LTO Network ($LTO) Fundamental Analysis

LTO Network ($LTO) Overview

What if incumbent corporations and legacy systems want to use blockchain, but because they carry so much weight in data, history, and operations, they need to split the difference between the blockchain and more familiar tech? Several anecdotal studies have been done in which traditional business leaders were asked in which ways blockchain could help them most. The majority of respondents answered that creating efficient business structures and integrating trust into B2B operations was a top priority.

Despite those desires, there are woefully few blockchain solutions to attend to the needs of businesses who want to streamline operations in a trustful, modern, and cost-effective way.

Enter LTO Network. Founded in 2014, LTO Network began as a document engine MVP before becoming a workflow engine within and between businesses. Over the years, LTO Network’s clients have grown to include some rather large names in the business world — Deloitte and Heineken amongst them. As the size and demands of the businesses LTO Network provides workflow engine services grew, so too did the security burden.

LTO Network became a trusted third party privy to the details of entire workflows. Should their data become compromised or manipulated in any way, the businesses trusting LTO Network could easily find a serious security compromise on their hands. That realization, combined with the emergence of blockchain technology, led to LTO Network changing gears and focusing on decentralized workflows and data security. In its current iteration, LTO Network bills itself as a hybrid blockchain built to enable automated business processes in a secure, immutable, and trustful manner. The LTO vision is that by introducing a network which allows companies to trustfully collaborate with each other and streamline their own processes, they’ll bring those companies increased transparency, efficiency, security, and profitability.

LTO Network in 100 words:

Most blockchain projects focus on financial transactions utilizing Smart Contracts. However, this leaves an enormous B2B market untapped. The benefits those parties are actually looking for in blockchain technology are reduction of costs on paperwork, administration, and so on. They need a way to automate processes — not within, but amongst organizations — in a trustless way. They need a level playing field. This is exactly what LTO Network provides. By combining private and public layers, it allows organizations to meet GDPR and data privacy requirements, while preventing the scalability issues typically associated with blockchain projects.

Decentralized Workflows Before getting into LTO’s concept of decentralized workflows, let’s get clear on what a workflow engine is in its original context. Essentially, a workflow engine takes complicated business-related processes and makes them simple, automated, repeatable, and organized.

When you’ve got a business on your hands that has plenty of moving parts, personnel, and B2B action, keeping track of and performing actions on tasks becomes a headache worse

than the one that comes after two days without coffee. Without workflow engine software, simple tasks like getting signatures from different parties on a deal might require middlemen, legal reps, and a whole slew of actors who are unnecessary (no offense if you’re one of them).

LTO makes it possible to handle the repeatable minutiae of quotidian business life by integrating blockchain-based workflow solutions with existing business infrastructure. In fact, LTO’s workflow engine is so lightweight that it forms the backend support of many applications and products — in this way, LTO, and thus blockchain, are being adopted by businesses without them even being aware of blockchain or LTO in the first place. But, we digress. Let’s get back to decentralized workflows.

The LTO innovation in this instance is the gesture of creating workflows which are secured and tamperproof on a blockchain. This way, organizations don’t need to trust a third-party to ensure that workflows are secure and are executed as defined between partners. The top barrier standing between businesses and a level up is data silos — organizations simply don’t want to create and manage shared systems with other businesses, even if doing so would benefit their business overall.

LTO Network solves this problem by becoming the network in which businesses can plug in, collaborate on tasks and exchange data, all while maintaining GDPR compliance. The beauty is that businesses don’t have to change anything about their systems to participate in a workflow with another business — they can simply tap into the LTO Network software with their existing legacy system and are good to go. This makes the barrier to entry very low when compared to similar systems like Hyperledger and Quorum.

With LTO’s decentralized workflows, companies can do things like transact, trade data, and organize complicated supply chains into simple automated flows that report inefficiencies while significantly reducing costs.

This all sounds well and good, but how does LTO Network do it? Moreover, why not just use smart contracts like everyone else?

Live Contracts and Final State Machines

Just like smart contracts, live contracts define logic and carry it out in a trustless and secure way. The main difference between the two, however, is that smart contracts contain/carry value, whereas live contracts just tell two parties how to interact. Think of live contracts as similar to paper contracts — there’s a set of definitions, a sequence of events, and legally binding commentary that tells two parties how to do whatever it is they’re going to do.

Live contracts look at workflows as Finite State Machines (FSM). Yeah, we didn’t get it at first either. But, it’s not as complicated as it sounds. An FSM is, basically, a machine that changes based on the information it receives. This allows for FSMs to be visualized as flowcharts, much like this one:

In the above example, the FSM goes through several changes to its state as the data present changes. Modeling an FSM is pretty simple and can include things like:

● Who will be present in the workflow

● How the workflow’s state looks at the beginning

● The full range of actions possible within the workflow

● How to determine when actions are accomplished

● Definition of a final state

Perhaps what’s being negotiated in a decentralized workflow is a supply chain agreement. Imagine that Bitcoin Bravado needs a shipment of new Bravado merchandise sent to its headquarters. Everything about the workflow is broken down according to the parameters in the bullet points above, resulting in a workable FSM that can be executed by the live contract between Bravado and the merchandising company.

Now that we have a defined data set for the FSM to work with, we can launch a live contract which, in turn, creates a private blockchain accessible only by the parties involved. Each party involved in the workflow becomes a node, and the private blockchain between those nodes serves to provide a recorded history of events that pass between them.

So, every time a new event along the FSM-defined workflow takes place, its logged and accepted by the participants, which creates a recorded chain of events which can be referred back to in case of a dispute.

Cool — but isn’t that centralized? How are these private blockchains a good thing for security? This is where LTO’s novel hybrid blockchain solution comes into play.

Hybrid Blockchain

LTO solves this conundrum by backing private blockchains with the security of a public blockchain. The way it works is elegantly simple — events on the private blockchain are hashed and recorded on the public chain — without the public chain knowing what the specific contents of that event were. LTO’s hybrid arrangement allows for private blockchains to be super scalable — to the tune of unlimited scalability — while at the same time possessing the security characteristics of the most distributed public blockchains out there.

Leased Proof of Importance, Mainnet, and LTO Tokenomics

The way it works is easy enough — stake is rewarded based on network participation. In other proof of importance paradigms, nodes with tons of leased tokens under their belt centralize the network while not contributing any transactional activity themselves. LTO’s leased proof of importance model makes it so that stakers will get a better raffle factor if they are bringing real transactional activity to the network. LTO also disincentives spam transactions so that nodes can’t spoof their raffle factor higher.

Incredibly, the LTO team baked their token into the economics of the network at both the permissioned and permissionless levels. There are four levels of token holders in the LTO Network:

  1. Integrators
  2. Clients
  3. Token Leasers
  4. Token Holders

Integrators actively run nodes and validate the network. Clients need LTO to pay for network usage fees (TX fees), however, they don’t need to know they’re doing so — that’s all handled at the integrator level. Token leasers are people like you and me who are buying and holding LTO, then leasing it out to validating nodes. Finally, token holders own LTO but aren’t staking/leasing them.

The LTO network prioritizes the first two types of token holders because they are bringing value to the network at the same time that they are receiving incentives from it. This give and take encourages more clients and integrators to come onboard and share in the rewards brought on by staking LTO.

Another notable design in the LTO Network setup is the Bridge Troll. Post-ICO token sale dumps by private investors became so prevalent that they became a powerful meme which kept ICO investors away. LTO created a way to avoid private investors from dumping tokens by penalizing them for doing so within the first six months. Early and private investors received Mainnet tokens which are not listed on exchanges. Crowdsale buyers, on the other hand, received ERC20 tokens that were tradable.

For mainnet token holders to switch to tradable ERC20 tokens, a huge fee from 0 to 55% percent is in place during the first 6 months after token unlock to prevent market dumping by early investors.

Finally, LTO is a non-inflationary token. Rewards come from transaction fees, and since LTO Network has been successful in onboarding new clients and integrators, transaction activity on the mainnet has also significantly increased — meaning there are more rewards to be had. The degree to which LTO Network has been successful at locking its token up in staking is impressive — currently, over $3.5 million worth of LTO, or about 8%-11% of the total supply, is actively staking the network.

LTO was recently listed on Binance DEX after receiving all positive votes from Binance validators. This means that there are now three LTO tokens

  1. LTO Mainnet
  2. LTO ERC20
  3. LTO BEP2

LTO mainnet tokens are used for paying transaction fees and staking. Both the BEP2 and ERC20 tokens are for liquidity purposes only and are the only version of the LTO token available for trading.

Partners and Clients

In a coup for blockchain adoption, LTO recently partnered with SignRequest, one of Europe’s foremost providers of digital signatures. SignRequest has over 1 million customers whose network activity will be a big boost to the LTO Network.

LTO — From Strength to Strength

Another interesting angle in the LTO story is their commitment to blockchain adoption. By tagging their solutions onto the backend of their integrator’s products, they’re spreading blockchain technology without posing it in the my way or the highway tone of many other blockchain projects around.

In terms of competition, LTO doesn’t face much. Again, they’re targeting such a niche — albeit a large one — that has been completely overlooked by the blockchain industry. That oversight is quite a surprise when considering that using blockchain to formalize and execute workflows/B2B operations is a natural application of the technology.

Additionally, LTO’s mainnet has been live since the start of the year and has already posted staggering month on month growth in terms of transaction activity. Because its public blockchain is entirely transparent, there’s no hiding the truth about whether mainnet activity exists or not. Owing to that, and the list of partners already on the network, LTO’s business model appears to be a success — one that is perhaps amongst blockchains best business successes to date.

Much like other heavy-hitting blockchain projects such as VeChain and Ontology, LTO is in the minority when it comes to having mainnet activity. That is, in and of itself, a fundamental win for the project because it clearly displays the team’s ability to bring onchain value to the network.

With LPoI and decentralized workflows coming to the network this summer (as per their roadmap), LTO is poised to keep the momentum going.

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