This former top-10 crypto could be in for an eventful 12-18 months ahead.
IOTA history overview
The project launched in 2016 after a $590,000 token sale the year before. Its main focus is to be the go-to platform for the “Internet of Everything”, seamlessly connecting with and sharing information between humans and machines.
After peaking at the 7th spot in December 2017 regarding the circulating market cap, many believed IOTA stood a chance of rivalling Ethereum, as was the case for many projects that emerged from the ICO craze in 2017 and 2018.
It appeared to be following in the footsteps of EOS – one of the most hyped blockchain projects to take on Ethereum that failed to live up to expectations, especially after EOS’ $4.1 billion ICO.
Most of these so-called “Ethereum killers” faded away from the spotlight and, dare I say, completely vanished into the ether.
Up until recently, I would have put IOTA into this category. However, it appears to have started defying this trend, up by roughly 60% for the week and reversing its 2023 losses in a matter of days.
IOTA/USD historical price chart and 24-hour volume. Source: CoinMarketCap. Snapshot taken on 9 December 2023 at 05:15 UTC.
Despite the 100% rally over the past seven days, it is still a long shot from its all-time high of ~$5.30 in December 2017.
Nonetheless, its price surge, bullish momentum across the asset class and a recent $100M partnership announcement have re-ignited interest in this project amid an increasingly competitive landscape—more on the latter in the ‘Partnerships and news’ section.
The technology behind IOTA
Unlike most ecosystems that utilise blockchain tech, IOTA became one of the first major protocols in crypto to adopt a different form of distributed ledger technology called directed acyclic graphs, commonly known as DAGs. This protocol specifically uses one called The Tangle.
Some consider DAGs to be a superior form of DLT. A major advantage is having no intermediaries, unlike dedicated miners and stake pools/delegators for Proof-of-Work (PoW) and Proof-of-Stake (PoS), respectively. This helps keep fees ultra-low and contributes to faster transactions, about a fraction of a cent.
Besides IOTA, projects including Kaspa, Hedera and Fantom are notable examples that utilise DAGs.
This IOTA blog post expands on the benefits of DAGs and why it chose this setup over blockchain tech. Those behind Hedera also share their thoughts about this DAG architecture. I also recommend viewing the (original) 2016 whitepaper about The Tangle.
🌐 An obvious choice: We adopted a #DAG architecture to overcome the limitations of blockchain technology. Read our latest blog post to understand how a DAGs’ collaborative approach aligns with #IOTA 2.0 objective of #DigitalAutonomy For Everyone. 🔗https://t.co/gCczOa3tgJ pic.twitter.com/PGsLjnsXlC
— IOTA (@iota) November 8, 2023
Partnerships and news
$100M collaboration in the UAE
It garnered much attention between 2017 and 2019 when it began to get some partnerships under its belt: Jaguar Land Rover, Volkswagen (including a former Chief Digital Officer joining the IOTA Foundation), Fujitsu, Bosch and others.
Unfortunately, many of these announcements were made pre-2020, and little progress has been publicly announced. Even if various collaborations have progressed since then – behind the scenes or otherwise – (crypto) media outlets have not covered much IOTA news, at least not compared to Ethereum, Cardano, Solana, Chainlink, etc.
Despite this, there is one major collab fresh off the press, which has re-ignited interest in IOTA:
The newly established IOTA Ecosystem DLT Foundation is the first DLT entity registered in the Abu Dhabi Global Market (ADGM) in the United Arab Emirates (UAE).
“The IOTA Ecosystem DLT Foundation will be seeded with over $100 million in IOTA tokens for nurturing the IOTA ecosystem and accelerating the growth of the IOTA protocol in the region, fostering community-driven initiatives and regulatory synergy.”
IOTA Blog, 29 November 2023
This $100M in IOTA will be granted to the Foundation over four years. I am glad this will be distributed in stages instead of all at once, as it will help maintain sustained interest in the project unless somewhat changes abruptly.
Cardano x IOTA
As Elliott Lee from Techopedia pointed out, greater connectivity between Cardano and IOTA could significantly boost volumes; the former is a top-10 crypto with >$21 billion circulating market cap, processing billions of dollars in 24-hour trading volume.
In an August tweet from IOTA co-founder Dominik Schiener, he mentioned the plans to “bring Cardano and Shimmer/IOTA closer together.”
I eventually expect IOTA to be compatible with Cardano, as with interoperability between IOTA and Ethereum via the Shimmer Ethereum Virtual Machine (ShimmerEVM).
Since September, this has allowed IOTA devs to develop applications and run smart contracts on the Ethereum-compatible chain before migrating these to the IOTA mainnet.
This IOTA Wiki piece explains how to connect to the ShimmerEVM.
Stardust upgrade and IOTA 2.0 (“Coordicide”)
In October, the IOTA Foundation forked the existing (Chrysalis) IOTA network to create a new system based on the IOTA Stardust protocol. This comes after more than a year of testing on the Shimmer network.
Two key benefits of this new setup are smart contracts functionality on IOTA and the possibility of connecting L2 chains to this updated system.
As a result, we have two separate ecosystems: IOTA (2.0) and IOTA Classic. The former has an increased supply and a different denomination, which I will expand on in the Tokenomics section.
Further details about these major chances are available here.
In recent years, there has been a discussion about the deployment of Coordicide – the plan to gradually remove the coordinator node to make IOTA a fully decentralised system.
IOTA relies on a centralized Coordinator to provide security given the risk of dishonest actors seeking to undermine the nascent network.
The Coordicide whitepaper, p. 4, May 2019
For anyone seeking updated information about this, this project has now been incorporated into the new version of IOTA, according to its revised roadmap (see ‘IOTA 2.0 Devnet’ and ‘IOTA 2.0 Protocol Upgrades’ for references to removing the network’s coordinator node.
It’s easy for laypeople and even competing projects to criticise IOTA devs with delays for this key upgrade. However, it is a difficult and time-consuming process to fully deploy his upgrade in a way that minimises interruptions to IOTA, particularly for maintaining network security.
This ties into the broader concept of the Blockchain Trilemma, involving scalability, security and decentralisation, whereby all crypto projects have had to trade off one of these factors (e.g., scalability for Bitcoin) to successfully and consistently achieve the other two.
For most of its existence, IOTA circulating, total and max supply was capped at ~2,779,530,283 pre-mined IOTAs (representing 2,779,530,283,277,761 micros, per the Stardust units – see below).
However, since the Stardust upgrade two months ago, the total and max supply has gone from ~2.779 billion to 4.6 billion IOTA.
Further details about how the additional ~1.8 billion IOTA will be distributed in the coming years are available in the IOTA Token Wiki entry. Here’s a great visualisation of the breakdown of the existing (~2.779B) max supply to the updated one. This also alludes to the IOTA Airdrop for Assembly stakers.
The IOTA Foundation has revamped the project’s tokenomics, leading to a 1,000,000:1 denomination reduction. Source: IOTA Blog – Stardust Upgrade IOTA Tokenomics
This is a sensible move, considering IOTA’s low price and high supply (in the billions). The old base and metric numbering system made it too confusing for the layperson, not to mention far too many zeros to express a small number of tokens in $ value.
This was done through ASMB and SMR as IOTA (Classic) was a pre-mined project, with all MIOTA tokens being released at launch. This differs from most PoS networks that issue staking rewards using the same (native) asset.
However, as of August 2023, ASMB finished its sixth (and what appears to be its final) round of staking. The focus now is on IOTA and SMR, with their respective networks.
This involves going through the official wallet, Firefly IOTA. When it launched in 2021 – replacing the original Trinity Wallet – ASMB and SMR were available for staking through just one wallet app.
However, Shimmer now operates through a separate app (Firefly Shimmer), which is available by creating a wallet with a mnemonic seed phrase or a Ledger device. Moreover, it can be purchased on Bitfinex, BitForex, Soonaverse and Iotabee.
Unfortunately, IOTA and its tokens are currently unavailable on Trezor devices or other hardware wallets, at least not that I am aware of.
After being very bullish on IOTA in the early days, I became less enthusiastic about this project as Ethereum, Cardano, and other blockchains took off in recent years.
However, I have never sold my tokens, as I believe this could always come back in the future in a different iteration, which appears to be underway.
On top of this, when I saw the prices continuing to drop throughout the bear market, I told myself there was little point in selling the tokens that got down a couple of hundred dollars; let’s see how it all pans out.
Three other factors stood out for me that made me realise this protocol still has legs:
1) The Coordicide upgrade and the general push to fully decentralise IOTA. I know these things take lots of time and effort, and there will be hiccups along the way, particularly if other projects are anything to go by.
2) The novel concept of the Internet of Things (IoT) and the potential role IOTA or another crypto asset would play in this. In a nutshell, IoT involves a deeply interconnected system of millions/billions of devices communicating with each other in real-time, involving all aspects of society.
3) The network still has strong developer activity, with more than 12,000 commits over the past 12 months, the fifth highest out of all crypto projects.
Mind you, more commits don’t always translate to a better product.
I am no developer, but as with many things in life, quality is often held in a higher regard than quantity…unless you have consistently low standards…
Yet, it has maintained a strong online community and has weathered two brutal and lengthy bear markets since January 2018, even though it has slid down the rankings.
As I anticipate massive growth in this subset of technology and AI, at least one entity will emerge as a dominant player in the IoT niche. As tech is not there…yet, this is another reason why I have told myself to be patient with this.
Like Cardano, it could be another case of “slow and steady wins the race.” Then again, it is possible that a rival chain – and do not forget, there has been a lot more competition since IOTA’s heyday in 2017 – will come along and provide a superior product.
The best way for IOTA to stand out from its competitors is for its Foundation and devs to provide a consistently superior product that will compel big businesses to collaborate with them…actual formal partnerships. I am alluding to the claims made in 2017 that IOTA teamed up with Microsoft, only to be debunked.
Compare this to the Enterprise Ethereum Alliance, which has over 100 members, including Microsoft, JP Morgan Chase Bank, Ernst & Young, FedEx, Banco Santander SA, and Accenture, to name a few.
How realistic is a comeback in 2024? I’m 50/50 about it, especially with how much more competition we have in this space and how established players – Ethereum, Cardano, Chainlink, Solana, Avalanche, Polkadot, etc. – have maintained their dominance whilst IOTA has slipped out of the top 50.
In conclusion, if you’ve got skin in the game and believe in IOTA, stick with it, but remain informed and adjust your portfolio accordingly.
Best of luck.
Ways to follow IOTA (Foundation) updates and news
– Official website
– Research papers
– R&D roadmap
– X (Twitter)
– News and blog
– Discord (including Shimmer discussions)
– Tangle Explorer
– IOTA Wiki
– IOTA GitHub page
– Open-source technology used by the IOTA Foundation
- HackerNoon article covering PoW, PoS, their pros and cons and how they compare to DAG systems.
- Video by Whiteboard Crypto, titled ‘What is IOTA’s Tangle? mIOTA Explained with Animations.’
- X (Twitter) and Medium pages of David Sønstebø – IOTA co-founder.
- N.B. None of this is financial advice; I am not a financial advisor. You are ultimately responsible for crypto investments, let alone in any asset class.
- The opinions expressed within this piece are my own and might not reflect those behind IOTA Foundation, IOTA devs, any news outlet, person, organisation, or otherwise listed here.
- Please do your\ research before investing in any crypto assets, staking, NFTs, or other products affiliated with this space.
- For transparency, IOTA accounts for about 1% of my crypto portfolio.