Key Insights
- In Q4 2023, IoTeX’s network transaction fees saw significant growth of over 3,000% QoQ to over $212,000. This increase in revenue can be attributed to the heightened transaction activity generated by inscriptions.
- IOTX rewards to validators decreased 2% in Q4’23. In USD terms, rewards to validators grew 62% to $1.3 million in Q4’23, due to the IOTX-USD price appreciation.
- As of the end of 2023, the IoTeX Network was secured by 100 active validators staking 3.6 billion IOTX. The average staking participation reached an all-time high of 36.8% in Q4’23, up 2.6% QoQ from 34.2% in Q3’23.
- IoTeX’s verifiable offchain compute infrastructure — W3bstream — is expected to launch on mainnet in 2024.
- The introduction of The Marshall DAO aims to improve the effectiveness of incentive programs, such as liquidity enhancement, supporting early-stage DePIN projects, grants for public goods, and donations to the ecosystem.
Primer
IoTeX (IOTX) is a decentralized infrastructure network focused on supporting developers of Decentralized Physical Infrastructure Networks (DePIN). The IoTeX Network combines its EVM-compatible base layer, offchain compute mid-layer, and open hardware to connect with real-world data from smart devices and dApps.
The IoTeX base layer utilizes a Randomized Delegated Proof-of-Stake (Roll-DPoS) consensus mechanism. Anyone can stake the network’s native token (IOTX) and cast a vote for one or more community-voted validators, who manage consensus on behalf of the IoTeX Network.
To prove real-world activity, IoTeX collects raw data from tamper-proof devices (e.g., WiFi hotspots in wireless networks or home batteries in energy networks) via an offchain compute middleware called W3bstream.
The W3bstream middleware serves as open infrastructure for verifiable data streaming and processing using zero-knowledge proofs and a general-purpose zkVM. W3bstream also powers the DePINscan platform — a DePIN sector-wide, map-based explorer-as-a-service.
W3bstream is chain-agnostic. As such, it can support and settle to public blockchains including Ethereum, IoTeX chain, Solana, Polygon, Arbitrum, Optimism, and Conflux. Following W3bstream’s devnet launch in June, its mainnet is projected to go live in Q2’24.
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Key Metrics
Performance Analysis
Financial Overview
Demand Side Revenue
The gas fees from transactions on the IoTeX Network represent the demand-side revenue.
In Q4 2023, IoTeX’s network transaction fees saw significant growth of over 3,000% QoQ to over $212,000. This increase in revenue can be attributed to the heightened transaction activity generated by inscriptions.
Similar to other Layer-1 networks, IoTeX saw a big spike in network transactions due to inscriptions. This heightened activity began to emerge on IoTeX in the second half of December. From December 18-31, IoTeX netted nearly $200,000 in revenue from gas fees — i.e., roughly 94% of the overall quarterly revenue, mostly attributed to inscriptions.
Supply Side Revenue
To deploy and maintain a community-contributed infrastructure network, IoTeX leverages token incentives. Supply-side revenue constitutes the IOTX rewards paid to validators on the IoTeX Network.
Supply-side revenue from rewards to validators decreased 2% QoQ to 47.5 million IOTX in Q4’23. In USD terms, rewards to validators increased 62% QoQ to $1.3 million in Q4’23.
Network Overview
The IoTeX Network connects:
- Supply: IoT devices supplying raw activity data to the IoTeX Network.
- Demand: decentralized applications (dApps) consuming data on the IoTeX Network.
Demand
Demand for IoTeX comes from apps and developers in need of data streaming and offchain compute capabilities. As of the end of Q4’23, the IoTeX ecosystem has over 230 dApps. Use cases include connected smart vehicles, geo-mapping, energy data tracking, and health platforms, as well as proof-of-presence and proof-of-humanity apps. However, in line with other Layer-1 protocols, there was a significant spike in transactions during the inscriptions craze.
While Q4’23 saw a general increase in organic demand for IoTeX blockspace, transaction growth was driven by the inscription craze. Transactions of the IoTeX Network increased over 1,800% QoQ in Q4’23.
Monitored Devices
To prove activity in the real world, IoTeX collects raw device data from tamper-proof, IoT-powered smart devices. The IoTeX Network supply can be assessed by the number of actively monitored devices.
As of the end of Q4’23, there were nearly 318,000 monitored devices on the IoTeX Network. The top projects by the number of monitored devices were Helium IoT (83%), MetaBlox (9%), and Theta (2%).
Staking Overview
Staking represents a core component of decentralized governance on the IoTeX Network. IOTX holders deposit the token to support network operations, consensus, and governance. If IOTX tokenholders stake their IOTX tokens, they can vote for validators to manage consensus on their behalf. Simultaneously, stakers earn IOTX rewards in return.
Staking Participation Rate
As of the end of 2023, the IoTeX blockchain has been secured by 100 active validators staking over 3.6 billion IOTX. The quarterly average staking participation reached an all-time high of 36.8% in Q4’23, up 2.6% QoQ from 34.2% in Q3’23.
Qualitative Analysis
Key Developments
IoTeX Core Series
IoTeX Core V1.12.1 and V1.12.0 were released in Q4’23. V1.12.0 included a hard fork and upgraded the EVM to the Bellatrix release, which serves in preparation for the Shanghai release. V1.12.1 brought several improvements to the API and transaction pool functionalities. The complete list of changes can be found in the release notes.
For context, the V1.12 upgrade follows the V1.10 and V1.11 mainnet upgrades which added new features and enhancements. Their contributions included liquidity staking, account abstraction, transaction security, node status monitoring, network improvements, and EVM support.
Integration of Solana with W3bstream
IoTeX announced the integration of Solana with W3bstream. This enables DePIN builders on Solana to utilize W3bstream’s verifiable offchain compute infrastructure as a middleware layer. Simultaneously, it allows DePIN projects on Solana like Render, Helium, or Hivemapper to use the DePINscan map explorer-as-a-service.
For context, the Solana integration is the continuation of the series of recent W3bstream integrations with Polygon, Arbitrum, IoTeX, and Conflux. Integrating with various L1s and L2s should help establish broad interoperability across chains, ecosystems, and foster composability through shared data layers.
IoTeX Domain Name Service (IIP-22)
This proposal introduces the IoTeX Name Service (INS) similar to Ethereum Name Service (ENS). INS aims to provide flexible resolution of short, human-readable names to IoTeX addresses, smart contracts, decentralized websites, and other IoTeX-based resources. Simultaneously, IIP-22 introduced Delegate Endorsement, enabling individual stakeholders to become Delegates (i.e., validators) by simply owning the minimum self-stake of 1.2 million IOTX.
Research on Confidential Computing
IoTeX started a research collaboration with ARM on privacy-preserving data processing. IoTeX aims to leverage ARM’s confidential computing capabilities and prove the feasibility of processing smart device data while preserving user privacy.
Key Events
Accelerator Program
FutureMoney, in partnership with the IoTeX Foundation, launched a $5 million Decentralized Physical Infrastructure Network (DePIN) accelerator program. The program focuses on DePIN and AI startups with applications in the real world. Program participants receive mentorship, networking opportunities, and resources. Each selected project receives an initial $50,000 investment.
DePIN Liquidity Hub
The DePIN Liquidity Hub program offers liquidity pool matching of up to $10,000 on mimo, a DePIN-focused DEX. By the end of Q4’23, the DePIN Liquidity Hub aggregated over $300,000 in liquidity and facilitated over $285,000 in daily trading volume for eight DePIN tokens: WiFi Map, Geodnet, Dimo, WiCrypt, XNET, Drop Wireless, Streamr, and Drife.
The DePIN Liquidity Hub aims to encourage DePIN projects that heavily rely on their tokens as an incentive mechanism to grow the supply side of their networks. In an effort to increase token liquidity for DePIN tokens, ioTube (multichain bridge), ioPay (DePIN wallet), and mimo (decentralized exchange) were created. The current initiatives include bridging DePIN tokens from any other chain to IoTeX L1, creating a two-sided liquidity pool using their token and IOTX on mimo, and running liquidity mining campaigns.
Account Abstraction Grant
IoTeX received a grant from the Ethereum Foundation to build the first zero-knowledge-based account abstraction wallet. The aim is to broaden adoption by allowing for ioPay wallet access with a user-chosen password.
R3al World Series and IEEE Workshop
Throughout 2023, IoTeX hosted the DePIN-focused series of events — R3al World — held at ETHDenver, EthCC, Consensus, Token2049, ETHTokyo, and Hong Kong Web3 Festival. Simultaneously, IoTeX hosted the IEEE DePIN academic workshop addressing design challenges, methodologies, implementations, use cases, and tokenomics related to building DePIN networks.
Governance
IoTeX Improvement Proposals (IIPs) are the mechanism for proposing community-driven changes to the IoTeX protocol, processes, or ecosystem.
The Marshall DAO (IIP-23)
This proposal seeks to establish The Marshall DAO utilizing a vote-escrow onchain governance model. IIP-23 is designed to empower IoTeX stakeholders to propose and decide on the allocation of IOTX incentives. The reasoning behind IIP-23 is to improve the effectiveness of incentive programs in the DePIN sector. The Marshall DAO could potentially allocate IOTX for liquidity enhancement, supporting early-stage DePIN projects, grants for public goods, and donations to the ecosystem.
Other Important IIPs in 2023
- IIP-13 Representing staking buckets as NFTs: proposed to natively support the representation of staking buckets as non-fungible tokens (NFT) on the IoTeX Network.
- IIP-14 (Account abstraction): aimed to abstract account properties, including authentication, authorization, replay protection, gas payment, and batching. Doing so would allow the use of smart contract wallets instead of externally owned accounts (EOAs).
- IIP-15 Sharing gas fees with dApps: proposed sharing part of gas fees from smart contract transactions with the dApp developers that created those smart contracts.
- IIP-21: Bringing IOTX from Ethereum to IoTeX: outlined a plan to bridge the IOTX token from IoTeX L1 to Ethereum and to implement the CIOTX (Crosschain IOTX) token on Ethereum.
Closing Summary
In Q4 2023, IoTeX’s network transaction fees saw significant growth of over 3,000% QoQ to over $212,000. This increase in revenue can be attributed to the heightened transaction activity generated by inscriptions. IOTX rewards to validators decreased 2% in Q4’23. In USD terms, rewards to validators grew 62% to $1.3 million in Q4’23, due to the IOTX-USD price appreciation.
As of the end of 2023, the IoTeX Network was secured by 100 active validators staking 3.6 billion IOTX. The average staking participation reached an all-time high of 36.8% in Q4’23, up 2.6% QoQ from 34.2% in Q3’23.
IoTeX’s verifiable offchain compute infrastructure — W3bstream — is expected to launch on mainnet in 2024. The introduction of The Marshall DAO aims to improve the effectiveness of incentive programs, such as liquidity enhancement, supporting early-stage DePIN projects, grants for public goods, and donations to the ecosystem. All in all, IoTeX’s recent efforts serve to highlight its commitment to building a decentralized infrastructure network for DePIN builders.
