Yesterday @jonastheis_ joined a space with @CryptoMiners_Co and talked about #IOTA 2.0
He did provide very valuable information about the development of #IOTA2, that i want to put together for you.
Link to the space:
twitter.com/i/spaces/1Mnxn…
🧵👇
He did provide very valuable information about the development of #IOTA2, that i want to put together for you.
Link to the space:
twitter.com/i/spaces/1Mnxn…
🧵👇
1/40
Let's start with an overview about everything #IOTA.
The #IOTA Ecosystem consists of 2 live networks 🌐🟢
and one running development network 🌐🟠
1) 🟢 The #IOTA 1.5 Network
2) 🟢 The #Shimmer Staging Network
3) 🟠 The #IOTA2 Development Network
Let's start with an overview about everything #IOTA.
The #IOTA Ecosystem consists of 2 live networks 🌐🟢
and one running development network 🌐🟠
1) 🟢 The #IOTA 1.5 Network
2) 🟢 The #Shimmer Staging Network
3) 🟠 The #IOTA2 Development Network
2/40
1) The IOTA 1.5 Network is the acutal running #IOTA network. The token is $MIOTA. It still has a coordinator (COO). A centralized unit issuing milestones in the dag. This network is able to perform value and data transactions. It has no #SmartContracts (sc) and no #NFTs yet
1) The IOTA 1.5 Network is the acutal running #IOTA network. The token is $MIOTA. It still has a coordinator (COO). A centralized unit issuing milestones in the dag. This network is able to perform value and data transactions. It has no #SmartContracts (sc) and no #NFTs yet
3/40
2) The #Shimmer network. It is the staging network for #IOTA. You can understand it as an tech demonstrator for the upcoming #IOTA2 techstack. Shimmer works the same as #IOTA 1.5 (with COO) but does support #NFT natively and will support #sc (EVM) on layer 2 very #soon
2) The #Shimmer network. It is the staging network for #IOTA. You can understand it as an tech demonstrator for the upcoming #IOTA2 techstack. Shimmer works the same as #IOTA 1.5 (with COO) but does support #NFT natively and will support #sc (EVM) on layer 2 very #soon
4/40
3) Last but defintely not least comes #IOTA2. This is the technology everyone is so excited about. This is a fully decentralized leaderless nakamoto consensus on a #dag. It is the tech stack that @jonastheis_ is doing research for and what he actually wanted to talk about.
3) Last but defintely not least comes #IOTA2. This is the technology everyone is so excited about. This is a fully decentralized leaderless nakamoto consensus on a #dag. It is the tech stack that @jonastheis_ is doing research for and what he actually wanted to talk about.
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If there is a little interest in this thread, i will go into the details of each of the networks, their advantages and their respective shortcomings. This thread however focusses on #IOTA2 .
If there is a little interest in this thread, i will go into the details of each of the networks, their advantages and their respective shortcomings. This thread however focusses on #IOTA2 .
6/40
What is #IOTA2? How is this solution different from other protocols? What advantages come with it? What hurdles had to be managed? What is it built for?
What is #IOTA2? How is this solution different from other protocols? What advantages come with it? What hurdles had to be managed? What is it built for?
7/40
Okay, let's start with the easy part.
#IOTA 2.0 is still a #DAG. A DAG is a directed acyclic graph. It is best explained with the picture below. In the Blockchain, blocks get lined up in a specific order. One after another.
Okay, let's start with the easy part.
#IOTA 2.0 is still a #DAG. A DAG is a directed acyclic graph. It is best explained with the picture below. In the Blockchain, blocks get lined up in a specific order. One after another.
8/40
The DAG allows you to process blocks in parallel. This is important, because it not only allows to increase the throughput, but also makes it possible to have multiple block producers. What does that mean?
The DAG allows you to process blocks in parallel. This is important, because it not only allows to increase the throughput, but also makes it possible to have multiple block producers. What does that mean?
9/40
In a typical blockchain if you create a transaction it is put in a waiting room. This waiting room is called mempool (see the part on the right, in the GIF below). Miners go to the mempool and look for the transaction that is offering the highest tips.
In a typical blockchain if you create a transaction it is put in a waiting room. This waiting room is called mempool (see the part on the right, in the GIF below). Miners go to the mempool and look for the transaction that is offering the highest tips.
10/40
Those transactions are then taken by the miners and get published in a block.
IOTA has no miners, since a DAG has no need for ordering blocks. Every participant is able to add his block to the network. Basically the mempool gets directly published to the network.
Those transactions are then taken by the miners and get published in a block.
IOTA has no miners, since a DAG has no need for ordering blocks. Every participant is able to add his block to the network. Basically the mempool gets directly published to the network.
11/40
This is very good news! It not only does it increase decentralization, but also avoids Maximum or Miner Extractable Value (MEV). MEV means, that Miners have and abuse the power to change the ordering of blocks and transactions.
This is very good news! It not only does it increase decentralization, but also avoids Maximum or Miner Extractable Value (MEV). MEV means, that Miners have and abuse the power to change the ordering of blocks and transactions.
12/40
The ordering of blocks can be very important, think about beeing the first to see a great buying oportunity. Then beeing the first to realize it by issuing a transaction, only to have a miner copy your transaction and then put a block with his transaction in front of you.
The ordering of blocks can be very important, think about beeing the first to see a great buying oportunity. Then beeing the first to realize it by issuing a transaction, only to have a miner copy your transaction and then put a block with his transaction in front of you.
13/40
Okay, so much to this. #IOTA2 is a DAG. It can handle transaction in parallel. It has no miners and therefore no MEV. Everyone is able to add his transactions directly to the network.
Okay, so much to this. #IOTA2 is a DAG. It can handle transaction in parallel. It has no miners and therefore no MEV. Everyone is able to add his transactions directly to the network.
14/40
But that's not all. No, we also wan't to get rid of all transaction fees. If there are no miners, we don't need to pay them, right? Right!
So parallel transactions, no fees, no miners, no MEV... Where is the catch?
But that's not all. No, we also wan't to get rid of all transaction fees. If there are no miners, we don't need to pay them, right? Right!
So parallel transactions, no fees, no miners, no MEV... Where is the catch?
15/40
Well fees aren't that bad. They not only incetivize miners to secure the network but they also guarantee, that people have to decide if a transaction is worth to put in the network, because they have to pay for this service.
Well fees aren't that bad. They not only incetivize miners to secure the network but they also guarantee, that people have to decide if a transaction is worth to put in the network, because they have to pay for this service.
16/40
If we get rid of fees, people could just add limitless data to the network. This is bad, because our resources are scarce. The data storage has to be limited, in order to keep the stoarge requirements for each node low.
If we get rid of fees, people could just add limitless data to the network. This is bad, because our resources are scarce. The data storage has to be limited, in order to keep the stoarge requirements for each node low.
17/40
The higher the network storage usage, the higher the cost to run a node. The higher the node operation costs the fewer nodes running and therefore fewer decentralization. So we need to balance access to the network (no fees) with acces to nodes (low costs).
The higher the network storage usage, the higher the cost to run a node. The higher the node operation costs the fewer nodes running and therefore fewer decentralization. So we need to balance access to the network (no fees) with acces to nodes (low costs).
18/40
To balance the network data usage #IOTA asks you to pay a deposit. Each byte need to be matched by a corresponding amount of IOTA. How is this different from a fee? Well, as soon as your data leaves the network, you get the deposit back.
To balance the network data usage #IOTA asks you to pay a deposit. Each byte need to be matched by a corresponding amount of IOTA. How is this different from a fee? Well, as soon as your data leaves the network, you get the deposit back.
https://twitter.com/i/status/1582679207259566080
19/40
The deposit amount for a byte obviously can be changed over time. The smaller the operation costs for nodes the smaller the storage deposit necessary.
Okay storage usage is adressed. How do we adress bandwith?
The deposit amount for a byte obviously can be changed over time. The smaller the operation costs for nodes the smaller the storage deposit necessary.
Okay storage usage is adressed. How do we adress bandwith?
20/40
Even though #IOTA2 will be able to handle very high amounts of transaction per second (1000tps +, see link below), we need to be prepared for the times of network congestion.
arxiv.org/abs/2209.04959
Even though #IOTA2 will be able to handle very high amounts of transaction per second (1000tps +, see link below), we need to be prepared for the times of network congestion.
arxiv.org/abs/2209.04959
21/40
If no fees have to be paid and everyone is able to participate without borders, then abvoiusly attackers could add spam to the network until no real transactions come through anymore.
For this problem #IOTA2 limits access to the network with a resource called mana.
If no fees have to be paid and everyone is able to participate without borders, then abvoiusly attackers could add spam to the network until no real transactions come through anymore.
For this problem #IOTA2 limits access to the network with a resource called mana.
22/40
So theres the catch. Access is limited through mana. And people have to pay mana in order to use the network. Isn't that just the creation of a paralell currency in order to claim, that #IOTA is feeless?
Lets put together what @jonastheis_ told us about Mana.
So theres the catch. Access is limited through mana. And people have to pay mana in order to use the network. Isn't that just the creation of a paralell currency in order to claim, that #IOTA is feeless?
Lets put together what @jonastheis_ told us about Mana.
23/40
Mana is a shadow currency limiting the bandwidth of the #IOTA2 network. Basically it aims to assure, that you get bandwidth in the network at the amount of tokens you hold. If you hold 20% of the #IOTA2 supply you will get 20% of the #IOTA bandwidth.
Mana is a shadow currency limiting the bandwidth of the #IOTA2 network. Basically it aims to assure, that you get bandwidth in the network at the amount of tokens you hold. If you hold 20% of the #IOTA2 supply you will get 20% of the #IOTA bandwidth.
24/40
Every #IOTA token generates Mana. You can use that Mana in order to pay for network access.
How is this different from fees? Well, you can send your tokens through the network without reducing them. The value of $MIOTA stays the same after each transaction.
Every #IOTA token generates Mana. You can use that Mana in order to pay for network access.
How is this different from fees? Well, you can send your tokens through the network without reducing them. The value of $MIOTA stays the same after each transaction.
25/40
But there might be a scenario of high congestion in which token holders of higher amounts pay significant amounts of mana in order to use bandwidth. In that case smaller token holders might not have enough mana to access the network.
But there might be a scenario of high congestion in which token holders of higher amounts pay significant amounts of mana in order to use bandwidth. In that case smaller token holders might not have enough mana to access the network.
26/40
This might sound unfair but it is a very smart solution. Let's dive a little into this.
@moo9000 once told in the great @MoonacoPodcast, that low fees or no fees isn't a unique value proposition anymore, since fees became incredible low in a lot of networks.
This might sound unfair but it is a very smart solution. Let's dive a little into this.
@moo9000 once told in the great @MoonacoPodcast, that low fees or no fees isn't a unique value proposition anymore, since fees became incredible low in a lot of networks.
27/40
While this is true, it doesn't mean other networks actually thought about limiting congestion. #solana did face severall congestion problems, that caused network outages throughout this year.
status.solana.com/uptime
While this is true, it doesn't mean other networks actually thought about limiting congestion. #solana did face severall congestion problems, that caused network outages throughout this year.
status.solana.com/uptime
28/40
How is this avoided through #IOTA2? Well it isn't, but if a player wants to spam the network, he really hast to invest lots of money.
A short example. #IOTA2 provides 1000 tps. If you want to be able to generate a constant stream of 200 tps...
How is this avoided through #IOTA2? Well it isn't, but if a player wants to spam the network, he really hast to invest lots of money.
A short example. #IOTA2 provides 1000 tps. If you want to be able to generate a constant stream of 200 tps...
29/40
one fifth of the current network bandwidth it would cost you 110 million USD based on the current evaluation of 0.2$ per $MIOTA. A high price to spam the network, wouldn't you agree?
To be fair, not all details about the Mana System have been release but...
one fifth of the current network bandwidth it would cost you 110 million USD based on the current evaluation of 0.2$ per $MIOTA. A high price to spam the network, wouldn't you agree?
To be fair, not all details about the Mana System have been release but...
30/40
the IF promised us, that even holders of small $MIOTA amounts will be able to use the network and generate enough mana for regular transactions. The exception will be times of very high network usage.
The picture below illustrates the mana concept.
Left 🐟 Right🐳
the IF promised us, that even holders of small $MIOTA amounts will be able to use the network and generate enough mana for regular transactions. The exception will be times of very high network usage.
The picture below illustrates the mana concept.
Left 🐟 Right🐳
31/40
Both the storage deposit and the mana system will have very interesting impacts on the tokenomics 💰 of #IOTA2. I will dive into that in another thread, if this thread gets a little interest.
Both the storage deposit and the mana system will have very interesting impacts on the tokenomics 💰 of #IOTA2. I will dive into that in another thread, if this thread gets a little interest.
32/40
Now there is only one thing left... We need to ask ourselfs, if we don't have miners and everyone can access the #DAG directly, who is making sure, that the system isn't maliciously exploited?
Well i can tell you, it won't be the coordinator.
Now there is only one thing left... We need to ask ourselfs, if we don't have miners and everyone can access the #DAG directly, who is making sure, that the system isn't maliciously exploited?
Well i can tell you, it won't be the coordinator.
33/40
Since we want to get rid of all centralized protocol parts and reach full decentralization with #IOTA2 the coordinator isn't an option anymore.
Therefore IOTA2 comes with a new consensus that will reach full decentralization with very short confirmation times by voting...
Since we want to get rid of all centralized protocol parts and reach full decentralization with #IOTA2 the coordinator isn't an option anymore.
Therefore IOTA2 comes with a new consensus that will reach full decentralization with very short confirmation times by voting...
34/40
If you are really interested in that, i would love to put that together in another thread. For now, i will ask you to read the very well written article of the Iota Foundation.
You can find it here:
v2.iota.org/how-it-works/d…
If you are really interested in that, i would love to put that together in another thread. For now, i will ask you to read the very well written article of the Iota Foundation.
You can find it here:
v2.iota.org/how-it-works/d…
35/40
Okay, i see the end comes rather shortly, but i really need to get back on my thesis. Let me use my last words to sum everything up.
Okay, i see the end comes rather shortly, but i really need to get back on my thesis. Let me use my last words to sum everything up.
36/40
IOTA 2.0 is a dag. It has no miners. Everyone can access the network without middlemen. Therefore #IOTA2 has no MEV. IOTA 2.0 assures high decentralization through the new consenus and limiting node operating costs (via a storage deposit).
IOTA 2.0 is a dag. It has no miners. Everyone can access the network without middlemen. Therefore #IOTA2 has no MEV. IOTA 2.0 assures high decentralization through the new consenus and limiting node operating costs (via a storage deposit).
37/40
It furthermore has a smart congestion control, avoiding network outages through spam and ensures people are able to participate without paying fees. Single limiting factor, you have to hold the $MIOTA token. It might be the techstack of the future.
It furthermore has a smart congestion control, avoiding network outages through spam and ensures people are able to participate without paying fees. Single limiting factor, you have to hold the $MIOTA token. It might be the techstack of the future.
38/40
It is perfectly suited as a Layer 1, a trust anchor for future Layer 2s. It will be the ideal solution for roll ups and bridgeless value transfers between different Layer 2s. But that is also for another thread.
It is perfectly suited as a Layer 1, a trust anchor for future Layer 2s. It will be the ideal solution for roll ups and bridgeless value transfers between different Layer 2s. But that is also for another thread.
39/40
If you red until this tweet. I would love to invite you into the #IOTA community.
There is the team from the Iota Foundation:
Board of directors
@DomSchiener
@navinram999
IOTA2.0 developers
@jonastheis_
@hus_qy
And the community moderators
@PhyloIota
@antonionardella
If you red until this tweet. I would love to invite you into the #IOTA community.
There is the team from the Iota Foundation:
Board of directors
@DomSchiener
@navinram999
IOTA2.0 developers
@jonastheis_
@hus_qy
And the community moderators
@PhyloIota
@antonionardella
40/40
Also obviously our community members
@SpecWeekly
@MoonacoPodcast
@IotaPoet
If you liked this thread and maybe even learned something new, please follow me. Also add a like ❤️ and retweet 🐦 to the first tweet of this thread.
If you want further topics covered, let me know!
Also obviously our community members
@SpecWeekly
@MoonacoPodcast
@IotaPoet
If you liked this thread and maybe even learned something new, please follow me. Also add a like ❤️ and retweet 🐦 to the first tweet of this thread.
If you want further topics covered, let me know!
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