Next level: IOTA smart contracts reach alpha stage
The IOTA Foundation reports progress in the implementation of smart contracts in IOTA. Today’s release of the pre-alpha version gives developers the opportunity to test applications for the decentralised financial services sector with IOTA as well.
The scrum in the smart contract platform space is getting tighter: the previous industry leader Ethereum is facing a growing number of alternatives, ranging from Polkadot to Cardano to the latest breakthrough, the Binance Smart Chain. The IOTA Foundation has also long had its eye on the rapidly growing sector. After presenting a first version of the IOTA Smart Contract Protocol (ISCP) in October 2020, the Foundation today announces further progress. Smart contracts for Bitcoin Method decentralised applications, for example for the booming sectors of decentralised finance (DeFi) or non-fungible tokens (NFT), will also be able to be tested with IOTA from now on.
IOTA Smart Contracts: The path to a multi-chain network
Unlike Ethereum (1.0), IOTA takes an approach that does not require the entire network to sign off on every single smart contract operation – one of the reasons why Ethereum is chronically overloaded. Rather, IOTA pursues the vision of a multi-chain network in which several blockchains run parallel to each other. The smart contracts run within these „subnetworks“.
The subnetworks, i.e. smart contract blockchains based on IOTA, determine a set of validators („committee“) to confirm the transactions. There are several options for the composition of these committees, depending on the desired degree of decentralisation, among other things.
For example, the creators of a subnetwork can use only self-operated nodes to validate the status of their chain. Another possibility is to found a consortium of (corporate) partners who jointly operate the validator nodes of a subnetwork. In the future, there should also be an „open market“ from which validators can be recruited to form subnetwork committees.
The committees monitor the status of the subnetworks and communicate it to the base layer, IOTA’s Tangle. The Tangle – itself not a blockchain, but another form of distributed ledger technology – provides the ultimate finality of all transactions made on a subnetwork.
IOTA Smart Contracts: Only in test mode so far
The IOTA Foundation points out on its blog that ISCP is still in an experimental stage. Trials with ISCP are so far limited to the test network „Pollen“. There, they are already testing an IOTA that works without the central control module, the coordinator. IOTA has already been working on the abolition of the coordinator for some time, which is why IOTA 2.0 bears the name „Coordicide“. Until the release of Coordicide, the IOTA Foundation still expects significant improvements in ISCP and Wasm, the node software on which ISCP will ultimately run. In Pollen, ISCP is still being integrated via GoShimmer nodes.
Outlook: IOTA wants to build bridges
In addition to the marketplace for validators, development is now focusing on further expanding the functionality of ISCP. In this way, cross-blockchain bridges are to be created that will enable applications in the DeFi sector, among others. These include decentralised exchanges (DEX) and automated market maker protocols (AMM) such as Uniswap. In addition, Ethereum’s programming environment, the Ethereum Virtual Machine (EVM), will be supported by the ISCP. This would allow smart contracts in the Ethereum programming language Solidity to be transferred to IOTA.