Thread by @navinram999

The tokenisation specifications released today have attracted a lot of interest. There is so much to delve into here, but first I wanted to talk about the ugly duckling that was also released today. The new #IOTA dust RFC:
github.com/muXxer/protoco…

1/n

This RFC is quite complex to understand, because we have tried to tackle many things at the same time, using an elegant unified system. So I will try to explain this as simply as possible.

Let’s start with why this dust protection is needed. What exactly is “dust”?

2/n

“Dust” refers to very very small amounts of cryptocurrency. So small that you would usually ignore it. If you trade on an exchange, you will likely see very small amounts of tokens, which you previously traded, still remaining in your account.

3/n

They were so small that they are now stuck in your account, as you don’t have enough to pay the fees for transferring this dust anywhere.

That’s one way you may see dust accumulate, because they are stuck due to fees.

4/n

But you may actually see dust accumulate as an attack:
gemini.com/cryptopedia/cr…

5/n

Dusting attacks can also “bloat the ledger”. This means that the amount each node needs to store will increase irreversibly, and cause the performance of the network to decrease. This is particularly easy if the network is feeless like #IOTA.

What does this actually mean?

6/n

Remember that 1 Mi (= 1 MegaIOTA = 1 million IOTA) is currently just over $1.30.

So I can send 1 million 1 IOTA transactions feelessly by buying IOTA for just over $1.30. It will take time to send all of these transactions, but it is easily doable.

7/n

Now if I send 1 IOTA to a million addresses using that 1Mi, it takes a lot lot more space to store that on the IOTA ledger, than 1 Mi on a single address. Why?

1 Mi on an address = store 1 address.
1i on a million addresses = store a million addresses.

8/n

(I have simplified this to avoid explaining utxo’s)

But we can see that we need a mechanism to stop people attacking the network by sending these dust transactions.

And this situation is made much worse by the introduction of native tokens and NFTs.

9/n

These new output types essentially behave like 1 IOTA transfers, but even worse, because they involve 0 IOTA.

So to prevent attackers filling up the database with nonsense data, we use the same protection.

But why is this not an issue with other cryptos?

10/n

Well it is!

But remember that the feeless nature of IOTA means that we encounter these problems well before other protocols. So, these are issues that affect everyone. We just have to try to be ahead of the curve to deal with them.

11/n

TLDR:
We have a really elegant solution to the dust problem which works really well with the new tokenisation framework.

Importantly is also begins to answer some tokenomic questions about #IOTA.

Let me know what you think and please comment in the RFCs.

❤️