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N.B: In the spirit of full transparency, the following Coin Report on LTO Network is a Sponsored Post.
Update – 9th July 2020: Metrics in this report are now out-dated.
Welcome to the 33rd Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of LTO Network. This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!
Prior to conducting my research for this report, I knew little to nothing about LTO Network, though I had – as if often the case – seen the ticker on my Twitter feed on several occasions. One thing I did know is that the community were clearly highly engaged, as, prior to the report being booked in, I had a number of requests to write one up. Having now concluded my research, I can say that I am glad I was given the opportunity to deeply research LTO Network, as there were many features of interest…
I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about LTO Network prior to reading this report, here are some primary links:
Name: LTO Network
Sector: Decentralised B2B Workflow
Exchanges: BitMax, Binance DEX, Hotbit, Trade.io, IDEX & Bilaxy
LTO Network was launched in 2017, following the team winning the Dutch Ministry of Justice hackathon for their workflow engine concept. Subsequently, the team raised funds privately in a seed round followed by a second private funding round before a final public crowdsale in January 2019, offering their LTO token in exchange. The total amount raised was around $2.67mn.
LTO was created as an ERC-20 token for accessibility but there is a native LTO token for the mainnet, as well as a BNB-based token for trading on Binance DEX. The total supply of LTO currently in existence is ~453mn, but this is split across the three chains in varying proportions, with a Bridge in place for interoperability.
As LTO Network has only had a traded token since February 2019, despite the project being in existence for over two years, there is relatively little price-history available.
Whilst I shall cover the available history in depth in a later section, for now it will suffice to say that LTO formed its all-time high of ~6,100 satoshis shortly after first listing on exchanges, with price making consecutive lower-highs since then in a long-term downtrend. Price is currently trading at all-time lows around 650 satoshis.
Though somewhat dense and abstract, LTO Network does have a niche; its hybrid blockchain is aiming to construct a decentralised workflow between businesses, improving the efficiency of communication, trustlessly and without sacrificing scalability.
As stated in their technical paper:
“Digitalization and automation of business processes offer great benefits in terms of productivity and cost reduction. Organizations struggle to tap into these benefits for interorganizational processes, partly due to a lack of trust. Bitcoin has proven how blockchain can use distribution and cryptography to provide a system that does not rely on trust. LTO builds upon this foundation with a decentralized workflow engine employed for ad-hoc collaboration. Information is shared between parties using per-process private event chains and hashed on a public blockchain. This hybrid approach allows organizations to meet any data protection regulations and prevents scalability issues that are typically associated with blockchain projects.”
In short, LTO Network will operate with a model that generates its revenue from organisations seeking to utilise its hybrid blockchain to streamline workflow within and between businesses.
I look forward to discovering how the project has evolved since its inception.
Let’s begin with some Metric Analysis:
Below are listed a number of important metrics, all of which are accurate as of 24th August 2019. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.
Price: $0.07 (679 satoshis)
Circulating Supply: 184,641,276 LTO
Total Supply: 453,491,521 LTO
Exchange Volume: $1.51mn
Network Value: $12.938mn (1253.71 BTC)
Maximum Supply: 453,491,521 LTO
% of Max. Supply Minted: 100%
Network Value at Max. Supply: $31.777mn
Exchange Volume-to-Network Value: 11.68%
Average Price (30-Day): $0.085
Average Exchange Volume (30-Day): $1.446mn
Average Network Value (30-Day): $15.722mn
Average Exchange Volume (30-Day)-to-Network Value: 9.2%
Volatility* (30-Day): -0.01331
Average Daily On-Chain Transactions (30-Day): 38,786 (source)
Average Daily Transactional Value** (30-Day): $45,232 (source)
NVT*** (30-Day): 286.04
% Price Change USD (30-Day): -22.3%
% Price Change USD (1-Year): N/A
USD All-Time High: $0.23
% From USD All-Time High: -70.1%
Premine % of Max. Supply: N/A
Premine Location: N/A
Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 2.408 BTC
Liquidity-to-Network Value %: 0.19%
Supply Available on Exchanges: 1,500,570 LTO
% of Circulating Supply Available on Exchanges: 0.81%
*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.
**Transactional Value in $ is calculated by taking the daily transactional value in LTO and multiplying it by price. A caveat to this is that only ERC-20 transactions have been included in this, as there is no data source for mainnet transactional value.
***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.
Supply Emission & Inflation:
Block Reward Schedule: N/A
Average Block Time: N/A
Current Block Height: 328,423
Annual Supply Emission: 0
Annual Inflation Rate: 0%
Circulating Supply in 365 Days: N/A
Staking & Masternodes:
Network Staking Weight: N/A
Staking ROI (Annual): 4.12% (source)
Masternode Collateral Size: N/A
Masternode Price: N/A
Masternode Count: N/A
Masternode Count Growth (30-Day): N/A
Supply Locked in Masternodes: N/A
Masternode ROI (Annual): N/A
Masternode Reward / Block Reward: N/A
MNV / Network Value: N/A
The following details were taken from this source.
Public ICO Period: 14th January – 16th January 2019
Total Tokens: 517,857,143 LTO
Tokens Available For Public Sale: 72,500,000 LTO
Total Raised: 7,991 ETH ($996,963)
Average ICO Price Per Token: 0.00024 ETH ($0.03)
Total Tokens Sold: 33,232,108 LTO
Total Tokens Burnt: 39,267,891 LTO
Further Details: $2.67mn raised in total across public sale and the private sale. A further $1.4mn was raised in the seed round. 65mn LTO was distributed in the seed round; 72.5mn in private sale; and 33.2mn sold in public sale of the available 72.5mn.
Remaining tokens were distributed as follows: 75mn to the ecosystem fund; 59.76mn to marketing; 50mn to the foundation; 85mn to the team; and 20mn to advisors.
Address Count: 1,191* (over 1900 including Mainnet addresses: source)
Supply Held By Top 10 Addresses: 7.49%
Supply Held By Top 20 Addresses: 8.17%
Supply Held By Top 100 Addresses: 9.59%
Inactive Address Count in Top 20 (30 Days of No Activity): 13
*ERC-20 addresses only, as there is no rich-list for the mainnet.
Given that LTO Network’s primary revenue model derives from on-boarding other businesses to utilise its hybrid blockchain, the most significant metrics to determine demand for these services are those related to on-chain transactions. Unfortunately, there is little to no relevant data for the mainnet; however, we do have data for the ERC-20 token, which will suffice for now, though it will not give a complete picture of on-chain utility.
Nonetheless, from the LTO explorer, I found that the mainnet network has averaged ~38.7k transactions per day for the past month, which is impressive, though it does not provide a figure for transaction value. (In fact, this alone places LTO Network in the top 20 most-used blockchains.)
Here is a Weekly chart for on-chain transactions:
There is, however, data for Average Transactional Value for the ERC-20 token, which amounted to $45,232 per day for the same period, giving LTO a 30-day NVT of ~286. Though not particularly indicative of undervaluation (given that Bitcoin’s NVT, for reference, is 87), it does depict a degree of non-speculative demand for the ERC-20 token, and we must remember that this is not the complete picture; instead, it is solely comprised of publicly-available data. We can make an educated assumption here, based on the 38.7k average mainnet transactions per day, that the total value across all chains of daily on-chain transactions is likely higher than ~$45,000.
Moving on, I’d like to take a look at Volatility, which I calculated to be -0.01331 for the past 30 days; this places LTO Network 4th-lowest amongst prior reports for 30-day volatility, indicating that there is perhaps accumulation underway against the Dollar, as LTO consolidates for a prolonged period. This can only be confirmed by rich-list analysis, however, as we shall come to a little later.
Next up, we have the metrics relating to Liquidity:
Firstly, I found that there was ~2.4 BTC of buy-side liquidity within 10% of current prices to be found across all exchanges, equating to 0.19% of its Network Value. This places LTO Network somewhere in the middle relative to projects previously featured in these reports, indicating some degree of demand at current prices.
As for sell-side liquidity, I found that ~1.5mn LTO was available for purchase in the orderbooks, equating to 0.81% of the circulating supply. This is the 3rd-lowest figure ever recorded in these reports, suggesting that, whilst there is no overwhelming desire to buy at current prices, holders are very much content with keeping their LTO.
Moving onto volume, LTO Network is reported to have traded $1.51mn of Exchange Volume over the past 24 hours, equating to 11.68% of its Network Value; more impressively, it has sustained a high level of traded volume over the past 30 days, with Average Exchange Volume of $1.4mn, equating to 9.2% of its Average Network Value for the same period. This is the 7th-highest figure recorded, suggesting that there is certainly speculative interest in LTO at present. However, these figures are not entirely accurate, as they do not account for the likelihood that wash-trading is occur on exchanges like Hotbit and BitMax, so keep that in mind.
Now, let’s take a look at (the lack of) Supply Emission:
Given that LTO was distributed via token sale, there is a maximum supply of ~454mn LTO that is already in existence, thus there is effectively no supply emission beyond the release of vested tokens over the next several years. Thus, annual inflation is 0%. Further, in practice, there is engineered deflationary pressure, as the Bridge connecting the three chains burns a number of LTO each time certain transactions occur, but we shall come to this a little later.
Given the lack of supply emission and the lack of LTO available for purchase in the orderbooks, one would expect there to be little to no headwinds for price appreciation, and yet price has continued to decline. As such, there are two distinct explanations for this: firstly, weak hands are market selling, driving the price down; or larger holders are manipulating price whilst adding to their positions. We shall discover which of these is the case when we come to Distribution.
Before this, however, I’d like to briefly mention that LTO does have a network of nodes offering staking rewards, currently estimated to offer ~4.12% annual returns-on-investment, which is a modest incentive to hold onto tokens, especially when one considers that there is zero supply emission in perpetuity. There are currently 79 nodes in the network.
Finally, let us take a look at some Distribution:
Using the rich-list, I found that there are currently 1,191 holders of LTO on the ERC-20 chain. There are over 1900 addresses across ERC-20 and Mainnet chains. Further, approximately 48mn LTO of the total supply is currently held on the ERC-20 chain.
Further, I found that the top 10 richest addresses control 7.49% of the total supply; the top 20 control 8.17%; and the top 100 control 9.59%. However, this is not accounting for the fact that the 1st, 2nd, 3rd and 10th-richest addresses are all exchange-owned, and the 5th-richest is owned by the team; as such, these have been now been discounted from my calculations, with the subsequent addresses occupying their place. BitMax, in particular, controls the top 2 addresses, with 18.5mn LTO split between them. The real figures for privately-owned addresses are as follows: the top 10 control 2.04% of the total supply and the top 20 control 2.51%.
Regarding the activity of the real top 20 addresses, I found that 13 were inactive over the past 30 days. Of the remaining 7 addresses, only 1 was in active distribution, having shed 30k LTO over the past month; the other 6 had amassed 925k LTO between them during the same period. Further, the 6th-richest privately-owned address can clearly be seen to be buying on BitMax and withdrawing consistently. Promising stuff.
That concludes this section. Onto the LTO Network Community:
There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.
Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.
LTO Network is present on two platforms: Twitter and Telegram. To begin with, let’s look at the various social metrics that I calculated from the LTO Network Twitter account:
Twitter Followers: 9,732
Average Twitter Engagement: 1.74%
Facebook Likes: N/A
Facebook Posts (30-Day): N/A
Average Facebook Engagement: N/A
As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.
LTO Network has a moderately-sized audience on Twitter of 9,732 followers, which places it somewhere in the middle of the pack. More impressively, it has strong and consistent engagement with high-quality, informative tweets pushed out regularly. The average engagement rate is 1.74%, which is the 10th-highest, relative to projects in prior reports. Relative to global benchmarks, this is 193.3x greater than the Media industry and 36.2x greater than the average across all industries.
There is no Facebook page for LTO Network.
There is no Discord group for LTO Network.
The Telegram group has 13,590 members.
Though Telegram is somewhat less accessible and informative for a potential new user than a Discord group, due to the lack of internal structure, the LTO Network group is certainly vibrant, with conversation taking place for a large part of each day. Over the past week, there have been more messages than one can feasibly work through. However, there are some key takeaways I’d like to highlight:
- The community are actively promoting the project for organic growth, with infographics, articles and other third-party material fairly regularly published.
- The above is facilitated and encouraged by a native LTO community website, which rewards individuals for their efforts in garnering engagement for the project, fostering greater organic growth (via social mining).
- Development updates are regularly published, with long-form articles pushed out in the group.
- A new website is expected over the next few weeks.
Further to the Telegram group, LTO Network have an announcements channel with 3,882 subscribers. Here, we find regular updates on the project, with recent announcements including:
- A new AMA scheduled for August 27th.
- A meeting scheduled for September 19th at the LTO office, with presentations on blockchain-related topics.
- A preview provided of the Integrator Portal for LTO Network’s clients, which depicts the niche use-cases of blockchain technologies.
- LTO/ETH pair added to BitMax.
- Platform updates for the LTO Network community DAO.
- A partnership between NEN and LTO Network is announced, with the goal being the provision of certificates with smart QR codes that are linked to the LTO Network blockchain, validating the given certificate.
There is no BitcoinTalk thread for LTO Network.
And that concludes this section on the community; let’s take a look at some development:
For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:
18 team members are listed on the website, with full transparency provided. There are 24 employees on LinkedIn.
There is plenty of breadth of expertise here, with all key areas covered, though with a development-heavy focus, as would be expected.
Beyond development, areas covered include legal, marketing, sales, finance and operations; a well-balanced and experienced team, indeed.
The LTO Website is modern, well-designed and fairly well-branded, with a useful header depicting the number of on-chain transactions over the past month, allowing for a quick read of the health of the network.
The navigation menu links to the LTO Products, Use Cases, About Us and the LTO Community platform. Social links are visible in the left sidebar.
The homepage itself opens with the tagline: “Hybrid blockchain built for business. We are the trust layer for every business application. Easy, scalable & GDPR compliant.”
Regarding the content of the website, there are highly informative pages on the two LTO solutions: the Proof Engine and the Workflow engine. These link to demos for potential clients to test out, as well as highlight the key features of being GDPR-compliant, permissionless, cheap and seamless to integrate into an organisation for the former; and modular, interoperable, private, scalable and also GDPR-compliant for the latter.
Scrolling down the homepage, there is a link to a Visionary Paper, which discusses the role of blockchain technology in the future, in general. Beneath this, we find more details on the key features of the solutions, as aforementioned, as well as a link to an information package directed at businesses, containing details on how these solutions will provide value.
Following this, there are brief summaries of the two products, with the Proof Engine stated to “allow you to secure any digital data against manipulation, protecting businesses against digital fraud.” The Workflow Engine is described as “a tamper-proof system that lets organizations create trustless, automated workflows to operate on equal footing through so-called “Live Contracts.”
Further down the homepage, we can find details of current clients, including Capptions and SignRequest and many others.
There is also a regularly updated blog. Overall, the website is fantastic for a potential new client or user. Impressive. More impressive yet is that the team are not satisfied with this website and will be releasing a new one shortly.
Above, I have linked to the most recent roadmap available, which is presented within a blog post.
It provides us with 6 months of plans, beginning summer 2019, with 6 major milestones given:
- Summer 2019: LTO private/public chain layer release version 1.0 and LTO marketplace launch.
- Fall 2019: New LTO product release and linked data release.
- Winter 2019: Proof of Importance release and Ecosystem V release.
There is plenty here to be achieved over the next few months; however, more so than these individual goals, I am particularly interested in the progression of the business with regards to clients – more clients, more revenue, more token utility. Given the progress thus far, I do expect this trend to continue going into 2020.
There is only a highly technical whitepaper available, which, for those who are not technological Neanderthals like myself, and who wish to read more on the precise details of the LTO solutions, can find here.
The ERC-20 token can be stored on any ERC-20-compatible wallet, including a Ledger or Trezor. The mainnet token can be stored on the web wallet. Overall, there are plenty of options available.
In this final section of my fundamental evaluation, I’d like to highlight some important points from miscellaneous sources (primarily recent Medium articles) that do not fit elsewhere, as I believe they will provide a concise, clear picture of the progress of the project since inception.
Firstly, this H1 2019 report contains a lot of insightful information:
- As of June, LTO Network is among the top 20 most-used blockchains, with over 20,000 transactions on-chain on a daily basis, with this figure continuing to rise as more clients are onboarded.
- The node network has grown from 13 to over 80 (at the time of publication, though now this has dipped slightly to 79) since January.
- There are over 1,900 active addresses across the mainnet and ERC-20 chains.
- Partnered with V-ID and Certik, as well as introduced SignRequest and Capptions as integrators for the various LTO solutions, which brings the technology to over 1mn users.
Secondly, unlike the vast majority of projects, it seems LTO Network are 100% committed to transparency, despite effectively being a private company. In this transparency report, we are given a great deal of useful detail:
- Between the private and public token sale, the team raised $2.67mn, which was liquidated immediately into USD, securing years of development runway.
- 7.85% of the original maximum supply was immediately burned following the public sale (39.2mn LTO),
- Over 6% of all ERC-20 LTO tokens were moved to the mainnet following the crowdsale.
- In January, 56mn LTO were on the ERC-20 chain; as of August, that number is 48mn.
Thirdly, we can find some clearer distribution information in this supply curve report:
- 11% of the total supply of LTO is locked forever; 17.8% is locked until 2021; and 11.6% is released over the course of a few years via social mining.
- This equates to around 200mn LTO that will take several years, at the very least, before it can provide sell pressure on the market; although, as stated in the report, over 80mn LTO of this is reserved for Mergers and Acquisitions in the future, thus will not be sold at market, and 50mn of the total amount is locked forever.
Why is this important? Because it tells us that there is no reason to expect significant headwinds for price growth when LTO find its cyclical bottom and begins a new market cycle.
In short, the lack of inflation, combined with high retention rates for the token, high lockup rate and burn mechanism via the bridge, all indicate that, over time, there will be significant deflationary pressure, particularly as the business itself grows (of which we have evidence of a trend of growth since inception). This is one of the primary traits of a token I am looking for when speculating.
Whilst LTO Network has been in existence for many years at this point, its token has only been listed on exchange for less than a year, and so there is rather little price-history available.
However, there is one clear market cycle that has played out, with a secondary mini-cycle present also. I have marked out the various phases of this early market cycle, which culminated in the all-time high that formed at 6100 satoshis late in February. Following this, price fell back towards the opening price of the market, with a breakdown below this initiating the Depression phase of the market cycle. Ultimately, a bottom was found around 800 satoshis, which became the base for the mini-cycle that followed.
Price ran up for several weeks, finding its next cyclical high at 2200 satoshis, just beyond the point at which the prior cycle’s capitulation began, with the long-term trend clearly moving downwards with each successive lower peak. Price has since been forming new lows, though it did find a range in July between the 800 satoshis support area and resistance at 1140 satoshis; this could not hold, and we are currently trading near all-time lows of 640 satoshis.
Given this price-history and the long-term downtrend in play, despite the fundamental strength of the project and the deflationary pressures on the token (as well as the clear accumulation taking place in the rich-list), I would not consider entering a position here unless it was with fixed risk allocation rather than a stop loss, as it is likely price will continue to move down until the overall sentiment in the altcoin market shifts significantly.
However, those that can stomach such plays, I expect current prices will be rewarded long-term.
For those looking for short-term trades, I would wait for the prior support turned resistance at 815 satoshis to be reclaimed before buying.
This report is now approaching 5,000 words, and it is time to draw it to a close.
My final grading for LTO Network is 8 out of 10.
Here, you can find my grading framework, for reference.
Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.
I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.
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