Skip to main content

FAQ

tags: [tokenomics] teams:

  • iotaledger/research description: Frequently asked question about IOTA Rebased, Move and the IOTA Rebased Proposal.

FAQs

1. How does the MoveVM improve security and developer experience?​

MoveVM offers:

  • Resource-Oriented Programming: Secure and flexible asset management.
  • Strong Data Abstraction: Simplifies resource management tasks.
  • Static Verification: Detects errors before code execution, enhancing security.
  • Formal Verification Support: Allows rigorous validation of smart contract logic.
  • Improved Developer Experience: Reduces bugs and vulnerabilities through strict typing.

2. How can I participate in the testnet and provide feedback?​

To participate:

  • Join the Public Testnet: Access the IOTA Rebased public testnet to explore new features.
  • Provide Feedback: Use dedicated channels on the IOTA Builders Discord server or GitHub to report issues.

3. What are the hardware requirements for validators?​

Validators are expected to have:

  • RAM: 128 GB
  • CPU: 24-core processor / 48 vCPUs
  • Storage: 4 TB NVMe SSD
  • Network Uplink: 1 Gbps
  • Minimum Stake: 2 million IOTAs (can be delegated to your validator by someone else)

4. What happens to the existing IOTA EVM?​

The IOTA EVM on Layer 2 will:

  • Continue Operating: It will eventually run alongside the new IOTA Rebased Layer 1.
  • Integration Plans: Future plans include integrating EVM capabilities directly into Layer 1.
  • Temporary Pause During Upgrade: The EVM chain will be paused and upgraded but will resume normal operations afterward.

5. What are the key features introduced with IOTA Rebased?​

Key features include:

6. Why is IOTA moving to the MoveVM and an object-based architecture?​

The shift to the MoveVM and an object-based architecture is designed to:

  • Enhance Flexibility and Programmability: Allow complex applications to be written via smart contracts directly on L1.
  • Support Advanced Use Cases: Enable sophisticated financial instruments, decentralized exchanges, and intricate supply chain systems.
  • Improve Security: Leverage MoveVM features like resource-oriented programming and static verification to enhance security.
  • Simplify Development: Provide strong data abstraction capabilities and support for formal verification, improving the developer experience.

7. How will the tokenomics change under the IOTA Rebased proposal?​

The new tokenomics model includes:

  • Staking Rewards: Validators and delegators receive newly minted IOTA tokens as rewards (approximately 767,000 IOTAs per epoch), resulting in an initial annual inflation rate of about 6%.
  • Transaction Fees: Small fees are charged on transactions (around 0.005 IOTA for an average transaction) and are burned to create deflationary pressure.
  • Storage Deposits: A redeemable deposit is required for storage, similar to the storage deposit system used in IOTA Stardust.

8. How does staking work in the new tokenomics model?​

Staking involves:

  • Delegation to Validators: Token holders can delegate their tokens to validators to help secure the network.
  • Earning Rewards: Both validators and their delegators receive staking rewards from newly minted tokens.
  • Proportional Distribution: Rewards are distributed based on the amount of stake and validator commissions.

9. How will the new fee-burning mechanism work?​

The fee-burning mechanism:

  • Burns Transaction Fees: Collected fees are burned, reducing the overall token supply.
  • Deflationary Effect: Increased network usage leads to more fees burned, creating deflationary pressure.
  • Supply Dynamics: The mechanism balances inflation from staking rewards and deflation from fee burning.

10. How will the introduction of transaction fees affect users?​

Transaction fees are minimal and serve as a congestion control mechanism:

  • Low Fees: Approximately 0.005 IOTA per average transaction.
  • Fee Burning: Fees are burned to reduce the total supply, creating deflationary pressure.
  • Staking Rewards Offset Fees: Users can earn staking rewards that may exceed the cost of transaction fees.
  • Sponsored Transactions: Developers can cover transaction fees on behalf of users, allowing for feeless user experiences.

11. How will this affect current token holders?​

For current token holders:

  • Balances Maintained: All balances will be migrated to the new network without loss.
  • Same Private Keys: Users can access their tokens using their existing private keys in the new IOTA Wallet.
  • Staking Opportunities: Token holders can participate in staking or delegation to earn rewards.

12. Will there be any migration steps for users?​

No manual migration is needed:

  • Seamless Transition: The migration process is designed to be automatic.
  • New Wallet Access: Users will need to use the new IOTA Wallet and can import their existing mnemonics or private keys.

13. Will transaction fees impact the feeless nature of IOTA?​

Yes, but:

  • Minimal Impact: Fees are very low and designed as a congestion control mechanism.
  • Net Gain for Users: Staking rewards can offset transaction fees, potentially resulting in more tokens than before.
  • Sponsored Transactions: Developers can sponsor fees, allowing users to transact without holding IOTA tokens.

14. How will the governance vote work?​

The governance vote allows IOTA token holders to decide on the proposed upgrade:

  • Announcement Phase: The proposal is announced, and the community is informed.
  • Voting Open Phase (7 days): Voters cast their ballots before counting begins.
  • Counting Phase (7 days): Votes accumulate over time; each IOTA token accumulates voting power at a rate of 0.01 votes per milestone.
  • Quorum Requirement: A minimum of 5% of the circulating supply must participate for the vote to be valid.
  • Outcome Determination: The option with the majority of votes prevails.

15. What happens if the proposal is accepted?​

If accepted:

  • Mainnet Upgrade: The IOTA network will transition to the new IOTA Rebased protocol after thorough testing and audits.
  • Network Transition: A final snapshot of the current network will migrate balances to the new network on a 1:1 basis.
  • IOTA EVM Chain Upgrade: The IOTA EVM Layer 2 chain will be temporarily paused and upgraded to integrate with the new ledger.
  • Wallet Transition: The IOTA Firefly wallet will be discontinued. Users can access their holdings with the new IOTA Wallet using the same private keys.
  • Token Continuity: No token migration is necessary; tokens will be available immediately after the launch.

16. What happens if the proposal is rejected?​

If rejected:

  • Current Operations Continue: The IOTA network will continue operating as it currently does.
  • Future Decisions: The IOTA Foundation will decide on future development paths and how to proceed with network improvements.

17. What is the IOTA Rebased proposal?​

The IOTA Rebased proposal is a significant upgrade to the IOTA protocol that aims to enhance the network's capabilities by:

  • Transitioning to an Object-Based Architecture: Moving away from the current UTXO model to an object-based ledger.
  • Introducing the Move Virtual Machine (MoveVM): Implementing MoveVM to enable Layer 1 (L1) smart contract capabilities.
  • Establishing Full Decentralization: Adopting a delegated proof-of-stake (dPoS) system with validators and stakers to secure the network.
  • Updating Tokenomics: Introducing staking rewards, transaction fees, and a fee-burning mechanism to create a dynamic supply.

18. What is the future roadmap for IOTA?​

The future roadmap includes:

  • Protocol Refinements: Enhancements like resilient consensus mechanisms and fairer gas pricing.
  • Multi-VM Ledger: Transitioning to support multiple virtual machines, including EVM, on Layer 1.
  • Tooling and Products: Developing new wallets, SDKs, CLI tools, and identity solutions.
  • Mainnet Launch Timeline: A potential launch in early 2025 after thorough testing and audits.

19. Why is IOTA making this change now?​

The change addresses:

  • Market Demands: There's a clear need for Layer 1 programmability and smart contracts to meet modern application requirements.
  • Technological Evolution: The new architecture allows for faster, more secure, and scalable solutions.
  • Avoiding Delays: Continuing with the current roadmap would require additional years of research and development with uncertain outcomes.

20. Where can I find more information and stay updated?​

Stay informed by: