In simpler terms, the South Korean cryptocurrency platform Upbit has issued a notice stating that the Internet of Services Token (IOST) has been marked as a potential concern by the Digital Asset Exchange Alliance (DAXA), with the aim of safeguarding investors.
IOST is a blockchain initiative centered around developing Decentralized Applications (DApps), with an emphasis on delivering high-speed transactions and scalability.
The project plans to move to a second-level blockchain system, leading to a major revamp in its token distribution and infrastructure. During this change, approximately 21 billion new IOST tokens will be minted, an event that typically triggers temporary fluctuations in the token’s price.
Upbit’s warning regarding IOST aligns with DAXA’s recommendations, which urge us to inform our users about substantial modifications in the network or tokenomics of an asset, as such alterations might impact the asset’s stability.
Investors cautioned
On January 13th, Upbit warned investors who own or trade IOST coins to be prudent, as the IOST development team had announced recent updates about the project’s planned transition to a layer-2 blockchain within the upcoming weeks.
As a researcher, I’ve been closely observing the recent announcement by Upbit, suggesting potential alterations to the token’s architecture. These changes might significantly reshape the token’s composition, potentially influencing investor perceptions and, consequently, impacting the market’s overall value.
Upbit reassured that they will maintain constant contact with the IOST team throughout the process, ensuring asset security and keeping users updated on any future developments or adjustments.
DAXA notice and market implications
DAXA, a Korean organization, concentrates on establishing consistent standards across significant Korean trading platforms. Regularly, it identifies and marks digital assets that are undergoing major transformations or displaying abnormal market behavior, as part of its mission to safeguard investors.
IOST’s transition isn’t about suspending trading or delisting, but DAXA has highlighted the upcoming L2 transition because of potential effects it might have on traders.
The L2 transition
Following the successful passage of the transition’s second governance vote on January 12th, the IOST team intends to distribute approximately 21.32 billion fresh tokens to fund validator compensation, attract users, and foster growth within their ecosystem.
To connect their current layer-1 network with the newly developed layer-2 system, the team aims to facilitate higher transaction capacity, boost efficiency, and decrease fees. A staged rollout is planned for the release of the upcoming tokens as part of an incremental supply increase.
60% of the freshly minted tokens will be allocated for validator rewards, while 20% is earmarked for airdrops. Additionally, 8% will be used for community incentives, 5% set aside for developer grants, and 4% will contribute to governance through Nexus DAO. Lastly, 3% will cover team compensation and other operational expenses.
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2025-01-13 13:48