Key Takeaways
- IOTA is a distributed ledger technology designed for the Internet of Things (IoT).
- IOTA was built on the Tangle instead of a traditional blockchain. Since the IOTA Rebased upgrade of May 2025, validators confirm transactions through delegated proof of stake.
- IOTA is designed to be lightweight and scalable, making it suitable for resource-constrained IoT devices.
What Is IOTA (IOTA)?
IOTA is a distributed ledger designed for the Internet of Things (IoT). The project aims to be a lightweight, scalable, and low-fee solution for microtransactions in the vast network of devices within the IoT. It is a complex technology, and while it offers exciting potential, it is still under development, and some aspects need to be addressed before achieving its full vision.
How Does IOTA (IOTA) Work?
IOTA was designed differently from the traditional blockchains used by cryptocurrencies. On May 5, 2025, the IOTA Rebased upgrade turned it into a delegated proof-of-stake network. Validators chosen by delegated stake now confirm transactions, using the Starfish BFT consensus protocol since April 2026, and each transaction pays a small fee, about 0.005 IOTA on average, which is burned. Here’s a breakdown of how the original design worked:
The Tangle
Imagine the Tangle as a web of interconnected transactions, unlike a blockchain with linear blocks. New transactions are not added to the end of a chain, but instead attach themselves to two previously approved transactions within the Tangle.
Transaction Validation
To validate their transaction, users had to approve two previous transactions in the Tangle. This approach removed the need for miners and transaction fees.
The Coordinator
IOTA originally used a coordinator, a central node that helped prevent spam and ensured the validity of the Tangle. The Stardust upgrade replaced it with a distributed validator committee in 2023, and since the Rebased upgrade of 2025, validators chosen by delegated stake run the network.
Lightweight Transactions
The Tangle is designed to be lightweight, allowing devices with limited processing power, which is standard in the IoT world, to participate in the network.
Here’s a more detailed explanation of some key aspects:
Tangle Transactions – When a new transaction enters the Tangle, it attaches itself to two previously approved transactions. This creates a web of interconnected transactions that validate each other.
Coordinator’s Role – While not ideal for decentralization purists, the coordinator helped prevent spam and ensured the Tangle’s overall health during its early development stage.
IOTA 2.0 & Beyond – IOTA 2.0, a coordinatorless version of the protocol, reached a testnet in April 2024 but never went live on mainnet. The IOTA Foundation chose IOTA Rebased instead, which brought Move smart contracts and staking to the main network in May 2025.
IOTA (IOTA) Token And Tokenomics
Tokenomics
The IOTA token is used for the following:
- Facilitates microtransactions between devices
- Pays transaction fees, which are burned
- Powers the Machine Economy
- Rewards network participants
Token Details
Total Supply about 5.0 billion IOTA (no fixed cap)
Circulating Supply about 4.68 billion IOTA
Price (October 11, 2026) about $0.050
Market Capitalization about $235 million
Figures from CoinGecko as of October 11, 2026. The token’s price, market value, and available supply may fluctuate.
Distribution
IOTA’s token distribution significantly changed with the Stardust upgrade of October 4, 2023, which raised the total supply to 4.6 billion IOTA. Here’s how the new tokens were distributed:
- IOTA Foundation (7.075%)
- Tangle Ecosystem Association (12%)
- UAE Entity (12%)
Contributors (5%) - IOTA Airdrop (3.5%)
Where Can I Buy IOTA (IOTA)?
Binance – Binance is a major exchange offering a wide range of cryptocurrencies. It offers multiple ways to buy crypto, including credit cards, debit cards, and peer-to-peer (P2P) trading.
KuCoin – KuCoin is a smaller exchange known for its competitive fees and support for many cryptocurrencies.
Gate (formerly Gate.io) – This exchange provides IOTA, other cryptocurrencies, and margin trading options.
Is IOTA (IOTA) A Good Investment?
Pros
- First ADGM DLT Foundation – In November 2023, IOTA became the first foundation registered under the DLT Foundations Regulations of Abu Dhabi Global Market (ADGM).
- Dedicated Ecosystem Fund – The IOTA Foundation launched a 100 million dollar fund that will be replenished over four years. This fund will actively invest in protocols within the IOTA network, advancing the development of the entire ecosystem.
- EVM Compatibility – IOTA achieved full compatibility with the Ethereum Virtual Machine (EVM) in Q1 2024. This allows protocols built on Ethereum and its Layer-2 scaling solutions to interact with the IOTA network, potentially attracting liquidity from those established DeFi ecosystems.
- Staking – Since the IOTA Rebased upgrade of May 2025, holders can stake IOTA by delegating it to validators and earn staking rewards.
Cons
- Inflation – Staking rewards are paid in newly minted IOTA, an initial inflation rate of about 6% a year according to the IOTA docs.
- Smart Contract Functionality – While IOTA added Move smart contracts to its main network in May 2025, they are still under development compared to the more mature functionality offered by platforms like Ethereum.
- EVM Compatibility Is Still New – IOTA’s recent achievement of EVM compatibility is a positive step. However, it’s still too early to say how effectively it will attract liquidity and projects from the Ethereum ecosystem.
Should You Invest in IOTA?
Whether IOTA (IOTA) is a good investment depends on your risk tolerance and goals. Remember, this guide only provides a starting point for your research. Always conduct your due diligence before making any investment decisions.
