What is IOTA (IOTA)?

IOTA launched in 2016 with a genuinely different architecture: not a blockchain but a directed acyclic graph called the Tangle, where each transaction validated two previous ones. No miners, no blocks, no fees — the idea was a network for machine-to-machine payments in the internet of things, where a sensor paying a fraction of a cent for data could not afford a transaction fee.

It did not work as designed. The Tangle could not reach consensus reliably at low transaction volumes, so IOTA ran a central node called the Coordinator that confirmed transactions. For seven years, the network marketed as decentralised depended on a single server run by the foundation. Everyone knew, and removing it was perpetually the next milestone.

Rebased is not an upgrade

In December 2024 token holders voted to replace the architecture entirely. IOTA Rebased is built on MoveVM for execution and Mysticeti for consensus — the same components Sui uses — with object-based state, parallel processing and delegated proof of stake.

The results are what those components deliver: over 50,000 transactions per second, finality in roughly 400 to 500 milliseconds, staking that launched at 10–15% APY, and no Coordinator. The network is decentralised for the first time in its history.

Be clear about what happened here. IOTA did not improve the Tangle; it abandoned it and adopted proven technology built by someone else. That is an unusually honest decision for a project with a decade of identity invested in a specific architecture, and it means everything written about IOTA before 2025 describes a different system.

What it is for now

The machine-to-machine story remains, alongside digital identity and real-world asset work, and EVM support at Layer 1 is planned so existing Ethereum contracts can run natively. The feeless model is gone — a proof-of-stake chain pays validators, which means transactions cost something.

• Gas for transactions, now that the network charges fees.
• Staking to validators, which secures the chain and launched at 10–15%.
• Governance over protocol parameters.
• Collateral and liquidity in the small IOTA DeFi ecosystem, which only became possible with smart contracts.

IOTA's enduring strength is institutional and governmental relationships, particularly in Europe and the Middle East, built over years around digital identity and supply-chain work. Those are real and they are the kind of engagement that produces pilots rather than transaction volume.

IOTA had a fixed supply under the old architecture and Rebased introduced staking rewards, which means new issuance — the standard trade for moving to proof of stake, since validators have to be paid.

Staking launched at 10–15% APY, which is high and reflects a network trying to attract participation from a standing start. As with every proof-of-stake chain, the rate falls as more of the supply is staked, so those figures describe the launch conditions rather than a steady state.

What the change cost holders

A fixed supply with no fees became an inflationary supply with fees. That is objectively worse for a passive holder and it is the price of removing the Coordinator — decentralised consensus requires paying the people who provide it, and the feeless DAG was only feeless because a central server was doing the work for free.

The practical implication is the familiar one: not staking means being diluted.

Staking IOTA means delegating to a validator under the Rebased architecture. Rewards launched in the 10–15% range and decline as the staked share of supply rises.

The mechanics follow the Mysticeti and MoveVM design rather than IOTA's own history, so anything written about IOTA staking before 2025 is about a system that no longer exists. Check the current unbonding period and slashing conditions directly rather than assuming continuity.

Staking did not exist at all before Rebased, because the old network had no proof of stake — this is a genuinely new capability rather than a changed one.

The history is a liability

Seven years of running a central Coordinator while marketing decentralisation, a 2020 Trinity wallet breach that forced the network to be shut down entirely, and a long record of milestones that slipped. Rebased addresses the technical criticisms and does not undo the reputational ones, which affect listings, partnerships and institutional willingness to engage.

It is now Sui's architecture without Sui's ecosystem

MoveVM and Mysticeti are good technology and they are Sui's, and Sui has more developers, more applications and more liquidity. IOTA's differentiation now rests on its institutional relationships rather than on anything technical, because the technology is no longer distinctive.

Move is a small developer pool

Split further between Sui's dialect, Aptos's and now IOTA's. Planned EVM support at Layer 1 is the answer, and it puts IOTA into the very crowded market of chains that run Solidity.

Inflation replaced a fixed supply

Staking rewards mean issuance where previously there was none. Holders who do not stake are diluted, which was not true of IOTA before 2025.

Ecosystem depth

Smart contracts are new to IOTA, so its DeFi and application layer is starting from near zero against chains with years of accumulation. Institutional pilots do not substitute for developers.