IOTA is intended to be the currency for the Internet of Things and robots. Image by Duncan Hill via flickr.com. License: Creative Commons
The IOTA Foundation announces that it will decentralize the COO – and create massive new tokens, which will primarily flow into their own pockets. Most investors are horrified. But at least all doubts about what IOTA is are now gone.
It is well known that the best and most honest way to talk about problems is to offer a solution. The cryptocurrency IOTA is no exception.
After it was relatively quiet about the “cryptocurrency for the Internet of Things”, the Berlin IOTA Foundation went public with two messages last week.
The first message is somewhat pleasant. The second, on the other hand, is controversial, a scandal, and in some eyes a fraud.
The COO will be decentralized
The first message is about a “special feature” of IOTA. About the problem that can be talked about most freely when you have a solution: the Coo.
The Coo operated by the Foundation is the central vulnerability of IOTA. Because IOTA’s decentralized architecture, the Tangle, does not fully work, a central server must issue “milestones” that verify transactions. The Foundation freely admits that this allows him to block transactions and practically shut down IOTA.
Actually, the Coo was supposed to be switched off “soon” for six years. Now the Foundation has announced that it will decentralize it by replacing it with a “committee”. 10 actors selected by the Foundation, connected by a “Byzantine Fault Tolerant” (BFT) consensus mechanism – an election mechanism similar to Ripple – will agree on the milestones.
The committee has already been introduced and tested on private and public testnets and will also be rolled out on the mainnet in the future. However, the Foundation does not give a specific date.
Large parts of the community should be satisfied with this news. The Coo is not removed as promised. But with the introduction of the committee, IOTA could actually start to become more decentralized.
However, the community is less happy about another piece of news from the IOTA Foundation. This causes horror and anger even among loyal followers.
IOTA Foundation increases token supply
With the “Stardust” upgrade, the Foundation announces IOTA 2.0. Stardust is intended to make the COO completely unnecessary, create consensus solely through Tangle technology and introduce smart contracts. There is no specific date as to when IOTA will work as promised at the beginning.
The Foundation is announcing two controversial pieces of news at the same time. First, Stardust is intended to disable the assembly network. This was intended as a staking network for smart contracts, but will become unnecessary with IOTA 2.0. The assembly tokens that stakers have earned become worthless and replaced with IOTA tokens via an Aidrop.
Secondly, Stardust is intended to change IOTA’s token economy – to a fairly large extent. The Foundation euphemistically calls this the “evolution of IOTA tokenomics”.
To date there are 2.78 billion IOTA tokens. These were initially created and sold to the community to finance the development of IOTA. With evolution through Stardust, the number will almost double, to 4.6 billion.
However, the assembly stakers will only receive a small fraction of the newly created tokens – 190 million – while the absolute majority will go to the “IOTA ecosystem fund”, namely 1.82 billion IOTA, which at the current market value is around 15 cents each IOTA at least a good 270 million dollars. This ecosystem fund will be divided between various legal entities registered in Zug and Abu Dhabi, but ultimately governed by the Foundation. This will also directly receive almost 325.5 million tokens.
Essentially, it is an expropriation that can hardly be denied. The IOTA that users hold will become less scarce – and therefore likely to be worth less – while the Foundation directly or indirectly assigns itself tokens worth a few hundred million dollars. An ecosystem in which the absolute majority of tokens were in the hands of holders becomes one in which almost 40 percent are in the wallets of a central entity.
People are used to all sorts of things from the crypto space. It happens again and again that developers abuse their control over the code to claim coins, for example with Zcash or Bitcoin ABC. But audacity like that of IOTA is rare.
What’s good for the Foundation is good for the Holders, even if they lose
Of course, no one in the IOTA Foundation expected the change to be met with applause. Therefore, Hans Moog and Dominik Schiener try to explain the motivation.
The reasons they give are interesting, at least from a psychological perspective. Put simply, they amount to a defiant claim to make money even if the project flops, and if necessary by taking it from the users, which is okay because the interests of the users and the Foundation are as identical as that French state with Louis XIV: “L’état, c’est moi”.
Hans Moog admits that he initially found the creation of tokens such a terrible idea that he considered leaving the project. But then he realized that it solves what he sees as IOTA’s biggest problem – its “limited financial situation”. This hinders the progress of IOTA more than anything else.
Similar comments are also made Dominik Schiener. He has invested all his money, all his time and so much effort in IOTA over the last eight years. With the fund, IOTA will have a chance to assert itself on the market. Therefore, this is “the right thing for IOTA and for the investment” of the holders.
In short: What is good for the IOTA Foundation is good for the holders, even if the holders lose. A vote was therefore not necessary. The Foundation creates money for itself because it can, which basically says everything you need to know about IOTA.
“I hope lawsuits follow!”
IOTA investors are known for their endurance and loyalty. Only a few projects can retain such loyal followers with such a lack of success. But the spontaneous increase in the amount of tokens goes too far for many people.
“Over 1.5 years of ASMB staking for NOTHING!” complains IotaBullrun on twitter. “I hope there are lawsuits! In addition, the current MIOTA inventory is to be DOUBLE! So you basically leave empty-handed & have lured your $IOTA for NOTHING for over 1.5 years!”
Another user, Shahin_Iota, accuses the Foundation of “you have repeatedly promised that the supply will remain fixed. That was the reason we bought IOTA. This is 100% theft of our money.”
And Laurin Kraemer sums up the audacity: “The Foundation can be tokenized to fund the operation that has delivered nothing in six years.”
Maybe with this move the Foundation will be able to operate for a few more years. But it was the death knell for IOTA as a currency or investment.
Source: https://bitcoinblog.de/2023/09/18/iota-das-ist-100-diebstahl-unseres-geldes/
