Icodrops: LTO Review

https://icodrops.com/

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LTO Network - is a hybrid blockchain for digitizing and building trustless business-processes (cross-enterprise) that are compliant with GDPR requirements and Live contracts.

Timeframe

The seed round was conducted in December 2017, the tokens were issued on Waves blockchain and are currently being swapped for LTO native tokens.

The private sale started on November 2018.

The public sale timeframe is from 14 to 16 of January 2019, it uses 'Fusion' model - the amount of tokens received by the investors will be proportionally lower in case the hard cap is passed. The excess amount will be proportionally redistributed back to the investors. The unsold tokens will be burned.

The metrics

The Hard Cap is 5 200 000 USD

The percentage of tokens available for sale: 42%, of which:

The seed round accounted for 1 400 000 USD with an average bonus of 39%. The private round accounted for 1 700 000 USD with an average bonus of 25%. Both rounds are not directly liquid, as they were completed with mainnet tokens that currently are under the Troll Bridge.

2 100 000 USD of ERC-20 tokens with no lock-up is offered during the public sale.

Considering 100% of tokens, the hard cap is 15 000 000 USD.

Social metrics

The website initiation date: 07.09.2018 (the previous version was initiated during summer of 2017)

Daily activity: 214 visitors, 854 views.

Alexa Global rank is 701,044, the majority of the traffic comes from Netherlands, Vietnam, Russia, Turkey, and India.

Twitter: the account was created in October 2017, there are 4743 followers, among which can be found Suppoman & Brad Laurie.

‏Telegram: the channel was created on November 9, 2017, currently there are 24 429 users subscribed to it, the communication is adequate, approximately since May approximately 70% of the communication is coming from the admins.

Misc: there is a blog page on Medium with content about the project and its partners, along with posts about the technology and possible use cases.

Key players

The team:

Rick Schmitz (CEO, Co-founder) - Rick started his career path in Deloitte (Big 4) as a Tax Assistant in 2008, by the time he left the company in 2011 he was an Analyst. Further he advanced to PwC (Big4) as a Private Equity and M&A Tax Lawyer. Since 2013 he is a co-founder of the legal services company Firm24 (their resource is mentioned above — https://www.onlineflexbvoprichten.nl/).

Arnold Daniels (Lead Architect, Co-founder) - Arnold has mainly been involved in startups and building things from scratch. He has been a developer from 2001, he was a lead software engineer at Cloud9 (cloud computing), which was acquired by Amazon in 2016 and now is a part of AWS. Aside from LOT (from 2014), he is currently working in a web-studio, which builds web-applications. He has 755 followers on Twitter and 500+ followers on LinkedIn.

Martijn Migchelsen (CFO, COO, Co-founder) - Martijn has 7 years of experience within PwC in corporate finance, where he managed to become a corporate finance advisor in the technology sector team (high expertise). Martijn's input should be very valuable for the project, as he should have understanding about financing principles, meaning that the public sale round should be very thoroughly planned. Along with the project's CEO, Martijn acts as a co-founder of Firm24. He has 500+ followers on LinkedIn.

Sven Stam - (CTO) - Sven is an experienced developer, who started by building mobile apps and moved to R&D in AI. Later he worked in a company that provided communication software for enterprises. Sven acts as a CTO in LTO since 2015.

Martijn Broersma (VP Operations, COO) - Martijn was working as a lawyer in the co-founded Firm24.  He is specialized in building and automating complex legal structures and workflows for enterprises. Since 2017 he acts as a COO in LTO. Martijn has 500+ followers on LinkedIn.

Ivan Golovko - Ivan is a lawyer and social media marketing specialist. He provided SMM services to ICODrops for 6 months. In LTO he is doing PR and investor relations (shilling).

Moesjarraf Jahangier (Senior Backend Developer) - there is not much data available abaout Moesjarraf. He graduated from Amsterdam University of Applied Sciences and has been working in LTO's LegalThings for about 5 years. The LTO website states that Moesjarraf created a large part of the services around LegalThings node. He has only 40+ followers on LinkedIn.

Yevhen Horbachov - (Lead Frontend Developer) - Yehven acted as a freelance web-developer before he entered Maxymiser (cloud computing provider with testing, customization and personalization services, which was acquired by Oracle in 2015), after which he had 1 year of experience as a frontend developer, followed by 3 years as senior external interface developer at European Patent Office. Since December 2016 he acts as a lead frontend developer at LegalThings.

There are 8 more team members: 4 developers, 1 director of sales, 2 tax lawyers and 1 marketing designer.

Advisors:

MIKE EGOROV is a founder and CTO of NuCypher, he is a very capable tech specialist from silicon valley with Russian origin. He has been working in LinkedIn as a Senior Engineer from 2014 to 2015.

SANDOR KLEIN is a Vice President of International Sales at Docker (software for automatization, deployment, and management of apps for operating-system-level virtualization). He has a vast experience in B2B sales.

PEDRO IRUJO is an advisor to CEMEX Ventures (a fund of the world's largest cement maker), his current status is unavailable. Pedro has a long track record of strategic consulting in top companies like PwC & Vodafone.

FEMKE STROUCKEN is a legal consultant at CMS (international legal consulting firm).

Partners:

NuCypher will be using both proprietary and LTO Network's technologies for improved security, privacy, and transparency for its healthcare product.

LTO Network is a fork of Waves sans unnecessary things and with newly added features. Previously LTO team had an intention of collaborating with Waves, but there is no distinct plan so far. Currently forking is the only interaction between the projects.

LTO will assist POA Network with GDPR compliance. Their collaboration will be aimed towards building a GDPR compliant blockchain for POA Network. LTO team will also use POA technology to create a Troll Bridge.

CPChain will work along with LTO on IOT data integration for supply chains and reaching GDPR compliance for cooperative business development. The key CPChain investor is Torque Ventures.

Clients:

Merin is one of the largest commercial property platforms in the Netherlands with a portfolio of 100+ offices and industrial assets across the country. The legal entity is registered in Amsterdam with 50-200 employees.

DEKRA is a vehicle inspection company, founded in 1925 in Berlin, Germany. It's one of the world's leading expert organizations in the testing, examination, and certification with 501-1000 people employed.

Ilent is the ILT that works on security, reliability, and trust in transportation, infrastructure, and environment. The inspection has 1100+ employees.

Stena Realty is a part of the Stena Group - a private Sweden company that specializes in ferries, shipping, drilling platforms, real estate, investments in business and recycling. Stena Group has ~6 billion of Euro in turnover and employs around 20 000 people.

Taxtimbre is a company that focuses on automating solutions for transfer pricing and building an intellectual transfer pricing technology. The headquarters is located in Hague, South Holland. The company was founded in 2018 and currently has 51-200 employees.

Cemex is a worldwide supplier of building materials and cement producer. It was founded in 1906 and has 10000 people employed.

Generali is one of the key players worldwide in insurance and finance products sphere. The group is Italy's industry leader, while Assicurazioni Generali was founded in 1813 in Trieste and has 10 000+ employees.

Firm24 is the largest platform that provides online business registration, legal services, etc. The company has 10%+ of the Holland's registration market. The headquarters is located in Amsterdam, the company was founded in 2013 and has 11-50 employees.

OSRE (Osrewoning dossier) provides online software for real estate and builds solutions for rental & selling optimization in this sphere. The headquarters is located in Amsterdam, the company was initiated in 2012 and currently employs 11-50 people.

Ovam is a Flemish government agency in charge of decisions about waste, materials, and soil. It protects soil and monitors its quality in the Flemish Region. The headquarters is located in Mechelen, Antwerp, the agency was founded in 1981 and has 201-500 employees.

AVR specializes in recycling various kinds of waste. The headquarters is located in Rozenburg, there are 201-500 people employed.

Indaver is a leader in sustainable waste management. It was founded in 1985 and currently has 1001-5000 employees.

Ah (Albert Heijn) is one of the oldest supermarket chains in the Netherlands. The headquarters is located in Zaandam, Northern Holland. It started in 1887 and now has 10 000+ people employed.

CMS Law is one of the world's largest legal firms and has 40+ countries coverage with 70+ offices around the globe. The headquarters is located in Frankfurt, the company was established in 1999 and now it has 5 001-10 000 employees.

MSeven is a leading pan-European asset management company in multipurpose real estate sector that works in UK, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Luxembourg, Netherlands, Poland, Portugal, and Slovakia. The headquarters is in London, the company was founded in 2009 and currently has 201-500 employers.

Some of the services that LTO provides to its clients:

AVR, Indaver, Ilent, Stena Realty

AVR & Indaver collaborate with LTO on waste transportation in terms of EU LTO Network tender, which the company won by the company in 2018. Their partner Capptions works on developing the UI, which will be later integrated with LTO Network's server-side solution.

Deloitte, MSeven, OSRE, Merin, Stena, CMS Law

Merin, M7, Deloitte and other large corporate property market players work with LTO Network on building an automated tool for document management on the blockchain.

Heineken, Euronext, Velcro, Cloud9

LTO's software is being used for business operations' automation, profit distribution in various jurisdictions that TNCs act within, and communicating reports to local tax authorities.

DEKRA

LTO provides GDPR compliance. LTO Network is implemented for automation of business processes in DEKRA and other interested parties.

Netherlands' Ministry of Justice

Digitalization of the document flow.

Technologies and idea

Whitepaper:

LTO Network is a lot similar to Ethereum and Layer 2 solutions, where:

Layer 1 is a public blockchain that stores hashes of all the events happened on the Layer 2. Hence, Level 2 is immutable. LTO is based on WAVES fork.

Layer 2 is a permissionless private chain built using Finite State Machine. Each Live Contract is a separate private chain. A Live Contract has a set of rules for two or more parties. It resembles a traditional (paper) agreement.

In essence, each Live contract is a linear sequence, just like Bitcoin Script. LTO provides a template for composing such contracts.

One may note that there are similar solutions available, but there are 2 key differences from other private solutions (e.g. Hyperledger, Bitfury):

1) The logic is implemented on the private layer;

2) There will be a dedicated public blockchain, which is more optimized for the existing processes, unlike others (e.g. Bitcoin).

Tokenomics:

The project's economic architecture is based on PoS with an addition of Proof of Importance concept (the reward is calculated depending on stake/generated transactions ratio). 

The rewarding mechanism originates from a combination of WAWES' Proof of Stake («LPoS») and NEM's Proof of Importance («PoI»), with an addition of Leased Proof of Importance («LPoI»). The 'Leased' part allows rewarding the users, who hold smaller stakes and don't want to launch nodes. The 'Importance' factor (ranking) guarantees that active network members will get better rewards than their passive peers. The more active a user is, the higher chance of validation they have. However, a ratio between a stake and a number of generated transactions is also being considered.

The percentage of the network, which will be used by a certain person at a certain period of time is calculated by analyzing the data about their number of clients and transactions. After the process is complete, the user receives the same percentage of the network's tokens and stakes them, which allows them to use LTO Network without regular fees and charges. In other words, if the user stakes tokens, their staking profit will cover the network's usage costs.

The token economy has a protection mechanism from spam transactions integrated, which makes them unprofitable.

The team implemented an algorithm that allows users to break even in case they are actively using the platform, this requires relatively high stakes. This mechanism is designed to facilitate the redistribution of tokens from passive stake owners to clients who generate transactions and active users.

A user's status is expected to be dynamic due to lower rates of rewards they get:

The 'Bridge' concept will be used during the first stages of the system's development in order to protect it from speculation. Transferring tokens between mainnet pools (utilized for network usage) and ERC-20 tokens (utilized for better liquidity and as a gateway for new companies joining the network) will be done at 1:1 ratio. However, each transaction will require paying a fee, which is why the Bridge Troll is provided. The collected fees will be burned.

Any liquidity transfer from the ERC-20 pool to mainnet will be a subject to a fixed fee of 100 LTO Network tokens paid through the Bridge Troll. This should hold speculators and users with small stakes from moving to the mainnet pool.

Transacting the other way to the ERC-20 pool will require paying a fee via the Troll that is calculated according to the curve that represents the project's roadmap.

MVP:

The mainnet wallet can be accessed via https://wallet.lto.network. The UI is simple and pleasant.

The Leasing tab should be used by users to delegate their tokens.

The Anchors tab is also available. One can upload an existing documents' hash on the blockchain, despite the fact that the file itself is stored on a device locally.

The screenshot below represents the addition of the same file. The first two hashes correlate with the original version and the third one correlates with a slightly modified one. Hence, one can make sure that the document of interest hasn't been altered.

There is also the Bridge tab for transferring tokens from the mainnet to ERC-20 and backward.

There is also a network scanner: https://explorer.lto.network.

The mainnet launch is expected at the start of the Public Sale.

Github:

The project's GitHub has 88 repositories, 5 of which are pinned:

• There is 1 user making commits to lto-api.js, Sven (sven4ask), who started working on March 2018.
• There are 11 contributors to mongodb-rest, it has been worked on by the original team since May 2010 and currently is being developed by the LTO team.
• sso was initiated on Nov 22, 2009 and currently has 11 contributors.
• angular-pdfjs-viewer was started on Aug 9, 2015 and currently has 16 contributors.
• angular-signature is up since May 10, 2015 and has 17 contributors.
• legalform-js was initiated on Feb 12, 2019 and currently has 9 users contributing to it.

The project's GitHub page looks decent overall, it's carefully structured and has plenty of publicly available data, plugins, and centralized software.

According to the team, there are also private depositories, where the main development is done and which will be revealed later.

Addendum / summary / opinions/

The project provides a tool that allows fast deployment of cross-enterprise business processes. It shouldn't be confused with other blockchain solutions, which aim towards creating a foundation for building dApps. LTO Network is more modified for adoption among business players, so that to enable them to conveniently work via the embedded web-interface (the users may even not know what is being done on the blockchain itself). The project is already at the mainnet launch stage. As the team claims, the clients have been waiting for it for quite some time.

Strengths:

• Well-developed tokenomics allows token price appreciation with the growth of the network and avoids issues that may occur during tokens' usage. It's also important that this is the first implementation of POA Network's mechanism, which protects the price from certain factors.
• The MVP is already shipped.
• The existing competitors in traditional business (DocuSign, PandaDoc) along with Hyperledger, have high valuations, even though the comparison between them is rather rough.

Risks:

• It's worth mentioning that the team comes from EU (statistically the ROI in this region is low) and has no intention to speculate with the token. We think that should the team hasn't known about the ICOs' processes, it would be silently working on the project and the token would most likely end up being only on the mainnet without any listing.
• The current market is bearish.