokens from the transactions, always keeping the LTO supply within the limits of the max 500M LTO tokens.
Initially, this will mean more LTO are created than burned. Making LTO’s supply inflationary. It’s projected that with a 30% annual growth in transactions, that LTO will tip back to deflationary in about 6 years, as the amount of LTO burned due to transactions will become higher than the amount of LTO created for the APY.
What else is good to know?
Lockup period: With the new and higher rewards the team expects a higher level of commitment from stakers/leasers. With the new tokenomics stopping your lease will take 2 days (3,000 blocks). During this time your tokens will not count towards getting rewards and you will not be able to move them yet (for example to an exchange) until those 3,000 blocks have passed.
Bulk transactions: The new APY construction allows LTO to introduce bulk transaction types. This will lower the costs for companies using LTO, allowing them to scale up their usage. It will also open the door to make a competitive market entry and draw in additional projects. This in turn will help grow the network, increase transactions and thus the burning of LTO, assisting the new model to tip from temporarily inflation back to deflationary again.
Fee voting by nodes: Next to the bulk transactions, nodes will have a structure to vote the transaction costs higher and/or lower depending on the price movements. Introducing, this structure will assure users of the network with a more stable cost for usage while the price level of LTO can act with its own volatility which is so very common in crypto.
In other words, there will be even less worries for users of LTO Network if the token price goes sky-high.
The other major reveal was the highly-anticipated NFT2.0 Litepaper, aka Ownables, aka Titanium Update.
1) LTO will bring NFTs under control of their owner. Allowing NFTs (or Ownables as LTO calls them) to be kept within one’s own wallet, instead of a centralized platform like OpenSea or Rarible.
2) People will be able to sell/buy their Ownables either on marketplaces (by bridging the Ownable to the marketplace and back) or peer-to-peer.
3) Ownables are packages. Allowing multiple versions of the same NFT (think high/low polygon models, 3D model, 2D and or pixel art model) to reside within the package. This will make it possible for different metaverse projects to accept the same NFT into their platform, opening the doors to a more flexible open metaverse space in general.
4) Ownables will be able to run smart contracts directly within the NFT package, opening up the possibility of all kinds of new use cases. For example, you could have dynamic content (content that changes when certain parameters are met, like in a game leveling up armor/creatures/characters), consumable content (permanently use and NFT through another NFT), and more.
5) LTO will create a specific open-source NFT wallet for Ownables. This wallet will be able to keep your NFTs, but also display things like widgets due to the way that LTO Network can run smart contracts within the NFT layer itself. For the widget, the smart contract needs to render a UI of 400 by 400 pixels. Everything within this block is sandboxed. Neither the smart contract nor the widget will be able to access information about other ownables or the wallet.
6) The LTO NFT Wallet will allow users to put their Ownables up for sale on the wallet peer-to-peer market. This Ownables market will allow you to boost the NFT’s visibility up for sale by burning LTO. 👀
7) NFT files are under control of the user, but do not necessarily all reside in the wallet itself. Due to the nature and flexibility of Ownables, files could be very large as well, which would make it impractical to keep them on the device. That’s why the wallet will have (decentralized) cloud storage options build in, that allows the user to safely keep their files in a place of THEIR choosing. Keeping control, but without the fear of losing one’s NFT should your phone/laptop/device die or get stolen.
I highly suggest reading the NFT Litepaper in full. It is a super interesting concept and will provide a much-needed structure in the open metaverse that is coming into existence out there in the world.
LTO released an ecosystem graphic: https://twitter.com/TheLTONetwork/status/1475743975600377856
Binance has officially announced their support for the new ERC20 LTO Smart contract. Getting one step closer again to leaving the old contract behind.
However, there’s still 150k USD liquidity provided on UNISWAP for the old contract, so I expect that it will still take quite some time before LTO can fully abandon the old ERC20 contract.
That’s it for this week. With all the new things coming up, I’m really looking forward to 2022! Hopefully COVID will fuck off into outer space or something and we’ll get a lot more freedom back in our personal lives. Apart from that, I’m sure we’ll see more exchanges for LTO pop up and more use cases come into fruition. May the grown continue!
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