cobalt Published on: Sep 03, 2021 Last updated: Jan 30, 2023

"What does the future look like for blockchain and crypto as a whole?"

"How will people maintain privacy when what they do is visible on the blockchain?"

"What could NFT2.0 look like? What kind of regulations will happen and when?"

These are questions that I often ask myself and discuss with the team. What we keep coming back to is that businesses will need a way to work with blockchain technology that allows them to integrate it into their government-regulated industries.

I also ask often: "How do we as LTO Network grow to be a platform that contributes significantly to the Cryptosphere?"

The solution we have come up with is to be the layer that glues the traditional financial and business models to the crypto world, satisfying the needs of individuals, governments/regulatory bodies and businesses while being an asset to the blockchain world.

The Cobalt update is the first step we take toward transforming the LTO Network into a platform for new types of decentralized applications and fulfilling the needs of all of the stakeholders mentioned earlier.

A unique feature of LTO Network is its hybrid approach. Privacy-sensitive information can be sent peer-to-peer, while consensus is always done through the public node. This allows for privacy-aware DApps, where sensitive information is not shared between specific parties and not with the entire network. The Cobalt update focuses on LTO Network as an identity platform, implementing most of the features from the 2021 Roadmap, and putting us firmly on our course towards becoming a chain which provides a global solution.

Decentralized Identifiers

Decentralized Identifiers will ultimately allow users to control the personal data that is shared when users interact with digital enterprises. The LTO Network already supports DID's in a limited form when using the identity node. These are automatically generated using the public key that is captured for each public node transaction.

However, having a fixed public key for a DID document misses out on one of the biggest advantages of DID's in comparison with simple wallet addresses. The DID standard allows decentralized identifiers to add, and remove multiple public keys. This is done by adding verification methods that contain both a public key and a purpose. This ensures that one key is used to log into an application, while the other is used to issue verifiable credentials.

The new version of the LTO Identity node supports constructed DID's, with the possibility to add and remove verification methods. Verification methods are created through associations, which are indexed to generate a DID document.


The LTO Network has always prioritized integration with existing applications, which requires flexibility. Typically, blockchains support one cryptographic algorithm ("cipher") for signing. We utilize the ED25519 standard.

While ED25519 is a common and well-supported standard, there are other algorithms that are also commonly used. DID's allow for a whole range of ciphers, but often only a single one can be used due to limitation of the underlying layer.

With the Cobalt update, LTO Network now supports ECDSA with two curves.

  • secp256r1 is a NIST standard, commonly used in applications, as well as SSL certificates.
  • secp256k1 is a curve that is commonly used by blockchains, notably Bitcoin and Ethereum, but rarely used outside the world of cryptocurrencies.

Multi-cipher support means that you can now use an Ethereum public / private key set to sign transactions on LTO Network, as well as a DID verification method.

Trust Network

LTO Network provides a permission-less identity solution, meaning anyone is able to create DID's and issue verifiable credentials. For credentials it is up to the validating party to decide whether or not to trust the issuer.

Other decentralized identity platforms address this in an absolute way, like building up a blockchain-wide trust level, or they simply ignore this altogether. LTO Network takes a completely different approach, that best fits real-world application.

The identity node allows setting up rules for a trust network by resolving associations as a graph. From the trust network the roles of a DID can be determined, which in turn may be used to assess if a verifiable credential should be accepted.

It is not necessary to establish these trust networks globally. Instead they rely on the context of a project. A node used by Firm24 for incorporating companies is interested if a DID belongs to a notary, but will not care whether a DID belongs to a licensed fishing boat.

Querying the Graph

A fixed rule set for a trust network, with a dedicated root, works well for hierarchical trust models. However it cannot be used for user-centric trust models. In such a case, an application might if a DID belongs to a first or second level contact of a specific user.

The identity node optionally enables indexing associations using RedisGraph and querying them using GQL (Cypher).

Paying the Fees

The LTO Network focuses on both businesses and general consumers. While it's trivial to generate a public / private key pair, which automatically gives you an account, registering a DID for this account requires a transaction fee.

Accounts created for the use as DID cannot be expected to hold any LTO tokens, which means they cannot pay the fee. Requiring individuals and businesses unfamiliar with cryptocurrency, to obtain cryptocurrency from an exchange to create a DID record, is too much of a burden for most use cases.

The LTO Network already supports sponsorships, allowing accounts to sign and broadcast transactions without having to own and manage cryptocurrencies.

However, sponsorships are not a good solution for creating a DID account, since such an account will only do a single (or a few) transactions. Also, the owner of a DID cannot always be trusted not to abuse the privilege of having another party pay for all of their transactions.

Sponsored transactions are a new feature, where an account can co-sign a transaction to offer paying for the tx fee.

This feature is mainly intended for creating and managing DID's, but may also be valuable for other use cases like a pay-per-transaction service.

The Road Ahead

The LTO Network was initially designed to run decentralized workflows. The Cobalt update will not on its own, transform LTO Network into an identity platform, it simply adds functionality to its stack.

As a Layer-1 solution, the LTO Network acts as a platform to run decentralized applications. This does not mean that we are now competing with Ethereum or similar solutions. Instead it means that the LTO Network now has a unique set of abilities, which enable a different kind of DApp.

The upcoming updates will broaden the possibilities, moving away from a pure B2B solution, opening up the possibilities for other fields to start using the LTO Network. This is inevitable since trying to get a larger piece of the pie means that you will be competing with other projects.

The next updates will focus on self-owned data and peer-to-peer DApps. A field currently populated by Holochain. Together with these technologies we will have a robust platform that will draw developers from outside of the existing LTO Network sphere of influence and empower the next generation of blockchain applications, especially Private Aware Decentralized Applications (PADA).

The LTO Network aims to be the preferred choice for developers, by providing all the functionality needed to build privacy-aware decentralized applications.‌