IOTA Announces New Tokenomics, Releases Additional 70% Token Supply

To implement a new ecosystem development fund for its DeFi-focused blockchain platform, IOTA will issue additional MIOTA tokens.

IOTA Announces New Tokenomics, Releases Additional 70% Token Supply

After a prolonged period without significant updates, the IOTA blockchain project (MIOTA) surprised the community on the evening of September 15 with an announcement detailing updated tokenomics and a roadmap for immediate development.

IOTA will embark on a new phase named IOTA 2.0, which includes changes such as support for smart contracts on the blockchain, building layer-2 solutions, and enhancing the utility of the MIOTA token.

The upgrade leading to IOTA 2.0 will be called the Stardust hard fork, scheduled for Q4/2023.

The addition of layer-2 and DeFi functionalities is expected to increase the utility of MIOTA. This is because as demand for IOTA usage grows, the network will record a significant influx of new transactions, necessitating validators to participate in processing. These validators will require Mana, IOTA's node verification mechanism, which necessitates holding MIOTA.

New Tokenomics of IOTA

The ecosystem on IOTA 2.0 will feature a seed development fund, financed through the issuance of additional MIOTA tokens. Currently, MIOTA has reached its maximum supply of 2.7 billion tokens, but IOTA aims to increase this to 4.6 billion — a 70% increase.

The newly created 1.9 billion MIOTA tokens after the Stardust hard fork will be unlocked on a bi-weekly basis over four years, with an annual inflation rate of 12%. Part of the new token supply will be distributed via airdrops to network supporters and staking participants.

Co-founder of IOTA, Dominik Schiener, responded in an interview with CoinDesk:

"Without additional funding, we would struggle to keep pace with other blockchains and risk losing market share and capitalization. To break this cycle, the project must make significant changes to revive adoption and growth rates. We want IOTA to have a chance to succeed in today's market environment."

IOTA was once a prominent blockchain project during the 2017-2018 period. The current price of the MIOTA token is $0.16 USD, significantly lower than its peak of $5.69 USD in December 2017. At the time of writing, IOTA's market capitalization is $446 million USD, ranking 69th globally.

The MIOTA token on the Binance exchange experienced slight declines following the news of the project's intention to issue additional tokens to execute the IOTA 2.0 plan.

1-hour chart of MIOTA/USDT pair on Binance as of 09:50 PM on September 15, 2023