Turing Coin Review: LUKSO — The blockchain for the digital economy
Lukso ($LYXE), a novel blockchain concept focused on domain-specific architectures, is building an infrastructure aimed at the creative field, by targeting the innovators and culture leaders embedded in the intersection of tech and lifestyle/fashion/design. It’s important to note that unlike most blockchain projects, LUKSO is fixated on developing the very foundation that will allow future ideas and applications to lay their ground within its blockchain network, trying to keep it as much of an open system as possibly conceivable.
As per their whitepaper: “As a neutral base layer, it operates on the principle of contingency: just like the internet itself, it will be a sustained experimentation ground also for those future scenarios that we cannot yet foresee today (…) LUKSO allows developers and creatives to dictate the distribution of wealth and influence from lifestyle activities.”
The potential use cases are endless, ranging from fashion, art, music, gaming, design, social media and more. It is LUKSO’s belief (and ours too) that these use cases will bring blockchain to the masses as billions of consumers are already participating in these economies through Instagram, online gaming, YouTube, etc. Note that the target market for these digital economies is much bigger than the market targeted by DeFi or other applications currently utilising blockchain.
(We at Turing have also found one other use case carrying immense potential, one that most people have not yet realised which makes LUKSO a guaranteed top tier project. Make sure to read through ‘till the end to find out)
LUKSO is betting on the fact that blockchain adoption will come from those who already make an active use of the web, especially the social web. How exactly is LUKSO trying to achieve this?
LUKSO’s mission is guided by three guiding features/implementations. They call them building blocks, as we can see from one their statements:
“We have created a framework that makes it easy for anyone to exhaust their potential by building customised applications on top of the LUKSO blockchain. Most of these use cases will draw on different combinations of each of the three building blocks.”
Let’s take a quick look at what those are.
1) Digital certificates & identities
A new form of ownership, enabling creators and brands to fight counterfeiting while establishing a fully visible record for all past, present and future owners and transactions. One of the benefits here is the potential to allow transactions across platforms and systems while retaining a product/individual’s full history immutable and transparent.
As an example, combining blockchain and RFID technology will allow product owners to verify a product’s journey across the supply chain and ensure its integrity. According to the OCDE, the counterfeiting market for the assets that can be tracked through’s LUKSO’s implementation amounted to 450 billion dollars in 2017, with data suggesting a continuous growth for the foreseeable future. This undoubtedly presents an invaluable opportunity.
As for digital identities, think of an event like the Helsinki Fashion Week with whom LUKSO partnered towards digitalising visitors and garments. Each attendee was given their very own digital passport which included the latest releases by the participating designers, allowing them to try on and visualise last years collections in a new and revolutionising way.
The scope is much broader than these two examples. We’d go as far as calling this NFT 2.0, and we’re not the only ones.
This kind of innovation is well suited to tackle the challenges posed by the emergence of Virtual Reality, where an increasingly larger number of users is adhering to this new paradigm that puts growing importance into developing your digital self to be as singular and distinguishable as possible.
In their whitepaper, LUKSO also gives the example of Fortnite, a game played by more than 350 million players worldwide, where users spend billions of dollars annually for the privilege of purchasing and owning their own customisable skin. This gives them a sense of individuality and accomplishment. What LUKSO is trying to do is allow players to not only further customise their in-game characters but to actually move them across different online games. In the above scenario that would equate to a player customising and owning their individual skin, which they could then port over to multiple games while retaining the individual look and design they picked for it, i.e. using the same skin on both Fortnite and CS Go, another worldwide famous online game where players are able to customise their skin and items.
This is because LUKSO is not looking to enter the NFT game as most projects are currently doing, instead they’re aiming to evolve it and push it forward, by developing what they claim to be “(…) the next generation of truly interoperable and future-proof NFTs standards.”
Here’s an excerpt that provides further insight into other potential use cases:
“For example, brands could equip every one of their items that have been taken along to their events with certain statuses. They could send their customers on journeys around the world to visit their stores, inscribe these visits into the digital identity of the products taken along and reward their trips with any kind of benefit — just like airlines do with their miles programs.
(…)
On a structural level (…) also enhances the insights that brands can get on their consumer base. Phygital ownership allows for tracking the lifecycle of physical objects. They can make visible the context in which an item is worn or shown, how often it gets sold on the second-hand market and how its value changes over time.
Such information is not readily accessible today, yet it is important for brands to better understand the interactions and needs of their consumers and to be more focused in the development of future products and services.”
We can already see how these digital certificates provide a great opportunity for lifestyle related enterprises. The fact that LUKSO’s advisory team is composed of some of the biggest brands worldwide when it comes to fashion denotes a potential awareness and intention to utilise these certificates for their own collections/events.
Although still at an early stage, we’re starting to get a glimpse of this already from a few partners such as The Helsinki Fashion Week and Chanel.
In this article, you can find the first asset Chanel will be launching on LUKSO.
2) Universal public profiles
“Blockchain-based user and company profiles enable permanent identifiers in the digital world. They allow for universal login’s that make remembering username and password a thing of the past, while giving you full control of all your virtual assets.
Universal profiles make economic and verifiable interactions possible and are the core building block for the new creative economies.”
That’s right. LUKSO is working on “universal logins”. This is in line with their domain-specific blockchain. Imagine all your social media accounts in one place, accessible through the same gateway, of which you’re the sole owner. This could be Google, Instagram, Facebook, Twitter, etc.
Many people miss the potential brought on by such a system. A decade long issue, public identification, is being solved under the very premise of decentralisation — the ability to “know with certainty that the source of a claim is actually correct and credible.”
All your digital assets linked to your domain. The possibilities are endless.
3) Cultural currencies (community and personal tokens)
Tokenise objects, status, membership, events, history, affiliations. LUKSO understands that blockchain allows value to flow in any shape and size. Picture an artist handing over limited edition tokens to his fanbase, or event participants being rewarded with specific tokens. Both tokens can later be redeemed in the secondary market, and both carry some form of value, be it historical, sentimental, etc.
With LUKSO, anyone can create a token for whatever purpose they see fit. We can already see how in today’s digital economy this will promote and increase influencer/artist/brand evangelism. Tokenised communities will be the standard for tomorrow’s creative economy. Value is in the eyes of the beholder.
“Tokens are a new form of interest, status, participation, and value on a global scale. They are cultural currencies and attach measurable and transferable value to all socio-creative activity.
(…)
One of the things we are building is what we call a “Lifestyle Wallet”, to be released with our Mainnet launch in the Spring of 2021. “
To quickly sum up the three building blocks we just described, you can picture your very own Universal Public Profile as a wallet that allows you to own, transact and carry your assets. These can range from brand tokens to digital collectibles, community tokens, fashion tokens, brand tokens, among others.
Who exactly is LUKSO?
LUKSO’s team and advisors are definitely top tier when it comes to blockchain project teams.
Their CEO, Fabian Vogelsteller, was responsible for propelling the ICO wave of 2017 (which warranted him the nickname “The Grandfather of the ICO”), while introducing the world to smart contracts and Ethereum’s main capabilities, which were in a (relatively) stealth mode at the time. He accomplished this by proposing the ERC-20 token standard alongside Vitalik Buterin.
As one of the earliest core members of Ethereum and a thought leader within the crypto-sphere, Fabian was also behind other key Ethereum developments such as ERC-725, the Mist browser and web3.js (Ethereum’s most used JavaScript library).
Fabian was also responsible for LUKSO’s very own innovative ICO model, the reversible ICO (rICO). This new model protects buyers not only from fraudulent teams but also from single asset appreciation, sort of an anti impermanent-loss mechanism for ICO’s.
The way it works is by giving buyers the option to reverse a set amount of funds provided relative to the amount of time of their purchase. When buyers send funding they don’t get immediate access to the full token amount. Instead, they “reserve” the full amount which is gradually unlocked and sent to them as time goes by. Tokens which are still locked can be returned to the rICO at any time with the buyer receiving the corresponding submitted funds instead. In LUKSO’s case, this essentially gave buyers the possibility of retrieving their submitted ETH (only relative to locked LYXe), which they might wish to do in a situation where ETH’s price is rising faster relative to LYXe’s price on the open market.
It is also worth noting that the rICO was approved by German regulators, which speaks volumes towards the premise that Fabian’s work in growing and evolving the cryptocurrency landscape (although already at a very high level) is still only getting started.
One other notable team member is Marjorie Hernandez, who, along Fabian, is leading LUKSO into becoming the behemoth of the future digital economy. Marjorie has vast experience in the sector, having been pivotal in LUKSO’s partnership with Helsinki Fashion Week where they deployed and tested LUKSO’s digital certificate and virtualisation capabilities.
Marjorie was also EY’s (Ernst & Young) Digital Transformation and Strategy executive, where she created and managed their Digital Innovation Labs.This is where she garnered most of her blockchain experience, having worked closely with both Ethereum and the IOTA foundation.
Then we have LUKSO’s advisory team. Needless to say, they managed to pick an all-star one, whose members are a perfect fit to help them fulfil their mission.
Here’s a sample of what you can find on their team page:
Daniel Heaf — Nike, Vice President Digital
Caroline Drucker — Instagram, Head of Strategic Partnerships EMEA
Dr. Berndt Hauptkorn — CHANEL, President of Europe
Rajeev Aikkara — Burberry, Vice President — Digital Technology
Eric Pfrunder — CHANEL, Former Artistic Director of Fashion Image
David Fischer — Highsnobiety, Founder & CEO
Dr. Mervyn G. Maistry — Deutsche Bank, Former Group COO
_______
Blockchain release and tokenomics
LUKSO is currently present within the Ethereum blockchain, represented by the LYXe token.
At mainnet release, scheduled for Q2 this year, LUKSO will launch their native blockchain, utilising a HoneyBadger BFT consensus along a delegated proof of stake system. Its native token will be LYX.
While not equal to Ethereum, LUKSO’s blockchain will utilise Ethereum’s EVM, providing it with the much needed Ethereum dapp compatibility (seen as Ethereum is by far the most widely used blockchain). The fact that LUKSO is building their blockchain using Catalyst (an execution environment) with a beacon chain running Casper FFG, (which is still in the research stage for Ethereum’s next implementation), means that LUKSO will probably deploy their ETH 2.0 blockchain before Ethereum itself. This goes to show the quality and amount of effort being put out by the team.
Going back to LUKSO’s POS system, large holders will be able to apply to be block validators/producers through community voting, while others will be able to delegate their LYX stake to existing block producers.
LYXe will be swappable for LYX at mainnet release, with the team releasing further instructions before the due date. It will be a 1:1 swap.
As for tokenomics, LYX will have a total token supply of 100,000,000 LYX. Its token standard is ERC-777, while being ERC-20 compatible.
Although these values are not yet finalised, they estimate an annual inflation of roughly 2,000,000 LYX, related to block rewards. There was also an estimate for a total of 48,000,000 LYX circulating at mainnet release, however the team has recently confirmed these values are not yet decided upon, with some suggesting the actual circulating supply at launch will be halved to 24,000,000 LYX. We’ll have to wait on official confirmation for this one.
Below you can find LUKSO’s token distribution as of this date.
Final note and mainnet approach
“We are building tools and applications that make it easier and more accessible for developers, regular users and creative producers to use the LUKSO Blockchain, on top of what the Ethereum community has already built. Our goal is to make the blockchain “invisible” and the applications incredibly beautiful.”
- Marjorie Hernandez, LUKSO’s founder
As mainnet approaches we expect to see several assets and use case announcements for LUKSO coming from its partners. Things have already started moving, although they remain behind the scenes for now.
Partnerships and similar developments which are currently under NDA will start getting released as LUKSO’s integrations begin to take form.
Feel free to check this article, where (although not yet clear) the nature of the involvement of Eric Pfrunder, one of Chanel’s two leaders, is speculated upon.
Surprise use case
As mentioned before, we saved this one for the very end.
We said earlier on that LUKSO is basically ahead of ETH 2.0 when it comes to running a beacon chain compatible with the Ethereum network. “It will likely become the first ETH 2.0 blockchain to execute smart contracts, even before Ethereum itself.” — from LUKSO’s latest Medium article
For those of you unfamiliar with the technical side, the potential this represents might not be so obvious. Let us elaborate.
The fact that LUKSO will be the very first ETH 2.0 blockchain means it will basically act as a proxy for all the Dapps running on Ethereum today. In other words, the thousands of projects/Dapps currently live have an incentive to deploy on LUKSO first, way before ETH 2.0 is ready, as a means to run tests and implement necessary updates. This means all these dapps will be acquiring LYX just so they can prepare in advance and gain the edge before Ethereum’s next stage is released.
For those keeping up with the crypto space since last year, does this sound familiar? It should.
This is exactly the same use case as the one Kusama (ticker $KSM) provides for the Polkadot ecosystem. Yes, we’re saying that besides all the above mentioned (and unmentioned/undiscovered ) lifestyle use cases, LUKSO still has one more (incredibly optimistic) application that very few people are aware of.
Just to provide a clearer idea of the demand for such a use case, let’s consider Kusama. To sum up, Kusama is a development environment “allowing teams to try out new technologies, innovate on existing projects, and prepare for a full Polkadot deployment.”
KSM, its token, climbed over 11,600% in the past six months surpassing a 2 billion dollar market cap. Let’s also consider the fact that Polkadot, although at a near 40 billion dollar market cap, is not yet live. With this in mind, one can only speculate how much LYX’s value will increase, but we feel confident (conservatively speaking) that this is just the beginning of the ride.
Considering LUKSO will essentially serve Kusama’s purpose but for what is literally the largest and most active blockchain by far, with a market cap over a whooping 220 billion dollars, it is our opinion that LUKSO will soon cement its place among the top crypto projects of our time.
We’re excited for what the future holds and deeply believe projects like LUKSO will be guiding the wave of innovation blockchain and other DLT technologies will bring about in the forthcoming years. We have high hopes for LUKSO and will be keeping an eye out for their development and future releases.
You can find more information through the links below. Let us know your thoughts on LUKSO and how you feel about their proposed implementation.
https://github.com/lukso-network
https://discord.com/invite/E2rJPP4
$KSM market cap growth figures and blockchain readiness were adapted from https://eddyroach.substack.com/people/17104550-eddy-roach. This is another great article to read about LUKSO.
