Thread by @id_iota

The #IOTA community has been lately very impatient about the release of the #ShimmerEVM which follows the #Stardust upgrade.

But what is #Stardust? What is #ShimmerEVM? What do they bring to #IOTA / #Shimmer and why are people so excited about it?
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While trying to put a thread together on the different #IOTA ecosystem networks and their respective usecase, i realized we first need to get a in depth understanding of #Stardust and #ShimmerEVM. So let's not waste time and dive right into this 🐰🕳️

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#Stardust ⭐ is - like IOTA 2.0 - a technology upgrade coming to the #IOTA baselayer. It is here to enable mainly one thing, it shall
finally empower the community and everyone else, to use the network and build on it.

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The Iota Foundation is planning to achieve this through finally enabling smart contracts within the #IOTA ecosystem. Smart Contracts allow developers to run code or apps, that are secured by the network.

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Okay, so why isn't Iota just adding #smartcontracts (sc) to its network as basically every other network - #Etherum #BNBchain #Avalanche - does?

Well things get heavily complicated if you are running on a #DAG, due to its unordered nature.

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IOTA runs - as does #Bitcoin and #Cardano - on the UTXO ledger model. This allows for parallel execution of transactions, however has no global and objective ledger state of account funds (if run on a #DAG).

There is another ledger model. The account based ledger model.

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The account model doesn't allow for parallel execution of transactions, however has a global and objective ledger state of account funds.

Smart Contracts, as we know them today, take the global ledger state and update it based on an Trigger-Event that has to be agreed on.
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So no global ledger state equals to no smart contracts? Correct! (at least for today 😉).

(We took quite some shortcuts in the tweets above and i might elaborate on the UTXO and account Model in another thread, for today that shall be enough)

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But... How is Iota enabling Smart Contracts then? Well they actually found an incredible smart solution to bring everything together. This solution is #Stardust ⭐ as an update for the #IOTA and #SHIMMER Mainnet and #ShimmerEVM as a Layer 2 network.

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With the Iota Smart Contral Protokoll (ISCP) everyone will be able to set up a blockchain (yes, no #DAG) and anchor that blockchain into the #IOTA baselayer (yes, a DAG).
The blockchain will run on an account based ledger model. It will have a global and objective state.

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Those blockchains, that run on top of the #DAG, are called Layer 2 networks. The #IOTA Mainnet therefore beeing a Layer 1 network.

Those blockchains, that run on top of #IOTA, will then be able to execute smart contracts due to their account based ledger model.

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The layer 2 blockchain will also be fully compatible to the #Etherum Blockchain (#EVM compatible). This means, that every application that runs today on Etherum is easily transferable to a layer 2 chain on IOTA.

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Each layer 2 will have its own set of validators, that guarantee for the security of the layer 2 network.
Additionally the Layer 2 prints each new ledger state (all accounts + their respective balance) into a new block on Layer 1. This is what we call anchoring.

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Through the anchoring in the layer 1 network, the layer 2 ledger state is immutable, global and objective. This increase the security by a lot.

So the layer 2 network is secured by its own validators and consensus and is additionally secured by the layer 1.

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What we explained up to now, is what everyone is so eagerly waiting for. The first layer 2 blockchain being released to #IOTA. The first chain will be #shimmerEVM. With release of #shimmerEVM we will see the first smart contracts run in the iota ecosystem!

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Okay, so we used a workaround, enabling Smart Contracts in #IOTA by chosing a blockchain on layer two that runs those #SC?

This is a little underwhelming, isn't it? Yes it is and therefore the reason we aren't finished yet.

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So if we have a blockchain running on #IOTA as a layer 2, wouldn't it be possible to get the same congestion problems every other blockchain (like #Etherum #Avalanche or #BNBchain) had in the past? Yes!

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But don't forget, the amount of layer 2 blockchains that run on top of #IOTA is not limited. So as soon as the first blockchain is congested we could easily set up a new blockchain and start issuing smart contracts there.

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We could go on with that approach for a little while until we have congestions on layer 1, so that would be it.

Hows that different to just using Avax, the time Avax is not congested and BNB, the time BNB is not congested? This is where the #Stardust ⭐ comes into play.

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Okay. Up to know we explained, how #IOTA introduces #sc on layer 2 into the ecosystem. Now we need to understand how #Stardust enables the Layer 1 to handle and empower #sc on layer 2.

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So what does #Stardust do?

It natively extends the ledger in a sense, that every possible asset is create- and trackable on it. Before the Stardust update, the ledger kept only track of one asset, $MIOTA. After the update everyone is able to create their own assets...

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and track them on the #IOTA ledger. This means custom tokens and NFTs. Both, custom tokens and NFTs, can be minted feeless on the ledger. Only a storage deposit is necessary to regulate the amount of used ledger space.

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Please see my other Thread if you are interested in the storage deposit and other major design decissions that come with #IOTA2.

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https://twitter.com/id_iota/status/1602696430853840896

Okay okay... So basically we split things up here a little. We do assets on layer 1 but everything else smart contract related on layer 2.

Coming to the final puzzle piece. The magic contract 💫📃.

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The magic contract is a special layer 1 / layer 2 smart contract which is able to trustless transfer Assets from Layer 1 to Layer 2 and vice versa. This is not a bridge. Think about real token transfers instead of token lock ups.

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So let's wrap everyhting up. With #Stardust ⭐ we enable the Layer 1 Blockchain (either #IOTA or #SHIMMER) to

1. Feeless Mint custom Tokens and NFTS
2. Anchor Layer 2 Blockchains in them
3. A lot of other UTXO related Stuff, that we will tackle in another Thread

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With the #ShimmerEVM release we will then be able to put up our own Layer 2 chains. We can put chains up as many as we like and this way make sure we don't get any congestion, even in high usage times.

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Additionally we don't get any fragmentation within the chains because all assets are freely and feeless transferable through the Layer 1 network.

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We will need to see how everything plays out, but the architecture is built in a way, that nearly endless scalability is possible.

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I want to add one more thing. This design of a layer 1, that transfers tokens and layer 2 that runs smart contracts allows for some flexibility.

One of the main advantages is that #IOTA will be able to stay Smart Contract Language Agnostic and therefore futureproof.

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You will be able to spin up a #WASM smart contract chain as a layer 2 the same way you can spin up an #EVM smart contract chain.

This way you can write your sc code in Go, Rust, TypeScript or Solidity. Whatever the developer likes best will be possible.

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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 mods
@PhyloIota

@antonionardella

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Also obviously our community members
@Vrom14286662
@SpecWeekly

@MoonacoPodcast

@IotaPoet
@iota_penguin

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.

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