Another “veteran” cryptocurrency has added smart contracts to its network. IOTA is very different from other cryptocurrencies: For starters, it doesn’t run on the blockchain, using a slightly different technology instead. Now it also features smart contracts, though currently still in beta version.
The official blog of the IOTA project released a message that smart contracts started working in beta mode on the IOTA 2.0 DevNet test network. They support the Ethereum virtual machine (EVM), Solidity, Rust, and Go languages, immediately laying a powerful foundation. In addition, the developers promise the community minimum commissions and maximum scaling.
Let’s briefly remind ourselves what the IOTA project is. One of the oldest cryptocurrency projects, it was launched in 2015 after a year-long development. Its “founding fathers” were a team of mathematicians made up of Dominik Schiener, Sergey Ivancheglo, Serguei Popov, and David Sønstebø, who headed the enterprise. The IOTA Ecosystem Fund, established by the founders, is responsible for developing this crypto project. It funds research and the introduction of new technologies into the system, as well as support for startups.
The difference between IOTA and the overwhelming majority of crypto projects is that, rather than the blockchain, its network uses the much newer Tangle protocol. It’s a so-called acyclic graph – a method of cyclic data transfer in which cycles can be executed simultaneously. As a result, any transaction made by a user in the system automatically confirms two transactions from other users performed immediately before.
This approach allows for a dramatic reduction in transaction processing time and minimizes user commissions (for the original IOTA network, those are basically zero). It also provides for unlimited system scalability unattainable for blockchains.
The project’s initial focus was the “Internet of Things” (IoT), which is where the very name “IOTA” comes from. Back when it was launched, no one was really thinking about decentralized finance – it was all about the IoT. However, during the current DeFi boom, we have clearly seen that it’s the “new finance” that demands the ability to perform multiple operations at a time and the high processing speed with unlimited scalability. The “Internet of Things”, on the other hand, is not progressing as fast as people thought it would 5-7 years ago.
Now the IOTA Ecosystem Fund specialists are optimizing and porting smart contracts to the main IOTA network. For them, it is fundamentally important to ensure compatibility with other networks from the outset. Any contracts working with Ethereum and written in the Solidity language can be immediately transferred to IOTA. Placing new contracts is allowed without asking for permits, auctions, or payment. The developers can set charges for transactions themselves, which creates competition within the IOTA network and encourages them to establish the lowest possible (down to zero) commissions for smart contract execution.
Moreover, they have complete freedom in defining tokenomics and contract attributes. This is done in the interest of NFT marketplaces and decentralized exchanges.
You can already see the work of smart contracts on the GoShimmer test network. To reduce barriers, all fees are set to zero. After testing the new functionality, it will be transferred to the main IOTA network, which now operates at a speed of 1000 transactions per second – quite enough for the comfortable operation of smart contracts. In GoShimmer, users will also be able to run their test validators.
So far, the announcement of smart contracts being introduced to the IOTA network has not caused any significant growth for the MIOTA token. Its last peak value – $ 2 – was reached in early September, but it was noticeably lower than $ 2.50 in April. At the moment, MIOTA is trading at $ 1.37 with a $ 381 billion capitalization and a total of 2.78 billion tokens in circulation.
Still, all is set for a significant boost in the value of IOTA cryptocoins after the full launch of smart contracts on the main network, which will undoubtedly enjoy great demand in the DeFi segment. Especially considering that IOTA is ready to accept projects in their expansion stage that are looking for new networks to launch.