originally published on October 6, 2021
This deep dive was made possible after a conversation I had with the Head of Product, Mathieu Tahon. Whether this is the first time you have heard of Winding Tree, or you have been following them since 2017, this article covers the basics and what is coming for the company. From now on I will refer to Winding Tree as WT. If you need a refresher on the current applications of blockchain technology and the main problems these aim to solve, you can reach my last newsletter:
Launched in 2017, WT was one of the first projects that aimed to decentralise the world of online travel distribution. It claimed to offer a viable alternative for travel suppliers, which were using distribution solutions such as Amadeus, Sabre, Booking, or Expedia.
Since I started looking into WT, I’ve taken many different steps to try to understand what they are up to; reading their White Paper, blogs, articles, joining their Telegram chat, looking into developer documentation and GitHub repositories, all things I highly recommend you do (links at the end). However, if you are new to the world of blockchain technology and online travel marketplaces, I believe that the best way to understand it is to look at the products that make this decentralised travel distribution possible.
But before I give you a breakdown of each of these, let me explain the underlying technology the WT team has leveraged to build their ecosystem.
If this is the first time you have read the term ‘smart contracts’, get ready for a short explanation. In one of my last newsletters, I gave a very brief explanation about what blockchain technology is, and explained that today the use cases have expanded well beyond digital currency. This is mainly thanks to smart contracts, a term initially coined by Nick Szabo in 1994 (some suspect he might be Satoshi Nakamoto). However, the term was popularised by Vitalik Buterin with the creation of Ethereum (today the second-largest cryptocurrency by market capitalisation).
Nick Szabo defined a smart contract in 1994 as “a computerized transaction protocol that executes the terms of a contract”. That definition still stands today, but it has been expanded and brought to life thanks to the original Ethereum White Paper published by Vitalik Buterin in 2013. Thanks to its open-source nature, Ethereum has allowed developers to create decentralised applications (dApps) with a very high amount of flexibility.
Here is an example, let’s take traditional supply chains, which still require a high number of approvals and due diligence to reduce risk or fraud when making deliveries or payments. Now, we can create smart contracts that executes:
if x amount of flour is delivered
then pay the supplier x amount per kilo.
It seems simple, however, this entire process often requires more than a smart contract - and some will often call them dumb contracts. This is because for most smart contracts you still need a connection to the real world. That is where oracles come in; oracles are a third-party service that provide smart contracts with external information, serving as bridges between blockchains and the outside world. In the example I gave above that could be the data from the scale weighing the flour (click here for more information on oracles).
Another popular oversimplification to understand the difference between Bitcoin and Ethereum is to think of Bitcoin as a calculator and Ethereum as a smartphone.
So how does WT leverage smart contracts?
WT uses the Ethereum network to create permissionless access to its marketplace. However, as most projects built on top of Ethereum do, WT created and issued their own native token and side-applications, which provided the functionalities needed to run an online travel marketplace. The token is called Lif and fuels the ecosystem by verifying all the transactions that happen in the marketplace. So, to be part of the marketplace and expose inventory, suppliers need to have a Lif stake. WT is currently writing a second white paper, and I suspect that it will contain some key updates about the functionalities and purpose of the Lif token within the ecosystem.
Smart contracts are not created every time a booking happens on the platform; that would not even be possible with the current capabilities of the Ethereum network in terms of transaction speeds and costs. The only time a smart contract transaction is created is when an organisation becomes a verified member of the marketplace, which is why to become a member you must pay a transaction fee in ETH, Ethereum’s token. However, users will then send transactions to the smart contract to modify the state of the blockchain.
Here is an overview of the products that make the WT ecosystem a viable alternative to current OTAs and GDS.
**This is the heart of the WT ecosystem and the first “product” that was built by the team. It enables people to join the network and start exposing their inventories. The team has worked towards removing the barriers to joining the marketplace by making it a simple process. However, there are still steps that involve using a cryptocurrency wallet (such as Meta Mask) After you have been registered on the marketplace you can start adding your API endpoint (which enables you to expose inventory and receive bookings). It might not be as simple as signing up on Booking.com or Expedia, but I believe that WT will eventually get there, which will be key to driving adoption.
The marketplace already has a few pages of registered institutions, including travel agents, booking platforms and hotels. What is less clear is whether companies such as Lufthansa, KLM and Etihad are actively using the marketplace, despite announcements of their adoption in recent years.
**Glider is a set of two products, which act as real-life examples of ways to use the WT protocol to sell or buy travel products.
**By clicking on glider.travel you can see a simple example of an OTA built by the WT team. I believe the goal was to give an example of an OTA and empower people to get started and build OTAs on top of WT. You can also technically copy the open-source code here and start your own OTA on top of WT. However, it is not as simple as building a website on a no-code platform as many integrations and developments are still needed, especially on the back-end.
I wonder if any successful projects have been able to fully build an OTA on top of WT? Having been involved in a similar project at the start of this year it was not as easy as it seemed. However, the WT team was very helpful and provided our team with a lot of guidance. I hope that in their upcoming plans to increase the adoption of WT, more development is done on the Glider OTA to make it easier to use the WT protocol. This will be especially important when it comes to building the back-end infrastructure needed to connect inventories and the content from hotels and airlines.
**The Glider Aggregator is a back-end service that forwards the booking requests received from the WT marketplace to airlines and hotels. Again, the code is open-source and offers documentation on how to make requests to the marketplace. Nevertheless, the same problem remains that non-tech-savvy travel agents won’t necessarily understand how to start buying inventory. Most importantly there needs to be a large amount of inventory to attract users to start using this channel.
**Rooms is a more recent and very exciting product built by WT, which offers a lightweight solution for suppliers that don’t necessarily use APIs, a CRS, or a PMS. Any supplier can log into Rooms, add their available inventory with a friendly interface and start accepting bookings throughout the WT marketplace. Again, the code is open source for anyone to contribute or use.
I believe this will be a key product to drive adoption with smaller suppliers, who frequently end up paying the highest commission fees as they have less leverage in negotiations with OTAs. Additionally, given that WT Glider Aggregator only integrates with eRevMax, a CRS and PMS for hotels, it is important to allow hotels that work with different PMS or CRS to start connecting to the WT ecosystem while the integrations are developed. On the airline side, WT confirmed that they are integrated with Air Canada.
**Launched at the start of this year, ORGiD is a Self-Sovereign Identity (SSI) Solution for organisations. It functions as a decentralised business registry that makes it easy to verify someone's identity. The main goal is to increase trust within the network by limiting the possibilities for scams or phishing attempts, which have been on the rise in the blockchain space [source]. Even though some community members might wonder why WT focused on creating this solution and not on expanding the adoption of the eco-system, I believe it was a key component to truly make WT a trusted permissionless marketplace.
All of these products come together to create a more efficient model for online travel distribution.
The WT team has been working on some major updates and solutions to solve some of their problems, such as the lack of adoption or clarity around the project.
**In response to many requests from the community to update the original Lif token, a new token was released in September. The new token will enable more compatibility with the growing Ethereum ecosystem, allowing holders to trade it on decentralised exchanges, such as Uniswap, and potentially allow for use cases on layer 2 solutions, such as Optimism. All in all, this expands the scope of the Lif token as well as making it a more attractive project. For a full list of details on the new token click here.
**White Paper v2
**The WT team has started writing a new White Paper. The reason for this is because the original White Paper, published in 2017, is outdated as most of the goals and aspirations have been achieved. Expect a strong focus on how the team plans to grow adoption, an updated Roadmap and an explanation of the new Lif token. You can check out the new White Paper under construction here.
Simard OÜ is a licensed travel agency independent of the WT Foundation and accredited by the IATA. Up until now, it seems to have only been used to accept payments. However, a few weeks ago simard.io showed up and had a simple countdown clock. After some speculation on the Telegram chat, the countdown ended and the announcement was very vague; check it out for yourself. I received limited information about this, but I can share that it will be a for-profit entity, which will be a key player in driving the adoption of the WT protocol. The goal is for it to mainly offer services to larger companies that want support in integrating with WT.
In my opinion, this is a very smart strategy, similar to the one taken by the Cardano network, which has formed a trinity of the Cardano Foundation (the non-profit legal custodian), IOG (the engineering arm) and Emurgo (consulting services).
**Becoming a DAO
**Finally, WT has taken some steps towards becoming a decentralised autonomous organisation (DAO). An example of this can be seen on Snapshot, where holders of Lif have been able to have an input on governance by choosing and creating proposals or voting on them.
My next newsletter will most probably be an in-depth guide to the world of DAOs, so if you are an expert or enthusiast feel free to reach out.
WT is unique with regards to its solution of creating a permissionless marketplace for the entire travel industry. However, there are more projects that are implementing blockchain technology in different ways; here are some of them:
Here are some useful links if you want to learn more about WT: