Dialogue with IOTA Co-founder: Infighting, Doubts, and Restructuring, How Can the Once-Stellar Project Make a Comeback?

Guest: Dominik Schiener, Co-founder of IOTA

Interviewed by: Sunny, Deep Tide TechFlow

"Today's IOTA is much more than just being called an IoT chain."

--Dominik Schiener, IOTA Co-founder

IOTA may seem very unfamiliar to those who entered the space during the last bull market. For those who joined before 2017, IOTA was once the "tenfold coin" that surged into the top ten on Coinmarketcap, aiming to create a blockchain foundation for IoT for large enterprises and governments.

At that time, IOTA was criticized by MIT's Media Lab for its unreliable technology due to its development of a 'blockchain' without blocks and chains, and it was described by scholars from the Hebrew University of Israel as "IOTA is a currency I love to hate , " and was mocked in a puff piece by a TechCrunch journalist. The original founding team also had public disputes on social media.

Controversial projects often grow under external criticism and pressure.

After a cycle of bull and bear markets, are the old projects still around? In a recent communication with IOTA co-founder Dominik, I learned that he has recently moved to Abu Dhabi in the Middle East and is actively promoting the application of IOTA 2.0 Layer 2 network and the on-chain of real assets. "We have shed many negative factors, including our technology, some co-founders, and the disputes among them," Dominik said.

When it comes to disputes, it is quite normal for various project team members to clash in earlier years. Ethereum founder Vitalik has also revealed that the success of the Ethereum project came from firing unsuitable employees and founders, believing that the technology is right.

Making a comeback and starting anew. Today's IOTA not only reflects on past mistakes in decision-making and technology but also repositions IOTA: not merely a blockchain project aimed at IoT, but a general-purpose chain compatible with Ethereum.

It seems that while everyone is venturing into Layer 2, IOTA is no exception, but they are more ambitious, deciding to build IOTA as a public chain that competes with Ethereum and follows the business routes of governments and large enterprises. Not only in the Middle East, but IOTA is also stationed in the EU and Africa, working with governments to achieve their long-standing goal of "Digital Autonomy for All."

Below is a summary of the interview between Deep Tide TechFlow reporter and IOTA co-founder Dominik Schiener.

TechFlow: What is your background and the story behind founding IOTA?

Dominik:

I started in the cryptocurrency field in 2011 and have been working full-time in this industry since 2012. Initially, I began with mining and later had the idea of creating a cryptocurrency exchange. I joined Crypto Valley in Zurich, contributing to its development and friendly regulatory environment. However, our efforts were unsuccessful. During the bear market of 2013-2014, I lost a significant amount of money. At that time, I was very young, only 18, and was obsessed with cryptocurrency. My interest shifted to Ethereum, and I improved my skills through connections with Ethereum founders and participating in activities at the Wanchain Blockchain Lab, where I won the largest blockchain hackathon in 2016.

At the end of 2015, I co-founded IOTA. The core idea of IOTA has two main aspects.

First, we realized that blockchain itself has limitations in scalability.

• It faces issues such as high transaction fees, energy consumption, and miners' control over the network. We recognized the need to invent a new architecture that could overcome these limitations and break free from single-threaded blockchains.

• Instead, our goal was to create a multi-threaded architecture, similar to the development of microprocessors. Our idea was not to have a single core executing transactions but to have multiple cores processing as many transactions as possible. This led to the birth of the Tangle concept, and in 2015, we were the ones who invented this new architecture.

The second goal was to explore new application scenarios. At that time, blockchain was still a relatively new concept, and few people understood DeFi, NFTs, or tokenization. Everyone was exploring various possibilities, and the direction was very broad.

IOTA took the lead in promoting blockchain adoption by collaborating with large companies, governments, and enterprises. To achieve this, we established a non-profit foundation in Germany and sought regulation. Our goal was to help large companies integrate IOTA and develop various application cases in mobility, energy, trade and logistics, digital identity, smart government, and smart cities. In 2017, when blockchain adoption was low, IOTA stood out as a pioneer, showcasing the potential of the technology.

TechFlow: What happened after 2017 in the face of numerous public criticisms against IOTA and its team?

Dominik:

During the period from 2018 to 2020, I would say we redefined the goals of IOTA and eliminated some controversies.

For IOTA, we were starting from scratch:

• We raised only $500,000 during the ICO in 2015.

• We did not have a large reserve of funds like other projects, as they allocated a significant portion of their token supply for themselves, leaving them with hundreds of millions for investment, marketing, and growth.

IOTA is truly a community project. From nothing to gradually becoming very large, this means involving a lot of funds and power. Therefore, the opinions among the founders often differed, as many of them did not even have experience with large companies or major projects.

They could also be seen as first-time entrepreneurs. So this means they would change during the entrepreneurial process. If people change, conflicts arise because everyone has their own pride, but everyone also has the incentive to make things bigger.

This led to differing viewpoints. Thus, disputes among them began. Unfortunately, compared to Ethereum, the controversies surrounding IOTA leaked into the public domain, as I also know there were many controversies this year, especially in the early stages, but they (Ethereum) kept their controversies private.

So for IOTA, they committed to making everything public, and the disputes took place in front of the public. This is why people used to associate IOTA with controversy.

This is also why we needed to change this and ensure that we always stay true to achieving IOTA's real goals.

What we did at that time was clearly to reposition IOTA in the market, discarding the bad aspects, including our technology at that time, which was very difficult to use and cumbersome, for example, you could only use an address once, and so on.

TechFlow: So, how has IOTA changed compared to before?

Dominik:

When you think about today's IOTA, you should not only see it as a project solely for IoT.

We have changed other negative aspects of IOTA, such as the board, and discarded some founders.

Between 2020 and 2022, we focused on improving the IOTA protocol to make it not only limited to IoT or enterprise application cases but also to enable us to achieve DeFi, NFTs, and have smart contracts, making IOTA compatible with the Ethereum Virtual Machine (EVM).

In 2022, we launched the evolutionary version of IOTA, ShimmerEVM, as a testing platform before product releases on the IOTA network. Recently, we released ShimmerEVM, a fully EVM-compatible Layer 2 network that will soon launch on IOTA. The evolution of IOTA has transformed it from a difficult-to-use chain in 2015 into a highly scalable network with one-second confirmation times and thousands of transactions per second (TPS). Now it is also EVM-compatible, making it possible to integrate DeFi and new application cases on IOTA and Shimmer.

Our next phase, IOTA 2.0, will introduce a leaderless consensus algorithm, a staking mechanism for network security, and a fully scalable and decentralized network. This major update is planned for release early next year to establish comprehensive competitiveness with Ethereum. Additionally, we are working to introduce smart contracts on our first layer to enhance utility and shared security. Our technology roadmap is supported by a professional team of about 110 people from the IOTA Foundation, extensively peer-reviewed, and collaborated with renowned institutions such as Imperial College London and the University of Zurich.

Shimmer EVM has already attracted several significant projects, with a total locked value of about $2.5 million. The network is still in the early development and onboarding phase. In the next phase, our focus will be on increasing liquidity by adding more bridges and expanding the listing of Shimmer on other exchanges.

TechFlow: After the repositioning, has IOTA's government and enterprise strategy changed?

Dominik:

IOTA has performed excellently in practical applications and has participated in several projects, such as building European blockchain infrastructure and developing digital trade infrastructure and digital identity in Kenya.

Our focus is to position IOTA as the preferred ledger for digital trade and establishing transparent supply chains. Additionally, we are actively working on tokenization, starting with U.S. Treasury bonds and gradually expanding into real estate and other securities. We believe this will attract new users and create new financial markets on the blockchain. Obtaining regulatory approval and collaborating with governments is a key aspect of our strategy, and we have a dedicated team responsible for regulatory affairs and building partnerships with governments. While IoT is an important component of our application areas, our scope is broader, involving various use cases such as human digital identity and financial applications. Currently, we are focusing on key IoT use cases such as digital identity for machines and product passports.

TechFlow: What do you think are the use cases that IOTA is currently exploring and have positive social significance?

Dominik:

Trade finance is indeed an exciting application case, especially in promoting financial inclusion. Our goal is to create liquidity pools that support farmers in countries like Kenya and Tanzania, enabling them to export goods and obtain funding. By leveraging blockchain technology and our capabilities, we can empower people and provide banking services to the unbanked. We are actively working on projects in this area and will make it one of our key focus areas in the future.

References:

1. https://techcrunch.com/2018/08/09/cryptocurrency-insecurity-iota-bcash-and-too-many-more/

2. https://www.media.mit.edu/posts/iota-response/

3. https://www.coindesk.com/markets/2018/04/14/iota-the-37-billion-crypto-developers-love-to-hate/

4. https://www.crypto-news-flash.com/iota-drama-cofounder-threatens-legal-action/

5. https://shimmer.network/

6. https://www.iota.org/