Loom is “the next-generation Blockchain platform for large scale online games and social apps.”

Let me jump straight into the tech and explain to you what this project is.

Currently Ethereum is the world’s biggest Blockchain platform. It has hundreds of Dapps (decentralised apps) built on its Blockchain, but because it has so many Dapps sucking up its computational power, Ethereum has also become one of the slowest platforms as well. Where theorectically Ethereum should be running at 1000 trx/sec, practically it is only currently running at 16 trx/ sec.

Loom is a second layer that is built on Ethereum. So when you build Dapps, you are strictly building on Loom not on Ethereum.

Loom Dapps are built as side chains, not on the actual Blockchain. Those who have been following our channel will be very familiar with side chains by now, it’s a popular off-chain method to achieve scaling as most of the computation is done on the side chain and not burdening the platform Blockchain.

The Dapps that Loom is hoping to attract and build are games and social media applications.

They already have working products e.g. cryptozombie which is a Dapp game that teaches people how to use smart contracts. It’s about 6 months old and has already been used over 170,000 times. And Delegatecall is a social media platform similar to reddit where you upvote and downvote questions and answers, but you can actually earn free tokens whilst upvoting.

Furthermore because of the use of side chains, Loom can scale well and can host massive games similar to mainstream games e.g. WoW. Ethereum itself is still struggling with a single simple game like cryptokitties.

I think the fact that Loom already has a working product is huge.

Someone recently shared this on our Telegram group recently and I thought it was both hilarious yet true. I don’t think many people investing in cryptocurrency realise how difficult it is to get a working Blockchain project out. They look at a project on whitepaper and get really excited believing the end product will definitely be what is described as the whitepaper. They haven’t realised yet that the final product may look very different. As an investor, investing into a project like Loom that already has a working product then is a much lower risk, because you know for a fact that the team can deliver on their promises.

Alright, coming back to the side chains, the side chains will benefit from both Loom and Ethereum as it’s foundation. So for example they can use the consensus algorithm of Loom (which is a lot faster) whilst also utilising the security of the Ethereum network. Let me explain how this is done.

Currently Ethereum is using POW which requires every node to process and store every transaction. That’s very secure but very slow. Ethereum is planning to transition towards Proof of stake. Proof of stake is a better concensus algorithm, but it still has it weakness, mainly it risks losing its decentralisation because the people who stake more earn more and have more to re-stake again, so over time the rich get richer and potentially monopolise the whole system making it centralise concensus algortihm.

Loom will be using the improved version of POS which is DPOS. Which uses a voting system to ensure fairness. It is a lot faster than POW and one of the more popular concensus algorithms currently.

Dapps built on Loom will be able to choose their own concensus algorithm e.g. POW or DPOS, depending on their project need, and they can even create their own concensus algorithm should they choose.

Now one of the downsides of using a faster concensus algorithm is that it becomes more centralised and less secure. So technically speaking, if I have a side chain that uses DPOS, the chance of my asset on the side chain e.g. my tokens being lost is higher than a system like Ethereum which uses POW which is a lot slower but also safer.

Loom will be using Plasma Cash technology then to help to improve security of assets on the loom side chains.

Plasma as most of us would know, is the scalability solution for Ethereum. Plasma Cash is the new and improved version of Plasma that is promoted by Vitalik Buterin the founder of Ethereum himself.

The way Plasma cash works is like this.

An asset on the Ethereum Blockchain can be represented by what is known as a Non-Fungible token (NFT). It’s like giving it an ID that is unique and identifiable.

That NFT is what is used for transactions on the side chain and can later be converted back into ETH. If for some reason the NFT was lost, the user still has the original ETH because the NFT was only a representation of the original ETH asset. In other words, Plasma cash allows owners to transfer their assets to the side chain whilst keeping their original value secure on the Ethereum network.

The last piece of tech I want to introduce to you guys is their SDK or software development kit.

Loom makes it very easy for developers to develop Dapps, but providing a SDK that is super easy to use. It’s almost click and drag simple interface, which lowers the expertise level to start building Dapps/ blockchain project to a beginner level. This is very important in terms of lowering barriers to adoption. The SDK will also be open source in future, which means all developers can contribute to it.

So that’s basically the tech of the Loom Network, it is essentially a second layer platform on Ethereum that allow large gaming and social Dapps to be built whilst maintaining scalability and security. I think it’s a brillant idea, they also already have working Dapps so we know the tech works. Ethereum is the biggest platform that desperately needs a solution like this, so I think Loom is potentially a game changer in the crypto space.

Token economics

Loom tokens are used to buy loom membership. So anyone who wants to use the network or any app on it has to buy the Loom Membership which costs only 1 token. Many people have criticised this to be too cheap and I agree as well. Some of the biggest platforms currently e.g. NEO, only have around 20 Dapps on their platform. Charging only $1.99 for each membership, that would work out to be $40 only. Considering the marketcap of around $250 million, that’s nothing. You would literally need millions of new users every day for the membership fees to affect the token price. That’s obviously not going to happen. Furthermore the token is not actually used in the asset transfer, it works like a software license key where you need at least 1 token to go ahead with the transfer. But the token itself is not actually used.

So where is the token use on this project then? They are hoping that Loom tokens will be used by future Dapps, e.g. if there’s a new game being launched, the new game might use Loom tokens as it’s currency. However, future Dapps are able to make their own currency and do not have to use Loom tokens should they choose not to. So there actually no guarantee of high volume of token use.

As token investors when we buy tokens, its different from buying shares, we are not buying into the success of the company, you are buying into the success of the currency. So if the company doesn’t use the tokens, the company and the technology can be very successful, but the token price doesn’t rise and token investors don’t earn money. So moving forward I do think it is worthwhile for token investors to pay attention to token use on this platform.

Currently there is only 1 tier of membership. Apparently they are thinking of adding additional tiers of memberships e.g. professional developers tier that would charge $199. That’s still very cheap for a multi-million dollar project, but a lot better in terms of profit margin. But then the challenge you would have is that $199 is a hundred times more than $1.99, so you will have to justify that the additional services available is worth that 100x. The details of higher tier memberships are not released yet.

Something else that didn’t make sense to me is that on their website they are selling one token for $1.99USD. But on the exchanges, you can buy the SAME token for $0.40 USD. So the website is selling the tokens for 500% more than the exchanges! I can understand a small discrepancy, 10% maybe even 20% difference, but 500% difference?!? The team knows the difference and explains in a medium article that it’s because third party resellers buy and re-sell in bulk. Whereas users of the platform would only need 1 or 10 tokens that why it makes it sense for them to buy it on the platform at a higher price.

Something’s wrong here. Whatever excuse you make, there is no reason for your website to be charging 500% more for a token. It’s not fair sales no matter how you look at it. If you want to peg the sale of a membership to 1 token on your website, then if the price of the token goes up or down on the exchanges, the price of your membership must also change. If you think that is too unstable and you want to peg the membership cost at $1.99, then they need to unpeg it from 1 token and say it now costs 5 tokens. As the team, you cannot just come up with your own valuation and insists on it because you want it. That’s not a fair way of doing things. Furthermore, you will notice that $1.99 is the discounted price and the original price of a token on their website is $4.99 which is a whooping 1250% difference.

I think the tech of this project is great, but the economics is flawed.

In the future, there will also be token use in running a node on the side chain, but the details of this have not been released yet.

Team

This is the team running the project, it’s a big team. They have 3 co-founders:

James Martin. He was the lead Developer for Casual Steps, also previously, the Founder of KoreaJobFinder.com from 2012–2015 and he shut it down in order to start Auragin which is a herbal supplement brand. Luke Zhang. Previously a developer at Workopolis for 2 years, a developer at Elemica for another 2 years and leader developer at Blockmason for 1 year, before co-founding Loom.

Both these two co-founders are quite young, if you look them up on Linkedin their careers only started in 2012, so only 6 years ago, and both have less than 300 connections on Linkedin (which is very little) and neither of them have remained in any company for more than 3 years so far, even the companies they founded. So I was a bit disappointed and hoping to find someone with a heavier resume and their third co-founder Matthew Campbell does have a much better resume and experience behind him.

Matthew Campbell — he was a programmer since 1999, he is the principal at Hyperworks for over 11 years, previous GoHacker for DigitalOcean, Technical Architect for Thomson Reuters and more. His is quite a solid resume, that inspires more confidence.

Feel free to go through the rest of the team’s profile yourself. The impression I got on was a pretty average team, no one really outstanding, a lot of young members who are into a Blockchain project for the first time, and there are certainly teams with much stronger resumes out there. But they have a big team with well balanced roles and they have already have a working product, which means they can produce results.

These are their advisors:

Il just go through a couple.

The first is Reuben Loo who is a co-founder of MW Partners Group a Blockchain consulting firm based in Singapore. He is also an advisor for Oneledger an ICO that we reviewed recently. Other projects he was previously involved in as a community manager include Utrust, Quantstamp and Zilliqa. So very notable projects in the Blockchain space.

Another advisor of theirs is Yuan Chin Soh who works in marketing operations at Linkedin. He is also a current senior manager in targeting and technology at Linkedin as well. And previously involved in marketing for Amazon Web services too.

And you can go through the rest yourself as well. But it comes across as a small but impressive advisor team.

There isn’t a roadmap. The team doesn’t believe in whitepapers or roadmaps. And if you go through their website, you pick up statements like “we have quite a few secret announcements that we don’t want to reveal yet, because we’re Loom Network and that’s how we roll (smiley face)”. And as you saw above, the team advisor list has a mystery zombie profile, that just leads to the cryptozombie game, which I thought was irrelevant. So I get the impression that they are trying hard to make a statement that they are alternative in the way they do things. It’s not a good or bad thing, it’s just different and will appeal to some but not others.

I’m personally big on roadmaps. Roadmaps aren’t just too announce what’s coming up, it’s one of the only points of accountability the team has to the community. A roadmap states milestones and timeframes to achieve those milestones, so it communicates to the community that there is a long term, big picture plan, and also by hitting the milestones at the stated time, it accounts to the community that the team is working hard behind the scenes. Without a roadmap, the team can be taking token investor’s money and go on a holiday. As a token investor you wouldn’t know, because there is no way of keeping track of the progress of the project. There is also no overarching big picture, so we won’t know if the team actually has a plan, or if they are just winging it as they go. Now, I’m sure the Loom team is a good team and they won’t skive the way I was describing, but I’m just saying that in general, no matter how alternative a project wants to be, it is good to have a roadmap for accountability to the community.

That being said, in a recent medium article, they have announced a few interesting things coming up, the main events are:

They have Loom SDK beta release in June, Plasma support being added to SDK in June, And 3 blockchain games being released in-house over the next 3months.

These are huge announcements and I think Loom as a project is going to have big June. For that reason, when we do our “top coins for the month of June” video in a few day’s time, you will find Loom amongst our top picks.

Pricing

Finally, let finish by taking a look at their pricing.

When Loom first opened on the markets in March they opened at $0.08. Currently they are sitting at $0.40. So they have 5x in 2 months. So this project definitely has momentum and attention. Given the upcoming events, if the market is good, I think this is a coin that will definitely show good returns.

Their marketcap is already close to $290million, that’s pretty high. But hey if they can solve Ethereum’s scalability problem and attract Dapps to start building on them. The sky’s the limit. This could potentially be a multi-billion dollar project and 10x or more. The project hasn’t had enough history to trace support lines and resistance lines, but looking at the graph and the recent market, I’m guessing that $0.50 is probably a strong line and anywhere around the price point of $0.40 and below is probably a good entry.

This is just my guess and personal opinion, I’m not a professional nor a financial advisor. So please always do your own research and make your own decisions.

In conclusion I think Loom is great project. I really like their tech and what they are trying to achieve or have already achieved. I think this is a project that is delivering a much needed solution for Ethereum, the biggest blockchain platform, will be big in the crypto space in the future, definitely in the Ethereum space. Couple of things I will be paying attention to is how their team reacts to situations and keep themselves accountable to the community especially without a roadmap. And also the economics I think it’s quite flawed. So I’l be interested to see if the team makes any adjustments in the near future. The truth is, most investors will probably look at the tech and the working product and FOMO into the project, so despite my concerns, I definitely think it’s a coin that will have decent gains in the short term.

That’s it from me guys. Thanks so much for reading this. Let me know in the comments below what you think of Loom and if you like this project, and also let me know as well if you have any coins you would like me to review.

Finally hit that heart symbol to help more people find this article! Thank you!

Have a great day! :)