Crisis looming over Ethereum-based Loom Network, after 2 co-founders left the project

Crisis looming over Ethereum-based Loom Network, after 2 co-founders left the project

Loom Network, a project that has its native token, LOOM, listed on Binance and with a market cap above $13 million (at the time of writing) is reportedly on the verge of an exit. 

Investors are left scratching their heads following a period of little to no activity from the project team especially after co-founders Matthew Campbell and James Duffy left the company in February. The current team, under the helm of the remaining co-founder and editor, Luke Zhang, also has not published any resourceful update regarding the current events but left investors in the dark regarding what is going on behind the scene.

What is happening to the Loom Network (LOOM)?

The Loom Network made its appearance in the crypto scene in 2018. The team reportedly raised $25 million in a private token sale and promised to develop a solution that would help developers to build scalable decentralized applications on the Ethereum network.

The project even boasts mentions from Ethereum-focused Consensys Labs, CNN, TechCrunch, and VentureBeat, but appears to have met a dead-end in recent weeks.

On the surface, the project’s social media engagement has hit rock bottom with the last post on Twitter coming on April 17 (three weeks ago), and then a Telegram announcement today that the team will close the channel because it is pivoting “from ‘blockchain games’ to ‘enterprise.’”

Validators and games exit Loom Network

Blockchain developer Julien Bouteloup provided a clue on the recent inactivity with Loom Network, alleging that a critical security flaw in the project’s protocol means that validators do not necessarily have to stake LOOM tokens before they can become validators.

Notably, Stake Capital, one of Loom’s largest validators after Binance exchange, stopped staking Loom in March claiming that the “project is dead.” This was around the same period that the project stopped publishing its Weekly Highlights.

Axie Affinity, one of the first Ethereum-based collectibles games to adopt Loom’s Basechain network, also announced its exit in March, citing the network’s lack of focus on gaming as the main reason behind the decision to move.

Interestingly, Axie Affinity is still being quoted on Loom’s website as one of the projects changing the blockchain space with its innovative uses of Loom Network.

Axie Affinity left Loom Network on March 2020

ChorusOne, StakeWith.us, and CryptoWarz also left Loom in March, leaving Binance as the leading validator with more than 50% of the coin’s staked token supply. 

Evidently, the exchange’s leading status as a validator explains why they still support trading for Loom, with the network currently having only ten validators [including Loom Network] at the time of writing.

Meanwhile, the token’s price has also been on a rapid decline since hitting a new high in the days leading up to former CEO, Matthew Campbell’s exit, and has traded rather flatly in the last few weeks.

Loom chart

The months ahead will reveal whether Loom’s supposed yet-to-be explained switch to the enterprise will be fruitful even though at this time, it seems that yet another project has met its dead end with investor money going down the drain. 

This article originally appeared on Coinfomania.

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