What Is Iota In a Nutshell (New Rebased Update Explained) 2025
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Revisiting IOTA, we uncover its major upgrades in 2025, including new consensus mechanisms, faster transactions, and EVM/MOVE VM compatibility. Discover how IOTA's innovations could challenge blockcha...
Revisiting IOTA, we uncover its major upgrades in 2025, including new consensus mechanisms, faster transactions, and EVM/MOVE VM compatibility. Discover how IOTA's innovations could challenge blockchain giants like Solana and shape the future of crypto.
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00:00 Introduction and Background
00:33 Revisiting IOTA: 2025 Developments
03:11 Understanding IOTA's Technology
04:35 IOTA's Major Upgrades and Features
06:59 IOTA vs. Solana: A Comparative Analysis
10:32 IOTA's New Consensus Mechanism
14:25 IOTA Gas Station: Revolutionizing Fees
17:44 Challenges and Future Prospects
20:16 Conclusion and Final Thoughts
AI Analysis
Okay, let's dive into what's happening with IOTA based on the video.
Here's the lowdown on IOTA and its big 2025 changes. It's not your typical blockchain, using something called the Tangle (a DAG) instead of blocks. The project just had a massive upgrade called "Rebase" which makes it way faster and adds smart contract capabilities, potentially putting it in direct competition with speedy networks like Solana.
Here are the key points:
* Back in 2016, IOTA was interesting because it wasn't a blockchain; it used a different structure called the Tangle, or a Directed Acyclic Graph (DAG). Instead of lining up transactions in blocks, the Tangle forms a web, where each new transaction helps validate previous ones, theoretically getting stronger as more transactions occur. * Fast forward to 2025, and IOTA has seen significant upgrades, the biggest being the "IOTA Rebase" update in May. This update completely overhauled its core layer and introduced new mechanics. * A major part of the Rebase update is the new consensus mechanism called Starfish. This mechanism is an evolution of ideas seen in projects like Sui. * The result of these upgrades is impressive speed and efficiency: IOTA now boasts 50,000 transactions per second (TPS) with sub-second finality. * Comparing IOTA to Solana in 2025, while Solana has a theoretical max TPS of 65,000, its real-world performance is closer to 4,000 TPS, and its finality is slower than IOTA's. * This speed and finality are seen as really good for the current crypto landscape, potentially leading to faster trades, less front-running, and fewer failed transactions during network congestion compared to something like Solana. * A long-standing complaint about IOTA was its lack of smart contracts and EVM compatibility. This has been addressed with the Rebase update. * IOTA's Layer 1 now features the Move VM, the smart contract execution environment originally proposed by Sui. Move is considered a "smarter" language for writing secure and auditable smart contracts compared to the Ethereum Virtual Machine (EVM). * To support the large existing developer community, IOTA's Layer 2 includes a "paralyzed EVM," which makes it much easier for developers familiar with Ethereum to migrate their applications or build new ones on IOTA. * This dual approach gives developers flexibility and makes migration from Ethereum easier, leveraging the huge Ethereum developer ecosystem. The feeling is that supporting EVM is a huge deal for adoption. * Previously, IOTA relied on a centralized component (often simplified as a "coordinator") to help with consensus, which drew criticism. The new system addresses this. * The new consensus mechanism uses a group of staked IOTA validators, moving towards a delegated proof of stake model, similar to Ethereum's evolution. * Transactions are signed by users and sent to this validator group. The validators certify the transactions. While still using the DAG structure, this decentralized certification process makes the network more robust and removes the single point of potential centralization. * This fundamental architectural difference, combined with the new consensus, leads to high TPS and very cheap transactions – potentially sub-cent fees, much cheaper than the priority fees sometimes needed on Solana during peak times. * One of the most exciting features is the "IOTA Gas Station." This tackles the huge onboarding problem in crypto where users typically need to acquire native coins just to pay transaction fees. * With the Gas Station, developers can choose to pay for user transactions within their applications, subsidizing the fees. Users can interact with dApps without needing to hold IOTA or worry about gas costs. * The concept of fee subsidy isn't new, but previous attempts failed because transaction fees on other blockchains became too expensive for developers to cover consistently. IOTA's architecture is designed to scale better, making developer-subsidized fees more economically viable. * This feature is still in alpha but is seen as very promising. It could enable mass adoption by allowing seamless user experiences, potentially opening the door for mainstream use cases like gaming (where developers cover costs for in-game item transfers) or initial DeFi interactions without the user needing upfront crypto. * The two-layer approach (L1 Move VM, L2 EVM) is a strength for offering choice but also a potential challenge for developer and user experience, making everything seamless takes time. * The current user experience, like using IOTA wallets, feels a bit clunky, reminiscent of the early days of Solana before its interfaces were polished for the masses. * A major challenge for IOTA in 2025 is attracting and growing its developer ecosystem. More developers building dApps will lead to better user interfaces and wider adoption. They are planning hackathons to help with this. * There's a strong feeling that IOTA is currently in a phase similar to early Solana: powerful underlying technology is in place, but it needs the developer community to mature and build user-friendly applications before mainstream price explosion can happen. * Overall, revisiting IOTA was cool, especially seeing the progress since early videos. The 2025 upgrades, particularly Rebase, position IOTA as a direct competitor to modern high-throughput chains like Solana and Sui, potentially even improving on Sui's ideas. There's felt to be a lot of growth potential. * The new ideas introduced, like the Starfish consensus and Gas Station, are seen as really reinvigorating how people can look at blockchain alternatives and could fundamentally change how users interact with crypto.
Transcript
This is rather interesting. So in 2026, a lot of you guys on this channel asked me to research IOTA. And the reason why was because it was a fundamentally different way of looking at blockchain. In fact, it's not really a blockchain at all. And I did my research, did a video about it, and it got a lot of views, like 329k views, one of my best performing videos on this channel. Now coming to 2025, a lot of people started asking me, hey, you should re-look into IOTA because they're doing somethin...
This is rather interesting. So in 2026, a lot of you guys on this channel asked me to research IOTA. And the reason why was because it was a fundamentally different way of looking at blockchain. In fact, it's not really a blockchain at all. And I did my research, did a video about it, and it got a lot of views, like 329k views, one of my best performing videos on this channel. Now coming to 2025, a lot of people started asking me, hey, you should re-look into IOTA because they're doing something very, very interesting. So that did pique my curiosity, and I was actually pleasantly surprised. I actually did a full research report on IOTA, and it highlights a lot of the recent developments here. And these developments actually quite surprised me because deep down I was thinking, you know, like 2025, we have new competitors like Solana, right? Super, super fast, high-throughput blockchain. We have this whole meme ecosystem going. Can IOTA change or improve this ecosystem? Can it really make a significant dent on everything that's happening? There's one specific feature that I'm also really excited for, so stay until the end of the video and tell you how this can fundamentally change everything. Because this has the full dream that I'm looking for. This is the dream where anyone and anyone can use crypto and blockchain without even having buying coins to start with. This is the big onboarding problem. If you want to play Solana meme coins, you got to buy Solana. But if you want to play IOTA meme coins, maybe you don't have to. So let's explore what's happening with IOTA in this video. I think it's really cool to revisit it. I'm really happy to do this because, yeah, it's a situation where I think all the tech is here. But at the same time, it's actually not too well discovered. And I'm really excited to show you guys what's going on because I feel like this might be one of the situations where it's like Solana before the initial explosion. You know, back when Solana was less than a dollar, the tech was really powerful, but people just didn't know about it. And, yeah, I see this very same thing happening with IOTA. So I'm really excited to show you this video. And guys, of course, everything here is my personal opinion, not financial advice. Do your own research. And, of course, check out the reports as well. I'll link them in the comment section down below. All right, first and foremost, what's IOTA? What's different? Why it's not even blockchain? And what's happening? So first and foremost, I think if you guys look at this video back in the day, we talked about IOTA not being blockchain. It actually relies on something called Tango or a direct acyclic graph. So this was kind of like its vision of like working is instead of building transactions block by block, which I guess it takes time because all the blocks have to be formed. And there's a kind of a limit to how many blocks they can be done. A cyclic graph means it can just make a huge web of things going forward. And every time a transaction was made, it kind of checked the transaction. So it got stronger as time went on. So the whole fundamental structure was a different way. IOTA represented a different way of looking at the space. But 2025 came along and they kind of continued this idea, but they actually significantly upgraded it. The biggest upgrade happened May of this year. It's called for something called IOTA Rebase. And this is a huge, like it completely changed how its original layer one works. And it kind of fundamentally changed how many transactions can process and introduced really new mechanics inside. What you need to know is this. It used a new consensus mechanism called Starfish. And it's an evolved version of what Sui was kind of working on. An evolved version of Mesteceti. Okay. Pronunciation bad. And the result is that it has 50,000 transactions per second. And the finality of these transactions are below a second. And I put up comparison. I actually asked a research tool. I'll tell you a little bit about a research tool later on. But I asked for comparison with Solana in 2025. And Solana, whilst it has a theoretical 65,000 transactions per second, real-world scenario is more or less around 4,000 transactions per second. And the finality here is slower. So what IOTA is offering is an even faster network, more transactions, more finality. And this is really, really good for everything that's happening in the crypto ecosystem today. So whether you're trading meme coins, trades will be faster, less front-running. All these issues that Solana is currently facing with sniping, bribes for transactions to go through, super bots, I don't know, they're damn annoying. But this will actually significant change, especially if you're using Solana on congested time, you'll see transactions fail. Having something on IOTA can actually significantly improve things. What's also kind of interesting about this new upgrade, some of the biggest complaints that people were saying about IOTA, why it didn't catch on, was because it wasn't EVM-compatible. It had no smart contracts. So on the first layer, layer 1 of IOTA, it has the Move VM, which is based on what was proposed by the Sui Group. Move is basically a smarter way to write smart contracts. It's a lot less flaky, I would say, versus Ethereum, the Ethereum virtual machine. It's kind of designed for smart contracts. So it's easier to audit, easier to write. But of course, the downside of that is that not as many developers write Move versus the developers that have Ethereum EVMs experience. So that's why IOTA has both. On its layer 2, it actually has a paralyzed EVM as well. So for migration to happen, you can actually use IOTA with EVM on its layer 2. Or if you want a modern approach, what Sui is doing, you can use Move VM. All in all, for developers, that means a lot more flexibility and also ease of migration. So if they're Ethereum developers and we know that experience matters and we know that Ethereum has a huge development community, yeah, supporting that is huge and migrating that is huge. So I think that's kind of the exciting part about this. So IOTA kind of fixed its flaws, its weaknesses, and at the same time, it improved upon its strengths, which is transactions per second, which is why May was a really, really big month for IOTA. And I see a lot of content being covered right now concerning about IOTA, but they don't really dive into the nitty-gritty. They don't dive into kind of why it works, the mechanisms and everything that's happening. To fill in that knowledge gap where people aren't talking about its consensus, it's really kind of important to figure out what's making this possible and what are its kind of potential strengths. So going at the start of things, like at the start of video, I said how it's not a blockchain, it doesn't form blocks in the same way that Bitcoin or Ethereum does. It really works with the DAG principle, but before what IOTA had and one of its biggest limitations was that it had a centralized server to kind of coordinate everything. I know this is kind of grossly simplified, and a lot of people criticize me for this, but I think this is the best way to understand it. And I think that's the best entry point. So if you consider that IOTA had this, people were criticizing IOTA having this centralized kind of coordinator, but now with its new system, this is actually a new group of staked IOTA validators. So it's kind of moving along more of the lines of what Ethereum did. So I moved to a delegated proof of stake system where people can stake and then approve these transactions. In terms of the actual process for transactions, how it works is that users sign a transaction very similar to how it works for any other blockchain. But the most important thing is that it actually sends it to a group of validators, and the validator actually sends a certificate and signs it. So yes, it still uses the G-based consensus protocol, but because of the certification process, now there's not as much worry about centralization. There's not as much worry. Because they changed fundamentally how it's certified, so instead of having one centralized certifier, now it's a delegated group of them. It actually means that the certification process is much more decentralized, and of course, it's much faster because of just how fast this works in the DAG system. So I think the best way to describe it here, like I'll put this up here. So basically it goes through this new group of checks to make sure that there's more decentralization, but at the same time the consensus is actually much faster, and the way it deals with transactions is a lot more robust. So just by the fundamental design, this actually changes a lot in how it works. So I think that's kind of what makes IOTA industry, even from the get-go. It doesn't use what Satoshi Nakamoto proposed, but it uses a complete different architecture and style, and that style leads to a huge improvement in transactions per second, and at the same time it makes these transactions really cheap. So we said that sometimes Solana is really cheap sometimes, but it still adds up. If you want to pay for bribe fees and you want to make sure that the transaction goes through, especially if you're going and fighting for a new coin, Solana can get relatively expensive. It's because of that priority. But with IOTA, transactions are sub-cent, actually below a cent and much faster. And because there's a layer 2 on that, if you're using that for Ethereum, that's even cheaper. And then this leads to my favorite feature, the IOTA gas station. This is actually really interesting. Traditionally speaking, fees are the bane of anyone's existence. If you want to bring someone onto crypto, you have to get them in some crypto first. And for that, it's just a big pain in the ass. And that's why adoption is slow. And we've always dreamed, for people who've been looking at how to bring people on, can people just trade or do something without spending transaction fees? Well, that's actually possible with IOTA gas station. So with gas station, it means that developers can pay for people using their apps and they can be part. So it's like fees are still being paid, but they're just being paid by the developer. And we've heard of that before. There have been some attempts to do this, but the problem was that because transactions on various blockchains get expensive over time, fee subsidy gets really expensive, and developers don't want to pay for that. But because of the architecture and design of IOTA, and because IOTA is designed to kind of, the more transactions it has, the stronger it gets, it actually doesn't have that scaling problem as much as other blockchains, and it can scale far faster. So that's what makes IOTA gas station really interesting. The concept is not novel, but it's something that we've really wanted for a long time. And we want it to work kind of perfectly, to say the very least. So right now, gas station is still in alpha phase, but what it's doing is very promising. It's allowing developers to directly subsidize these fees and eventually make that reality come true where users can just trade and they don't have to worry about anything. This opens the door up for a lot more different applications. Right now, if you want to make video games, you have to have a wallet. You have to fund a wallet. That's a pain, right? But hey, with gas station forward, that means developers who can give up items, send items, everything can be covered by the dev, and then users can just collect a wallet full of NFTs or items for the games, even start using the DeFi. But then once they really start, you know, making money and learning about this and saying, hey, look, I want that full power, full trades, fund it themselves, and then, of course, that gets movement forward. So developers can basically, TLDR, developers can choose which transactions to subsidize and give the user basically a seamless experience. Lastly, there's something I want to cover about IOTA and one of these advantages and potentially one of its challenges, I would say, is its two-layer approach. So right now, there's layer one for Move VM and an EVM on layer two. Now, this is going to be one of the strengths and weaknesses. Strengths of having Move VM on layer one means that because Move is a newer language and designed specifically for smart contracts, it's going to make auditing, programming, and having safe smart contracts a lot easier. Just by fundamental design, the way people think, it will be much better for smart contracts. That being said, of course, Move developers, it's still not widely adopted. And right now, the kind of two main languages that are being adopted right now are Solidity on EVM, for Ethereum-based coins, and then Rust for Solana. What's kind of interesting is, now IOTA has both, so basically EVM compatibility on layer two and layer one, but I feel like this is where the challenges are. To make everything seamless and make all the DABs seamless and make all the wallets seamless, it's going to take time. And I tried using the IOTA ecosystem. Right now, the wallet experience works, but it's not like the full Solana experience you get in 2025. It almost feels like early Solana. Early Solana was a little bit clunky to use, sending, receiving. The interface was not as beautiful. It's like a beautification of interfaces. And I feel like that's kind of the state IOTA's in right now. It's still a little bit like, kind of like, oh, it works, but it's not like fully beautiful for the masses. And I feel like this is where IOTA can really grow. It's like right now, as people start onboarding, as like, now that everything's released and everything, now that people can onboard, more and more developers can come into that ecosystem and grow. So they basically have a bunch of hackathons and competitions coming up to kind of improve that. So I think this is the biggest challenge for IOTA in 2025 is for it to gain the developer ecosystem and then for that developer ecosystem to explode. And then we're going to get like all those beautiful apps and everything that's going to be super mainstream. So coming full circle, I think this was a really cool video to make because we get to revisit one of our oldest and most favorite coins, IOTA. Wow, this is very cool because like this is one of the very first videos I've ever done, IOTA in a nutshell. And I feel like this is kind of fun because I got to revisit one of the oldest videos I've done. And it's actually really encouraging to see how much work was put into IOTA. Basically throughout the years, IOTA got a lot of upgrades, but 2025 marks the biggest upgrade yet, which takes it basically direct competition to something like Solana and other modern ecosystems like Soy. It actually improves upon Soy. So I'm actually really excited for IOTA. There's a lot of growth potential and I feel like the early days, like that's what I said in this video, I really feel like this is the early days of Solana. Like IOTA is going through that developer attraction and then once that developer attraction matures, that's when the mainstream price explosion explodes. So yeah, that's really, really exciting. So guys, what do you think of IOTA? I definitely feel like you should take a look, especially if you haven't done this, if you watch my old video and you haven't done so, take a look. It's like, there's a lot of new ideas floating around that really reinvigorates how we look at blockchains. And it's like, it takes, I guess it takes a big upgrade for us to really take a look back and really look at these systems and say, okay, look, fundamentally, if this is different, you know, we're at 50K transactions per second now, but you know, where can it go and how good this is going to be for us to use. And guys, thank you guys so much for watching this video. I really feel fun sharing this video with you guys and I really hope I can make more videos like this. So if you guys have any topics you want me to cover next, leave a comment down below. And with that guys, thank you guys so much for watching. See you next time.