- IOTA Rebased: Unlocking New Possibilities
- What is the Promise of IOTA Rebased?
- 1 - Making the Move: UTXO —> Object-Based Architecture
- 2 - The New Horizon: A Multi-Environment Future
- 3 - All Things New: A New Flurry of Products
- 4 - Building a Win-Win: The New Tokenomics Model
- Final Thoughts
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IOTA Rebased: Unlocking New Possibilities
What is the Promise of IOTA Rebased?
In a groundbreaking development for the IOTA ecosystem, the proposed IOTA Rebased initiative promises to revolutionize the protocol's capabilities and unlock new possibilities for developers, users, and validators alike. This comprehensive upgrade introduces significant architectural changes, moving from UTXO to an Object-Based model, while bringing smart contracts directly to Layer 1 through multiple execution environments. With a revamped tokenomics model and an array of new developer tools and user interfaces, IOTA Rebased represents a pivotal moment in the protocol's evolution, positioning it as a more versatile, secure, and sustainable distributed ledger technology platform.
More security, faster txn resolution, greater decentralization, higher staking rewards. IOTA Rebased is a major overhaul that can send ripples across the DeFIverse.
Check out the proposal for IOTA Rebased, that was passed in December 2024.
1 - Making the Move: UTXO —> Object-Based Architecture
The Move Virtual Machine (MoveVM) will enable a transition from the UTXO model to an Object Model. What does this signify? This change will upgrade the network's flexibility and programmability, thereby allowing for the creation of highly complex applications through smart contracts. Imagine what can be develeped? Advanced financial instruments, DEXs, complex supply chain systems, and many other applications that the UTXO model in previous IOTA protocol versions couldn’t support.
Let’s look at some of the key upcoming features:
- Flexibility: Resource-oriented programming, facilitating secure and flexible digital asset management.
- Efficiency: Data abstraction capabilities, streamlining complex resource management tasks.
- Security: Static verification, enabling error and vulnerability detection before code execution and at compile time, enhancing security. Also, support for formal verification comes into play, allowing for thorough validation of contract logic.
2 - The New Horizon: A Multi-Environment Future
MoveVM is just the beginning. IOTA Rebased will be incorporating multiple execution environments directly into the Layer 1 protocol. This means - bringing the EVM onto Layer 1. That’s groundbreaking.
Why is this so important? By integrating the EVM at the core protocol level, IOTA will now enjoy the same high-level security and decentralization as the rest of the network. The goal is to ensure that the existing dApps deployed on the IOTA EVM (currently an L2 network on IOTA) stay alive and flourish in the long run, while getting integrated with the rest of the ecosystem. What happens next? This step will allow the IOTA ecosystem to diversify at lightning speed and also enable developers building on it - a new playing ground of option, without decreasing security in any way whatsoever. Also, think about the tokenomics. By moving EVM with all its txns and smart contract operations to L1, network usage will be at a an all-time high, and that will also increase the amount of burned IOTA tokens as fees - which would further contribute to the deflationary part of the tokenomics.
3 - All Things New: A New Flurry of Products
With these new developments at the core of IOTA, there also is coming a massive new lineup of products to support the new users and activity that’s going to hit the IOTA ecosystem. Here are some of the key products that are being built right now, gearing up towards the mainnet launch .
- IOTA Wallet Browser Extension and Dashboard dApp
The new IOTA Wallet browser extension will offer a user-friendly interface for managing IOTA tokens, supporting all the usual expected functionalities such as staking/delegating tokens and managing assets. The IOTA Wallet will replace Firefly, and token holders will be able to simply import their secrets/mnemonics into it to manage the same accounts they had before.
- SDKs & CLI:
IOTA team will be providing updated SDKs for Rust and TypeScript developers, as well as comprehensive documentation, tutorials, and examples. They are also offering a new CLI for interacting with smart contracts and validator tools for setting up and managing validator nodes. To support smart contract development, they're also offering IDE plugins for Move language development, along with testing, deployment, and security analysis tools.
- Identity SDK:
IOTA Identity has been upgraded to the new Move base layer while keeping the API as backward-compatible as possible. The programmability of the base layer allows IOTA to significantly extend the capabilities of the identity solution.
- IOTA Rebased Explorer:
The IOTA explorer has been completely redesigned to provide detailed insights for IOTA Rebased in terms of network activity, real-time tracking of txns, blocks, and validator metrics. It also gives an overview of what’s going on in the network.
4 - Building a Win-Win: The New Tokenomics Model
IOTA will move from being a feeless protocol to having txn fees. But, this is done with the objective of improving the experience for developers, token holders, and validators. The logic is that the high staking rewards will any day be higher that costs of the txn fees. In other words, despite paying fees, participants would ultimately end up with more tokens than they started with as the transaction fees are so low compared to the staking rewards earned. Additionally, there would also be sponsored transactions - and this feature would allow application developers to create services that don't require their users to own or buy IOTA tokens by covering the transaction fees on their behalf. The new proposed tokenomics model is designed to achieve three goals:
- Long-term sustainability
- Secure decentralized network
- Incentivization of network participation
Here are the major changes that are going to happen to the IOTA staking system:
- To secure the network, validators and their delegators would be compensated via newly minted tokens. Per epoch, 767k new IOTAs would be minted and distributed to validators/delegators in the form of staking rewards. This would mean that the supply would grow ~6% in the first year and then gradually decline as the rate of 767k stays constant. Staking rewards would be distributed to validators/delegators proportionally to the overall stake while taking into account the commission set by the respective validator.
- Transactions incur a small fee which would be burned to set deflationary pressure on the supply. This means that network utilization directly impacts the inflationary/deflationary nature of the dynamic supply. The initial gas price would be set to 1000 Nanos per computation unit (1 Nano = 0.000000001 IOTA) which translates to around 0.005 IOTAs for an average-sized transaction.
- The minimum staking requirement to become a validator would be set to 2M IOTAs and there would be initially a maximum of 150 validator seats. Note that validators wouldn’t have to come up with the minimum staking requirement by themselves but could leverage the stake assigned by delegators to overcome the minimum requirement.
Final Thoughts
This is a major landmark in the roadmap for IOTA, and the possibilities it unlocks are game-changing, to say the least. IOTA Rebased is going to set a precedent in how an ecosystem, its devs and the community can rally together to build real-world use-cases for crypto and increase its adoption.
We at encapsulate.xyz are one of the 50 chosen validators selected to particpate in the IOTA Rebased testnet and we’re super pumped to help the IOTA ecosystem go to the next level during the mainnet launch and be part of the IOTA family for all future network upgrades.
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