Modularity as a Service - The case for IoTeX
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In August 2024, IoTeX announced a comprehensive update to its tokenomics, aimed at enhancing the utility and value of the IOTX token within its ecosystem. This new tokenomics model aligns with the broader vision of IoTeX 2.0, which emphasizes modularity and interconnected infrastructure.
New Tokenomics - Key Elements
Burn-to-Certify Mechanism:
This mechanism ensures that both human and machine identities are verified and trusted within the IoTeX Network. Device manufacturers will need to burn IOTX tokens to obtain a "Powered by IoTeX" certificate for their devices. This certificate grants access to specific network services and capabilities, such as decentralized warranties and zero gas fees up to a certain limit. The burning process effectively reduces the total supply of IOTX, creating a deflationary effect that can increase the token's value over time.
Stake-to-Service Framework:
Service providers in the IoTeX ecosystem will be required to stake IOTX tokens to deliver their services. This requirement ensures that providers are committed to maintaining high service levels. Providers that fail to meet their service level agreements (SLAs) will face penalties, including the slashing of their staked tokens. This framework incentivizes high-quality service provision and aligns the interests of service providers with the overall health of the network.
Enhanced Governance:
IoTeX continues to emphasize decentralized governance. IOTX holders can stake their tokens to participate in network governance by electing delegates and voting on important proposals. This decentralized approach enhances network security and ensures that decisions reflect the community's interests.
Emission and Deflation:
IoTeX has introduced mechanisms to balance token emission and deflation. While staking rewards generate new tokens, the burn-to-certify mechanism and penalties for service providers contribute to token deflation. This balanced approach aims to maintain a stable token supply and support long-term value appreciation.
These changes are designed to support IoTeX's goal of onboarding 100 million devices and unlocking significant real-world value on the blockchain within the next few years. The updated tokenomics model not only incentivizes participation and high service quality but also enhances the overall utility and value of the IOTX token in the IoTeX ecosystem