What is IOTA?

IOTA is one of the many technologies shaping the future of Web3, offering a fresh approach to how value and data move in a decentralised world.

• IOTA is an open-source distributed ledger technology (DLT) designed for individuals, businesses and institutions in Web3.

• It enables permissionless value and data transfer with low fees on a scalable network.

• IOTA uses a DAG (Directed Acyclic Graph) as well as MoveVM, a secure and flexible virtual machine for digital assets.

In this article, you'll learn about the basics of IOTA.

The origins of IOTA

IOTA is one of the most established distributed ledger projects, officially launched in 2015. The IOTA Foundation, a non-profit based in Berlin since 2017, leads protocol development and strategic partnerships around the world.

Unlike traditional blockchains, IOTA is built on a Directed Acyclic Graph (DAG) and integrates the MoveVM at Layer 1, enabling parallelized validation and native smart contract functionality.

Designed for scalability, efficiency, and real-world utility, IOTA offers an open, permissionless infrastructure for sectors such as supply chain, energy, and digital identity. Supported by organisations in Germany, Switzerland, and Abu Dhabi, IOTA continues to evolve through collaboration with enterprises, institutions, and public-sector bodies.

The Tangle

The IOTA network uses a Directed Acyclic Graph (DAG) ledger structure, rather than a traditional blockchain. In this architecture, each block references previous ones, enabling a parallelizable flow of transactions without relying on a central mempool or designated block proposer.

This design allows for low-latency confirmations, high throughput, and efficient conflict resolution, making IOTA well-suited for applications requiring scalability and fairness, such as decentralised finance and transparent supply chains.

At its core, IOTA combines this DAG structure with a consensus protocol that orders blocks, confirms transactions, and prevents double-spending. It uses Delegated Proof of Stake (dPoS) and integrates a fee-burning mechanism for long-term sustainability.

Smart contracts are supported natively at Layer 1 through the Move Virtual Machine (MoveVM), a programming language designed for digital asset management. Developers can also deploy Solidity-based applications using IOTA’s EVM-compatible Layer 2.

Consensus on IOTA

Unlike traditional blockchains that rely on miners or energy-intensive proof-of-work systems, IOTA uses a modern consensus protocol designed for speed, efficiency, and scalability. IOTA’s transaction validation is based on Mysticeti, a Byzantine Fault-Tolerant (BFT) mechanism optimized for low latency and high throughput. Validator nodes agree on the order and validity of transactions through a fast, three-round voting process.

IOTA is also developing Starfish, an enhanced version of this protocol designed to improve resilience and performance at scale, supporting over 150,000 transactions per second with sub-second finality.

To secure the network, IOTA uses Delegated Proof of Stake (DPoS) for Sybil protection, eliminating the need for mining or transaction fees and aligning the interests of validators and users.

IOTA and $IOTA

IOTA is the native digital asset of the network and is divisible into smaller units called NANOs — one IOTA equals one billion NANOs. Following the Rebased protocol upgrade in May 2025, the total supply is 4.6 billion tokens.

New tokens are minted each epoch (approximately every 24 hours), with around 767,000 IOTA issued daily. This results in an annual issuance of roughly 280 million tokens, reflecting an initial inflation rate of about 6%.

Previously used units such as MIOTA, KIOTA, and others have been retired to simplify token denomination and standardize usage across the ecosystem.