Thread by @dariuskohsg

1/32 In this deep-dive, no BS, pure #ALPHA thread, we will review the long forgotten @iota and its smart contract layer @assembly_net.

2/32 Many blockchains are pursuing modular solutions that offer different trade-offs between security and performance. And, one of which is Assembly smart contract layer on IOTA.

3/32 History of IOTA
In 2017 18, IOTA differentiates itself from other L1s with the DAG (Directed Acyclic Graph) data structure. With its original Tangle ledger model and high TPS, it occupied a spot on the Top 10 list of cryptocurrency market capitalization for quite some time.

4/32 Later, when the entire blockchain industry entered the "Defi Era" and the marketplace became dominated by smart contracts, IOTA seemed to simply disappear.

5/32 Simultaneously, the representatives of DAG-type public chains have been replaced by a new generation of support contracts typified by Fantom and Avax.

6/32 The characteristics of the IOTA1.0 era are as follows:
- High concurrency, high TPS
- Based on an Unspent Transaction Output (UTXO) model, same as BTC, which means no gas fee
- Doesn't support smart contracts
- Centralized coordinator (provided by the foundation)

7/32 Note that UTXO ledger is superior to the account model represented by ETH and loses out in terms of Turing completeness and functionality.

8/32 IOTA2.0 after rounds of refinements is very well positioned to meet the requirements of a modular public chain in the Web3.0 era. Here are some of its new chararacteristics
- High TPS: The DAG data structure of the underlying Tangle ledger ensures high concurrent TPS

9/32 - Scalable: a multi-chain network similar to Cosmos or Polkadot that can continuously deploy new contract chains
- EVM compatible and supports Web Assembly
- Developers can flexibly customize the incentives and fees of each chain, etc.
- No MEV
- Sharing Security

10/32 IOTA achieves this by being the L1 of Assembly network, which features an underlying DAG-based UTXO, and only needs to be responsible for settlement and doesn't need to process any contracts or run Dapps.

11/32 Not supporting smart contracts would be an advantage here, because there will not be any DAPP from L1 competing with L2 for resources.

12/32 At the same time, L1 processing has a huge advantage in the number of L2 supported, as it can theoretically sustain massive high concurrency under the UTXO and DAG models.

13/32 Assembly itself is similar to the node verification of other public chains in that it provides POS stake of its own token ASMB. If there is an error or any type of malicious behavior, it will be slashed.

14/32 The ASMB token is also the governance certificate of the entire Assembly ecosystem, including the chain?s configuration, committee rotation parameters, gas fee settings for each chain, etc.

15/32 So what is Assembly exactly? Assembly can be regarded as "Layer 1.5" which is a smart contract architecture layer. Therefore, each smart contract chain built on Assembly would end up forming the real L2.

16/32 Also, Assembly itself is similar to the node verification of other public chains in that it provides POS stake of its own token ASMB. If there is an error or any type of malicious behavior, it will be slashed.

17/32 The ASMB token is also the governance certificate of the entire Assembly ecosystem, including the chain's configuration, committee rotation parameters, gas fee settings for each chain, etc.

18/32 Since Assembly is exploring a multi-chain parallel structure, sharing security is of utmost importance.

19/32 As long as there exists a scenario involving cross-chain call, the chain with the poorest security will inevitably become the weakest short board of the barrel theory, thus affecting the overall security of the barrel.

20/32 Assembly uses a form similar to the Rollup, the ETH2.0 fraud proof. In this instance, each verifier stakes assets as a security guarantee.

21/32 Therefore, any third party can provide fraud proof when the verifier updates the wrong chain status by monitoring the activity of the chain. They can even get rewards in the process.

22/32 This incentive structure helps ensure that as long as there is an honest verifier in the committee, the state of the chain will be protected from malicious transitions.

23/32 As, IOTA's L1 does not support smart contracts for staking the assets of the verifier, "ruling" fraud proofs, and slashing staked assets to ensure finalisation on both source and destination chain, the best solution would be to create a separate smart contract chain on…

24/32 …Assembly. This would allow for the implementation of all the necessary verification and validation logic and maintain responsibility for the security of all other smart contract chains.

25/32 This special chain is called the "root chain," and it has the highest security because, according to the whitepaper, its verifiers include a unique set of nodes.

In the IOTA 2.0 ledger, the root chain verifiers will be chosen from so-called "high mana nodes."

26/32 High-mana verifiers are the owners of L1 IOTA nodes. They are selected on L1 nodes in a decentralized manner using access mana and consensus
mana as weighting factors.

What is the Mana system about? It was one of the key features introduced in IOTA 2.0.

27/32 Due to the absence of a blockchain in IOTA, they have to use the "mana system" to prevent Sybil attacks and controlling network congestion as core requirements of security and functions.

28/32 Mana was developed to measure the impact of various modules, including FPC voting, dRNG (distributed random number generation), autopeering (automatic pairing), and congestion control. One might think of it as a set of methods similar to the node reputation system.

29/32 The higher the Mana value, the higher the integrity and security of the node. Similarly, Mana also shares a vital interest with ledgers on L1.

30/32 Therefore, through the verification of the root chain by a verifier with high Mana, the security assumption of the smart contract chain on L2 would be approximately equivalent to that of the IOTA L1 ledger.

31/32 The arrival of the modular public chain trend in 2022, the release of IOTA 2.0 and L2 blessing of the Assembly smart contract layer give us reason to believe that IOTA will finally find its place in this saturated blockchain market.

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