LTO Network: The crypto company that should have been on the stock market?
LTO Network is gaining popularity these last few months and for good reason. It’s the leading European Blockchain with strong fundamentals. So strong… people seem to have a hard time believing it. So, I took some time to write down some things that I find interesting about LTO Network and show you why it’s on its way to join the top40 coins on the CMC top100, where projects sit comfy with their 1+ Billion USD marketcap.
The Future
Just because! Why keep the best for last?!
For the last 2 years, LTO has established a solid clientele base with decentralized workflows, Blockchain as a Service (BaaS) and document validation. With their earlier roadmap completed, they now shift their focus onto DID (Decentralized Identities). Using their mainnet in combination with the established trust network of extended-SSL certificates, LTO Network will lead the way for cross-chain DIDs through their partnership with Chainlink. By using their unique transaction type of associations, any blockchain will be able to cast out their net of trust using LTO Mainnet.
Using this DID structure, LTO Network will provide a structure for verifiable credentials. It will act as an oracle for the DeFi world, one of the fastest growing use-cases of the cryptoworld. Decentralized Identities are HOT. Just look at Coinbureau’s latest youtube video (about $LIT, but ignore that shit it’s about the DID). So, forget $LIT (starting from scratch, entire video is a paid shill), and replace everywhere you hear $LIT on the DID explanation part with $LTO. Then realize that LTO Network has an established clientele waiting for their DID solution. The thought ‘Build it and they will come’ rarely works in crypto. It’s about who you know and LTO has the connections, the userbase and the knowhow to be one of the major providers of DID in the oncoming years.
Partnerships like Horizen and Drep Foundation have already jumped onto the opportunity and I suspect many will follow once things through Chainlink become active later in 2021.
Read the newest LTO Decentralized Identities Litepaper and Techpaper here:
https://ltonetwork.com/documents/LTO%20Network%20-%20Identities%20Paper.pdf
https://ltonetwork.com/documents/LTO%20Network%20-%20Identities%20Tech.pdf
Interested to know more? Read on!
The Basics
- LTO Network is run by a revenue making company, little chance of them running out of funds, or abandoning LTO as it is part of their IT (SaaS or Blockchain as a Service, BaaS) service structure
- Total supply of 402M coins; Started at 500M, all coins are minted, there’s no inflation build in. Various instances led to burns, leaving 402M LTO total supply right now.
- Circulating supply at this time is around 272M (see M&A comment under tokenomics)
- LTO is not an ERC20 token or a simple smartcontract. LTO Network runs its own mainnet (a heavily adapted fork of WAVES), where they have build new functionality on to suit their use-case approaches.
- They build their own blockchain tools, mostly as SaaS offered services, but also work heavily together with other blockchain parties, like Horizon, DUSK, Chainlink (making integration with any other blockchain possible) and smartcontracts on ETH.
- 99,9% of the transactions on LTO are B2B transactions, paid by integrators and clients, who have to purchase tokens from the market to pay for their transactions.
- Some example tools that run on LTO: fillthedoc.com (most powerful and flexible document automation workflow tool out there right now. It’s easier and cheaper to use than current standards), thecontract.app, digital signatures through signrequest, IoT sensor data tracking through the Internet of Environments project (environment data, but also climate ‘corona’ quality sensors: https://www.coronasafetyindicator.nl/).
- They have been quiet about their progress, while big companies already make use of their tools: Deloitte (fillthedoc), Quislex (thecontract.app), IBM (Internet of Environments), NEN (national Dutch standardization company), Amspec and Navarik (both companies in the oil industry), the Dutch and Belgian government (on several levels), and the biggest to date: The United Nations.
- They have been building their base level of clients and tech these last 2 years through the land & expand method. Investing their money in smart ways, not spending it on crypto marketing, but on investments to get tenders, which leads to clients and opens more doors, leading to new opportunities, etc., etc.. They’ve been biding their time, waiting for the moment to upscale and go international.
- Expanding on the previous point: Merger and Acquisition is part of the LTO Network’s plan to grow (more about that under the tokenomics). They are building an ecosystem to offer all kinds of easy to integrate blockchain solutions for businesses around the world. It’s why Stansberry Research recently called LTO the “Ethereum of the Business World”.
- Community: An active community has stood by LTO since mainnet launch in January 2019. They have helped develop chain crawlers, overviews, ROI calculators, wallet price display extensions in chrome, but also brought in new clients, helped promote the services and providing feedback on approaches and ideas.
The tokenomics
- The tokenomics are among the strongest I’ve ever seen. It should speak to anyone that likes strong fundamentals behind their coins. XRP peeps will like the real usage by clients. VETfam will like the more direct value capture mechanism. ETH people will see it as another way to earn great staking rewards while ETH 2.0 is building up.In short:- Transactions on LTO mainnet cost LTO, integrators and clients need LTO to run their SaaS (or Blockchain as a Service, BaaS) services.- LTO can only be bought from the market. There is no OTC, nor a weird structure with a second layer token like VET. Just plain and simple; as usage increases, more tokens are needed to fund those transactions and more buying pressure comes into play.- On top of that, as companies start their own nodes, they will stake LTO in these mainnet nodes themselves to get rewards back. Those staked tokens can be considered non-circulating supply, as they are not actively traded. So, while demand increases, the offer side decreases.
- There is a transaction burn mechanism active since August 2020, burning 0.1 LTO per transaction. With the current daily txs (100k-105k) about 10.000 LTO is burned EVERY DAY. This means the total supply of 402M is actively decreasing. The deflation will speed up with more adoption being onboarded.
- LTO Network works on a PoS mainnet. Any token holder can stake, either by running a node of their own or leasing their tokens to a vetted community nodethat does regular payouts. Leasing is super simple, and you keep full control over your tokens. Currently, 128M LTO are staked on mainnet, a whopping 47% of the circulating supply.
- Annual staking ROI is between 6–8%, which might not sound like a lot until you realize this is on a deflationary total supply due to the transaction burning.
- Daily transactions have recently burst through the 50.000 txs per day. It will soon become the new normal on our way to higher levels.
- Remember that 272M circulating supply I mentioned? And the merger and acquisitions strategy? Well of the remaining +/- 130M LTO left that still need to unlock, 80M is part of LTO’s M&A funds. These funds will be used to bring more value to LTO’s mainnet and growing the company when the moment arrives. They recently released a blog post talking about how the M&A funds will not be touched until the LTO price is much higher, so that the power of those funds are bigger and they can make bigger moves. Read it here: https://blog.ltonetwork.com/faq-why-arent-lto-transactions-pegged-to-the-euro/
The Possible Counter Arguments
There is so much more to tell that I can’t possibly fit it into this post without making it a book. But let me close with some of the major against/worry arguments I’ve seen about LTO:
- Why, if it is so awesome and great at transactions/adoption, is the price so low then? There must be something wrong with it: IMHO, no. LTO has been seeing great traction the last two months and is not done by a longshot. Reasons I can think of why MC is still so low are: LTO Network build up their blockchain during the bear market when hype was little and people bearish, so they quit their investments quickly. LTO Network did little marketing, as they wanted to establish a solid base first, before going internationally and enter their scale-up phase.
- What happens if all the tokens get burned? Not possible. The burn mechanism can be adjusted by node consensus if need be. Lowering it, or perhaps make it a percentage of the transaction costs are possible futures, all decided by the (community) nodes voting process with a need of 80% consensus.
- When price rises, transactions will start too cost way too much. The team will not allow this: Again, no. Read this blogpost (same as M&A post): https://blog.ltonetwork.com/faq-why-arent-lto-transactions-pegged-to-the-euro/While a high token price will increase costs for integrators, clients will barely notice; adoption will not be impacted. These integrators have already put a margin on their offered services, allowing the price of LTO to grow for a long time before it starts impacting their client’s costs.On top of that, it’s quite common for every service, to charge a little more every year (just look at your own IT service plans, or TV/phone plan), so the costs will remain covered while LTO’s token price rises.*Comparison example: Would LTO’s price rise to 1 to 4 USD, it would still be cheaper to anchor on LTO then for example Ethereum. Some use-cases like certificate securing can easily off-set and additional cost of 1 USD per certificate, which means LTO can charge up to 4 USD without much problems on the adoption side. In general, clients don’t really see the blockchain side of the service, it is simply a fiat payment.*There’s two structures ready for when (not if ;)) the token price skyrockets and does become “too high”:1) Nodes can vote to lower the transaction costs, just like with the burning mechanism. At the moment, a transaction costs 0.35 LTO, 0.25 for the transaction and 0.1 LTO for the burn. Should price skyrocket, nodes can adjust this downward (don’t forget annual ROI in money terms would have climbed as well if price rises) so that adoption is not obstructed. This would all even out with a major increase of daily transactions, increased ROI and a higher token price. So, the vote would be have no problem to tweak the transaction prices down for things to find a new equilibrium.2) Leased Proof of Importance: Currently not active, this is something for a faraway future. LPOI skews the balance of rewards toward those nodes that are most active in transactions. Giving these nodes a better cost-effectiveness, while the public/community nodes get a little less, reward-wise. As this change in protocol would require node consensus as well, it’s not likely the community nodes will vote for this structure quickly. This means that adoption has to have progressed so far already that the integrators and clients own 80% of the node consensus by running their own nodes and staking vast amounts of LTO. This means that the price will be at a whole different level entirely before that happens.
TL/DR: The LTO team benefits from a higher token price with their M&A funds, creating the opportunity to bring more value to LTO mainnet, and LTO price can grow indefinitely with the 2 possible counter solutions available.
The Moontalk
- I believe that LTO has all the strengths needed to make it to the top 40 on CMC. 1 Billion USD MC would put LTO’s price just above 3 USD. But when chains like ADA can reach 30 Billion MC during the previous bull-run with absolutely no real-world usage or adoption, I’m optimistic that LTO will go for the multi-billion MC this year as BTC seeks new heights. This is not a pump and dump coin. Passive income, growth and sensible investment would be well-placed here. Still, I expect that the growth will go very fast with such great fundamentals backing it up.
That’s it. LTO, the blockchain company that probably should’ve been on the stock-market. Not because they offer securities (LTO is an utility coin through and through), but for being too real for crypto. I hope you enjoyed the read. May the growth continue and see you on Mars.
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