Each individual dApp on the Loom Network can run on its own Ethereum sidechain, a ‘dAppChain’, with an SDK developed by Loom, and can implement its own consensus mechanism and node architecture for managing token transfers. The project was motivated by the continued issue of scalability on Ethereum, where single dApps such as CryptoKitties have caused network congestion. Early projects built on the Loom Network include CryptoZombies, an Ethereum developer school where users build a dApp similar to CryptoKitties, and DelegateCall, a Q&A forum similar to Steemit for blockchain and Ethereum-related discussion.
Loom Network is an example of a layer 2 scaling solution, partially analogous to the Lightning Network for Bitcoin; it offers increased transaction throughput external to the Ethereum blockchain with optional layer 1 settlement and transfer, for a class of applications (primarily large-scale online games and social apps) that do not require the security guarantees of Ethereum for low-value microtransactions. Individual dAppChains use Plasma-based relays to transfer assets to Ethereum; ERC20 and ERC721-standard tokens can be transacted on one or more sidechains, then ultimately secured by the main Ethereum blockchain.
The LOOM token offers a variety of features across a range of Loom Network dApps, and is based on the ERC20 standard. In order to transfer a dAppChain token balance to another dAppChain or to Ethereum, users must hold 1 LOOM token in their Ethereum wallet. For example, users accrue DelegateCall tokens by generating content which can be transferred from the DelegateCall sidechain to the Ethereum main chain and exchanged for ETH, provided the user has at least 1 LOOM token. Users who need only a single LOOM token for dApp access can purchase it through the Loom Network website, through a centrally-controlled reserve. Future development will implement a series of membership tiers requiring larger balances, offering other premium features and exclusive benefits on particular dAppChains. Seperate from these access rights, the LOOM token may also be used to pay transaction fees on individual dAppChains and as payment for premium development assistance from the Loom core team.
The beta SDK was released in March 2018, and initial support for non-fungible tokens (NFTs) on Loom sidechains debuted in June 2018. Loom has developed an SDK interoperable with the popular Unity engine, and the team has extensive experience in software development and the Ethereum ecosystem in particular. Loom Network was funded privately through investors such as Techstars NYC, and did not conduct a public token sale.