- IOTA launched its layer 2 Ethereum Virtual Machine (EVM) network, focusing on real-world asset usage and introducing new functionalities to the IOTA ecosystem.
- The layer 2 network has a focus on bringing real-world assets on-chain, with a particular focus on the tokenization of physical assets, and features built-in protections against transaction ordering and MEV.
Blockchain network IOTA has started its layer 2 Ethereum Virtual Machine (EVM) network with a focus on real-world asset usage, the developers shared with CoinDataCap over email.
Tuesday’s launch introduced functionality such as smart contracts, cross-chain capabilities, parallel processing and security against Maximal Extractable Value (MEV) into the IOTA ecosystem, boosting the fundamentals of the IOTA token. The token has advanced 6% in the past 24 hours, data from CoinGecko show, while the CoinDataCap 20 Index (CD20), a measure of the broader crypto market, gained less than 2%.
The layer 2 will have a particular focus on decentralized financial (DeFi) applications and real-world assets (RWA) usage, IOTA co-founder Dominik Schiener said in a Telegram message. RWA refers to a sector within the cryptocurrency market that focuses on the tokenization of tangible assets that exist in the physical world.
“We are positioning IOTA to bring the real world to Web3 and help to bring trillions of assets and institutional investors on-chain,” Schiener said. “With the establishment of the IOTA Ecosystem DLT Foundation as the first DLT foundation registered under the Abu Dhabi Global Market (ADGM) regulations, IOTA is uniquely positioned to lead in Real-World Asset (RWA) tokenization.”
“We have adapted our technology stack specifically to adapt to the needs of institutional investors, including our on-chain KYC project to identify investors and enable institutional DeFi trading pools, and the MEV-resistance of our network to protect investors and meet regulatory compliance,” he added.
MEV is a predatory way for network validators to extract fees by rearranging and reordering transactions waiting to be added to the blockchain. The IOTA EVM claims to have a built-in feature to prevent transaction ordering, which helps avoid extracting value from the fees users pay to use the network.
Parallel processing involves sending multiple network transactions simultaneously instead of sequentially. This enables blockchain scaling, lower gas costs, and higher transaction processing speed.
IOTA Network:
Iota is a blockchain network known for its innovative architecture using a Directed Acyclic Graph (DAG) instead of traditional blocks.
Layer-2 EVM: A layer-2 network operates on top of the main blockchain (layer-1) to address scalability limitations. The EVM (Ethereum Virtual Machine) is a software platform that enables smart contracts on the Ethereum blockchain. By integrating an EVM on a layer-2 network, Iota aims to leverage the established functionalities of smart contracts while potentially avoiding the congestion issues of the Ethereum mainnet.
Focus on DeFi and Real-World Assets (RWA): The focus on DeFi (Decentralized Finance) suggests Iota is aiming to facilitate applications like peer-to-peer lending, borrowing, and trading within its ecosystem. The emphasis on Real-World Assets indicates Iota is exploring ways to tokenize physical assets like property or artwork on their network.
Potential Benefits:
Increased Functionality for IOTA: The EVM integration could open doors for a wider range of decentralized applications (dApps) to be built on the Iota network, potentially attracting more developers and users.
Bridging the Gap Between DeFi and Real-World Assets: Tokenization of real-world assets on Iota could unlock new investment opportunities and create more efficient ways to manage these assets.
Boost for IOTA Adoption: A successful implementation of the EVM network could lead to wider adoption of IOTA, potentially increasing the value of the IOTA token.
Things to Consider:
Technical Challenges: Integrating a layer-2 network and ensuring seamless interaction with the mainnet can be technically complex.
Security: The security of the EVM network and the tokenized assets is crucial. Iota will need to demonstrate robust security measures.
Competition: The DeFi and real-world asset tokenization space is already crowded. Iota will need to find ways to differentiate itself from established players.
Overall, Iota’s EVM launch is a bold move with the potential to significantly enhance the network’s capabilities. It will be interesting to see how this development unfolds and how it impacts the Iota ecosystem in the long run.
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