IOTA upgrades its L1 to Move, accelerating its efforts on real-world adoption

BERLIN. November 18, 2024  –  The IOTA Foundation, a global non-profit foundation that develops next-generation decentralized technologies for a new digital economy, is proposing a fundamental transformation for the IOTA network called IOTA Rebased. This proposal, which is currently undergoing a token vote, would completely reshape the IOTA technology stack by switching the IOTA Layer 1 to a Move-based object ledger. This new ledger architecture will introduce programmability to the L1 with the MoveVM and will scale the network to tens of thousands of transactions per second and subsecond confirmation times. 

With this network upgrade, the IOTA Foundation wants to accelerate its adoption efforts. With the Rebased update, the IOTA network will be upgraded to a fully decentralized, highly performant, and production-ready protocol. This will make it possible for current adoption cases, such as trade and logistics supply chain tracking, tokenization of real-world assets, identity protocols for governments, and others, to finally deploy on the IOTA mainnet.

IOTA proposes full decentralization of the IOTA L1 DAG through a delegated Proof-of-Stake mechanism with 150 permissionless validators to secure the network. This will mean discontinuing the development of the IOTA 2.0 protocol and implementing an object-based ledger architecture on a DAG. The architecture would use the Move programming language to enable smart contract functionality directly on the L1 ledger.

By joining the Move ecosystem alongside Sui and Aptos, IOTA becomes the first L1 to upgrade to MoveVM.  With this rebase IOTA wants to position itself to become a leading global infrastructure that brings the real world on-chain.

By introducing Move-based smart contracts to IOTA, IOTA Rebased includes: 

• Fee burning and dynamic token supply: Guarantees fair tokenomics and aligned incentives 

• Rewards for token holders: Ability to earn staking rewards in IOTA tokens for token holders that secure the network through staking and delegation

• Benefits for stakers and validators: Initial target inflation of 6-7% per year will be issued to reward stakers and validators, yielding 10 - 15% effective APY in staking rewards based on utility

To secure the network, validators and their delegators would be compensated via newly minted IOTA 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.

To validate this release, the IOTA Foundation has developed a Move-based testnet alongside new software tools, including a browser wallet extension, explorer, SDKs, and an updated documentation portal. The IOTA Rebased Testnet is live today for builders and community members to try out. This testnet is accompanied by a voting proposal. Voting will commence over the following 4-5 weeks. Several weeks after the vote is successfully concluded, the IOTA mainnet will then be upgraded with the IOTA Rebased protocol.

“IOTA Rebased would significantly shorten our time to market to introduce programmability and full decentralization to IOTA, helping us to accelerate our adoption efforts and advance IOTA’s mainstream adoption,” says Dominik Schiener, Co-Founder and Chair of the IOTA Foundation. “We believe that this proposal has the best chance of creating significant value for IOTA, its token holders, and the ecosystem. The IOTA Foundation’s leading R&D team of more than a hundred team members will work on further improving the new IOTA network by improving consensus, decentralization, and fee markets.”

For more information, check out IOTA’s blog post here.