Ethereum has a scaling problem. The network has a maximum capacity of 15 transactions per second (TPS), low enough that even a few thousand Daily Active Users (DAU) on a single DApp can clog the whole network. Ethereum’s TPS is so low because it relies on a Proof of Work (PoW) consensus mechanism that requires the majority of the network to verify a block of transactions before it can get added to the blockchain.

Getting to that majority requires a certain amount of time and computing energy. But you need a majority if you want your network to be decentralized. A blockchain where only a few powerful entities can mine blocks and verify transactions isn’t as decentralized as a blockchain where everyone can mine blocks and verify transactions.

So it seems Ethereum is stuck with a low TPS if it decides to stay with its PoW consensus mechanism. Luckily, there is a way to significantly scale Ethereum DApps to accommodate tens of thousands, and even millions of users. This feature article will talk about Loom Network and how it has solved Ethereum’s scaling problem.

Loom in a Nutshell

Loom’s long-term vision is to enable million-user DApps on Ethereum. This currently isn’t possible for DApps built solely on Ethereum, because of the scaling problem described above. But Loom has built a software development kit (SDK) that allows developers to create sidechains running alongside Ethereum. These sidechains can be programmed to follow any consensus mechanism and any rules that developers can come up with.

Out of the box, the Loom SDK support the Delegated Proof of Stake (DPoS) consensus mechanism. DPoS is much faster than PoW, and much more energy-efficient. With DPoS, community members vote on ‘Witnesses’ to secure their computer network. The more tokens community members have, the stronger their vote power. Voting is continuous, which ensures Witnesses can be voted in or out, depending on the strength of their proposals and how well they’re doing. Popular crypto projects that already use a DPoS mechanism are Ark, Steem, EOS, and BitShares.

But Loom puts a spin on how it uses DPoS, because it’s used in sidechains that run in conjunction with Ethereum. To give you an example: if a motivated developer would want to port Pokemon to Ethereum, they would quickly run into limitations. Every single action you take (e.g. Pikachu attacks, Pigeotto defends, you throw a Pokeball) would require the player to pay a transaction fee. Not only would this become ridiculously expensive after a while, but it would also introduce so much friction that the game would pretty much be unplayable.

Imagine a window popping up asking you to pay a transaction fee for every action you take. Not great

However, if that developer would decide to use the Loom SDK and a DPoS sidechain to run their Pokemon game, the story would be different. Gamers would be able to play without transaction fees. It would seem as if it were a regular game, and gamers would never know it would be run on a blockchain (until they figure out they can trade their Pokemon in a decentralized marketplace, exchange it for a token, and then exchange that token for actual money if they’d want).

You see, the gamer’s Pokemon that he fights with would be transferred to the DPoS sidechain, where the player can fight with them without any friction. The Pokemon he doesn’t fight with, and any other valuable assets he’s collected in the game, are still stored securely on the Ethereum blockchain. Once the fight is over, the gamer’s active Pokemon are transferred back onto the Ethereum mainnet.

Why Loom Focuses on Gaming

Loom has realized that Ethereum (and crypto in general) doesn’t just have a scaling problem. It has a user adoption problem too. Three years into Ethereum’s existence, the top 100 DApps have less than 5,000 DAU. Have a look at our DGaming industry report for more evidence on this.

Now, I don’t mean to bash Ethereum, because it’s the same problem for every blockchain platform. This is simply because the benefits of blockchain technology aren’t enticing enough to move people away from the applications they use today. People are still okay with Facebook, despite its flaws. They’re still okay with the centralized power of developers (although less and less so. I’m looking at you, EA).

One of the thousands of EA memes mocking the company and its microtransactions

Loom believes that the first ‘killer’ DApp, the first DApp that hits even 10,000 DAU, and that introduces a mainstream audience to blockchain and cryptocurrencies, will be a game. But it should be a game that’s fun to play and has zero friction. It should feel like a regular game, but with the benefits of blockchain. Gamers should be gently introduced to the technology, and nudged towards its benefits.

That’s why Loom focuses on gaming. And they’ve not been sitting still. You can already download Zombie Battleground, Loom’s Kickstarter project that successfully raised $320,000 (in a single day). It’s a collectible card game and currently available in alpha mode. A public beta will be available to the general public at the end of the year.

I’ve played the alpha and I must say it’s as seamless as any other card game. You wouldn’t guess for the world it’s run on a blockchain without a centralized game server. I’m curious to see what this game will do once the public beta hits the App Store and Google Play.

Zombie Battleground is also the first game that runs on Loom’s PlasmaChain. Loom launched Plasma on the 24th of August this year, and it enables gamers to relay their gaming assets between Ethereum and a Loom sidechain even more securely. They’ve written an excellent guide on what Plasma will do for gaming. Suffice to say that it’s impressive they’ve managed to figure out how to integrate Plasma into their technology, while Ethereum itself is still struggling to implement it.

The Loom Token

As I researched this project, I realized that Loom is quite different from the other crypto projects I’ve reviewed so far. One of its biggest differentiators is that it has a token, but it didn’t do an ICO. In fact, Loom Network is funded by Techstars, a startup accelerator based in New York.

There is a fixed supply of 1 billion Loom tokens, and the company holds 35% of the total supply as a reserve fund. 10% is held by the team members and advisors, and the rest (which will vary between 65-55%) is in circulation and can be bought on all major crypto exchanges (even on Coinbase Pro, which is quite a big deal, because it’s really only the big boys there).

But Loom’s token performance? Not so great.

Loom’s token price saw a huge spike in March, up to nearly $0.70, which is when it was officially released. That was also around the time when Loom’s first DAppChain went live: DelegateCall, a Q&A site similar to Quora, but run entirely on a Loom DAppChain. Answer questions to earn Karma, and transfer that Karma back to Ethereum.

The Loom price then sharply sank to $0.15 and saw a brief revival in June, after the Loom SDK beta went public. But that revival didn’t last long, and its token price now sits at a disappointing $0.039. It’s ranked #112 on CoinMarketCap.

What’s the Loom Token Good For?

You can use the Loom token for all products and services offered by the Loom Network. More specifically, developers need to stake a certain amount of Loom tokens in order to run their DApps on Loom’s DPoS sidechains. Each month, tokens are deducted on the basis of how much bandwidth the DApp consumes (although you can cap your throughput, so you don’t run into sudden costs). These tokens go towards the DAppChain ‘witnesses’ responsible for keeping the network running.

Although Loom advocates free-to-play games where gamers have access to all loot, gamers short on time can buy random card packs (if we take the example of Zombie Battleground) from Loom or individual cards from other gamers on the Zombie Battleground marketplace, all with Loom tokens. Gamers can also stake their Loom tokens to get a ‘game membership’, which will give them access to all DApps running on Loom sidechains.

And finally, developers can get SDK enterprise support for 100,000 Loom per year, which would only come down to around $4,000 with today’s Loom price.

Loom’s Side Projects

Let’s talk about Loom’s side projects. Because not only has Loom solved the Ethereum scaling problem and developed a frictionless blockchain game, they’ve also created side projects that are incredibly popular and have tens of thousands of users. Here are their most popular ones.

Loom’s best-known side project is CryptoZombies, an interactive code school that teaches you Solidity, Ethereum’s programming language. The project is insanely popular and by far the #1 resource for learning Solidity. It’s translated in 9 languages and has more than 300,000 users from all around the world.

It makes learning Solidity very easy. I’m a programming noob, and even I could get through my first few lessons quite easily. You only need to understand the very basics of programming to get started. They make it fun too, with the ability to design zombies and create a zombie game.

The lessons are fun and engaging

Another Loom side project is EthFiddle, the biggest code sharing site for Solidity with over 10,000 users. Developers can compile, test, and run snippets of Solidity code using the intuitive and easy-to-use UI of their platform.

And there’s also SolidityX, a programming language that compiles to Solidity and protects against some of Solidity’s known security issues.

What’s Not to Like?

I usually try to balance out my reviews by pointing out the downsides of the crypto project I’m reviewing. But there’s was no immediate downside I could find. There’s no controversial CEO heading up the project, there’s not been any bad news about the project, and they explain very well who they are and what they’re doing.

That’s why I found it surprising that its token is just under $0.04, from a high of $0.69. I appreciate that the crypto market has only been going down in 2018, but the Loom team has consistently been delivering excellent work that has added significant value to the crypto community. It’s almost as if they’re flying under everyone’s radar, but that seems implausible, particularly when Ethereum co-founder Jo Lubin mentions your game on CNN (1:58).

This being said, when I Google Ethereum Scaling or Ethereum Scaling Solutions, Loom doesn’t show up on the first page (or the pages after). Instead, it talks about Ethereum’s Serenity update, which is supposed to solve its scaling problem. I know SEO is hard to master, but I’d have hoped to see Loom show up.

I feel like I’m missing a piece of the puzzle. Is it symptomatic of the crypto industry that I’m worried it hasn’t caught a lot of hype? What am I missing here? Let me know.

In Conclusion

Personally, I think this is a fantastic project (disclaimer: this article wasn’t sponsored). The Loom Network team does things differently: they didn’t do an ICO, because they’re funded by a startup accelerator, and they don’t even have a whitepaper, because they believe in shipping product first. Talk is cheap, show results.

And that’s exactly what they’ve done. Using their SDK, developers can build sidechains that solve Ethereum’s scaling problem. They’re building games that run nearly frictionless on those chains, with the security of the Ethereum network.

They’ve also built the biggest platform to learn Solidity, the biggest code sharing site, and a programming language that compiles with Solidity and solves some of its security issues. They consistently meet their deadlines, have a clear roadmap, and have well-written documentation that explains exactly what their technology does.

I like it a lot. Here’s a group of developers who work hard to contribute. Heads down, get to work, ship great product. They want to enable million-user DApps on the Ethereum blockchain, and have already built technology that goes a long way towards that goal. If they keep on working as diligently as they’re doing now, that first million-user DApp might well be one their own.