Layer-2 Scaling Arena: Matic Network Digs In as Loom Network Wobbles

Matic Network and Loom Network are among those that focus on sidechain and Plasma tech to boost blockchains' transaction throughput.
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Ethereum and the cryptoeconomy in general can’t reach anything close to their true potential until a corner is turned on the problem of scalability, i.e. powering fast and cheap transactions en masse. Alas, solving scaling is the top mission for numerous novel projects in the ecosystem.

In the diverse constellation of scaling projects, Matic Network and Loom Network are among those that focus on sidechain and Plasma tech to boost blockchains’ transaction throughput. But whereas Matic has notably been rising recently, Loom has instead become beleaguered.

Both efforts certainly started out promising, as both were early Layer 2 scaling efforts — or solutions built atop Ethereum or other blockchains, and not within them — that gave dApp projects an avenue to explore faster and cheaper transactions. Yet between the two, only Matic has kept up positive momentum as of late. Why?

Beyond the thing’s Matic’s been been getting right, the answer to that question largely lies in how Loom’s leadership recently totally re-envisioned their project in media res, which sent teams building atop the project scrambling and some key network participants heading for the exits. But before digging deeper here, let’s first compare how Matic and Loom work for better context.

Two Scaling Approaches, But Not Equal

As we’ve mentioned already, both Matic Network and Loom Network are Layer 2 scaling solutions, but naturally they approach the scaling question in unique ways.

As for Matic, it uses an account-based variation of More Viable Plasma, or simply Plasma, and its sidechains are underpinned by a network of proof-of-stake (PoS) validators. This model ensures fast and secure Layer 2 transactions.

What is Matic Network? Guide to This Blockchain Scaling Platform

“The system is designed to enable quicker partial confirmations for better user experience,” the Matic team has previously explained.

On the flip side, the Loom Network relies on a version of Plasma known as Plasma Cash, which only supports payments made via ERC721 non-fungible tokens (NFTs). And as opposed to PoS, Loom’s “Basechain” uses delegated proof-of-stake (DPoS) consensus, so its design calls for considerably less validators than Matic does.

To that last point, Loom is meant to rely on 21 or more external validators who stake LOOM tokens to secure the network. However, Loom’s number of active validators is soon set to sink to as low as 14 after several projects have recently departed or announced plans to depart the network over shake-ups in the project’s leadership and roadmap.

That drop isn’t necessarily devastating yet, but it isn’t pretty either as Binance would thus control more than 50% of the staked LOOM token supply. The decline also signals that a non-trivial amount of stakeholders have increasingly lost faith with Loom’s direction.

Key Loom Validators Depart

Matic Network is, and has been, general purpose in focus and thus capable of backing financial projects as well as blockchain gaming projects. Loom Network, however, started out with a major focus on games and has since pivoted from that concentration in favor of working on solutions for large enterprises.

In other words, the Loom Network team shifted the ground beneath its early users in a big way, and these users have had to pick up the pieces accordingly.

For instance, Axie Infinity, a popular Ethereum game project, announced in March 2020 that it was shutting down its Loom validator in response to Loom’s shifting operations:

“The Loom team has recently undergone leadership changes and will be focusing on enterprise solutions rather than user facing applications. Given this change in course, we believe that it’s best for us to end our relationship with Loom Network. We were proud to be one of the first applications to show off the fast and gas-free transactions made possible by early layer 2 scaling solutions.”

That announcement came after Loom Network chief executive officer Matthew Campbell stepped down back in February 2020. Since then, several other Loom validators beyond Axie Infinity also announced their decisions to step back from the re-envisioned network, namely Staked Capital, StakeWith.Us, and Chorus One.

These enterprises are undoubtedly miffed, as Loom Network bills itself as frictionless and as a way for projects to “future-proof” their dApps. However, these projects have experienced friction from Loom and watched the future of their melds change right in front of their eyes, which has left Axie Infinity and others looking for new scaling solutions.

“A fully decentralized … application is valuable because it gives users the confidence that it will always be there, so you can safely build on top of it,” Ethereum creator Vitalik Buterin recently aptly argued in a separate discussion.

Matic Winning Over Projects

As something of a migration away from Loom Network has begun, Matic Network has stood out as a viable alternative for teams looking to build on new L2 infrastructure.

For example, in March 2020 the Ethereum virtual world project Somnium Space announced plans to transition from Loom to Matic. Somnium Space CEO Artur Sychov noted at the time:

“Due to the fact that Loom has decided to shut down their customer facing solution we were forced to search for a new reliable partner for a second layer scalability. Matic was an obvious choice due to their team expertise and other well-known projects working with Matic already.”

Somnium Space thus joined dozens of other projects that are already building atop Matic’s tech, including Ethereum’s leading virtual world Decentraland, trading platform Koinfox, and betting platform project BetProtocol among others.

As such, Matic’s ascension on the adoption front has translated to the markets, too, as the market capitalization of the MATIC token is over $36 million USD, which is more than double the LOOM token’s current $15 million market cap. Investors simply trust Matic more than the Loom project right now.

A Few Positives on the Horizon for Matic

Beyond being more nimble, general purpose, and technically superior to Loom, Matic also has clearly positive developments ahead on its roadmap at a time when some major Loom stakeholders have grown uncertain over the future.

First off, Ethereum is officially launching on the Ethereum mainnet in May 2020. This will allow dApp project’s to utilize Matic’s mature capabilities, which means more dApps may be enticed to integrate with the L2 network in the coming months.

At the same time that Matic hits the mainnet, the project will also launch staking support, which means MATIC holders will be able to hold their tokens in special wallets to secure the network and earn token rewards for doing so. The staking industry is just starting to come into its own, so the timing of Matic’s activation of PoS consensus may prove fruitful for its general earliness.

It seems that some folks are already lining up to stake via Matic, too — the project reportedly had more than 500 validators participate in its recent incentivized testnet campaign, Counter Stake.

Taken altogether, then, and Matic’s biggest days seem decisively ahead. That dynamic stands in contrast to the present uncertainty around Loom, which has lost the faith of some of its biggest earlier backers.

Of course, it’s entirely possible that the Loom project turns things around, rebounds, and makes notable moves in the enterprise space. But as things stand, Matic is simply a more attractive option in a few respects for any Ethereum dApp projects that are interested in leveraging Plasma-based sidechain solutions. Let’s see if Matic can keep its fledgling momentum up from here.


William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

1 Comment

  1. Avatar

    Both Binance and Huobi integrated their chains in Loom’s Basechain
    Loom only has 1 Billion supply compared to Matic’s whooping 10B yet their price is close

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