IOTA, a feeless distributed ledger (DLT) network, today announced the introduction of IOTA staking. Expanding the token utility of IOTA will offer new opportunities to token holders to be rewarded for their participation in the IOTA ecosystem.

Shimmer, IOTA’s staging network, will be the first project to use the IOTA network to fairly distribute its entire token supply – transforming the IOTA tangle into a launchpad of new token economies.

Multi-asset ledger without transaction fees

Currently, IOTA is transforming into a fully decentralized, programmable multi-asset ledger. In combination with smart contracts, IOTA will be a network that allows developers to create dApp ecosystems with unique token models and economics.

IOTA’s unique architecture of layer-1 tokenization with feeless transactions, layer-2 smart contracts with full EVM compatibility, and atomic composability empower builders to create dApps with the flexibility to customize everything – including execution fees, rewards, and token incentives.

“The underlying foundation of these token ecosystems will be the IOTA token (IOTA), turning the native token of the IOTA network into a launchpad for new token economies. As one of the oldest DLT networks with no premine and fair token distribution since its inception in 2015, IOTA offers innovators the opportunity to launch their own token economies and invite one of the largest crypto communities through open token distributions. What has been missing until now was a mechanism for new token networks to easily and fairly distribute their tokens to IOTA token holders.”


– The IOTA Team

Staking on IOTA

IOTA staking is a process whereby IOTA token holders can participate in the open distribution of any kind of new token. It is a mechanism to fairly distribute new tokens to a set of already existing, active users. 

How staking works on IOTA

Staking IOTA tokens is done through a simple transaction within the Firefly wallet to indicate to the network the beginning of the participation in staking tokens. All nodes in the IOTA network using the new staking plugin can recognize and process staking information, record them individually and calculate rewards associated with any IOTA addresses on which staking has been activated.

All information concerning staking is attached to IOTA addresses and shared by all participating staking nodes. The nodes, therefore, get the same information and are individually able to calculate rewards. In this way, IOTA guarantees that staking rewards can be individually validated by nodes and users connecting their Firefly wallets to nodes.

Staking rewards are assigned to IOTA mainnet addresses, the ones holding the IOTA tokens that are being staked. To acquire rewards (i.e. Shimmer tokens on the Shimmer network), users will need to sign a special transaction with Firefly, using the private key for the address the original, staked IOTA tokens were held on. Firefly does all this automatically through a click of a button.

IOTA staking rewards

IOTA’s token supply is capped and IOTA is one of the few networks without inflation. When someone stakes IOTA tokens, the staking rewards are therefore not paid out in newly minted IOTA tokens, but in the tokens which are launched on the IOTA network and on other networks. This means that users will not earn more IOTA tokens, but will earn tokens from new crypto networks or applications.

The best example of this process is the Shimmer Network. In this case, IOTA token holders can stake their IOTA tokens to receive Shimmer tokens as rewards.