IOTA will be able to host CBDCs, DeFi and decentralized exchanges, says Dom Schiener

  • According to IOTA co-founder Dominik Schiener, the IOTA Smart Contract Protocol can provide the technical foundation for a central bank digital currency (CBDC)
  • IOTA smart contracts will provide “the most flexible developer environment” to host DeFi and decentralized exchanges.

IOTA co-founder Dominik Schiener once again took the time to answer some questions from the community via Discord yesterday. One of the core topics Schiener answered was the IOTA Smart Contract Protocol (ISCP). The IOTA co-founder provided probably the most interesting answer right at the beginning, when he said that the ISCP will enable the issuance of central bank digital currencies (CBDCs):

yeh, I mean you will be able to run CBDC or stablecoins on top of IOTA ISCP and tokenized assets. So the ecosystem will be empowered to build whatever.

Interestingly, IOTA was already under discussion in 2018 in relation to the Swedish e-krona. At the time, Sweden’s central bank, the Riksbank, put the technical infrastructure for the e-krona out to tender. Around 40 projects had applied to the central bank as part of the tender, with 19 remaining after an initial elimination.

Within this selected group were both the IOTA Foundation and IBM, which wanted to provide the technical basis for the CBDC on the basis of Stellar. Ultimately, however, Ireland-based Accenture was awarded the pilot project in December 2019.

IOTA smart contracts offer “the most flexible developer environment”

In addition to the statement about a CBDC on IOTA, Schiener admitted that publicly available information around the IOTA Smart Contract Protocol is currently rather scarce. However, this is expected to change “as soon as the alpha is ready.” According to the current roadmap, this could happen as early as the end of the first quarter of 2021.

In addition, Dominik Schiener also revealed that the IOTA Foundation is currently hiring many new people to strengthen the smart contract team and further develop “some exciting ideas.” When asked what differentiates IOTA smart contracts from other competitors and what capabilities IOTA has that no other competitor has, Schiener stated:

Every smart contract will have its committee, thus drastically increasing speed and scalability, and reducing costs (there will be a fixed fee, not a variable fee). IOTA is the interoperability layer (think Relaychain in Polkadot or Cosmos) that makes it possible for all smart contracts of IOTA to exchange assets (tokens) and data between each other.

And lastly, we want it to be VM-agnostic, making it possible to run the EVM or a formally verifiable language. TL;DR: We are offering the most flexible developer environments with ISCP, which greatly leverages the IOTA network for security and interoperability.

When asked if IOTA will also host DeFi and decentralized exchanges (DEX), Schiener also revealed that “some people” are already developing a DEX based on IOTA. The DEX will exclusively support IOTA-based tokens, though Schiener said that “wrapped coins” – possibly Wrapped Bitcoin or Wrapped Ether? – could also play a role:

Tokenized assets that will be on IOTA. Real estate, bonds, NFT’s, arts, funcoins, whatever […] and obviously wrapped assets or wrapped coins

About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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