What Is Iota In a Nutshell (New Rebased Update Explained) 2025

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Description

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...

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...