IOTA Takes an Important Step with ETO

Friday, 23 February 2024 10:30

In November 2023, the German open source protocol IOTA took an important step towards the complete decentralization of its network with the appointment of validators. As a Web3 pioneer, ETO GRUPPE also belongs to the select circle of first validators.   

The open source protocol IOTA is based on distributed ledger technology and aims to ensure the secure exchange of data and values in the Internet of Things environment. Based on this innovative communication protocol, the automated exchange of information between end devices could take place in the future Web3.

With the launch of the so-called "Validator Committee", the non-profit IOTA Foundation has initiated a historic upgrade for the gradual transition to full decentralization. The decentralized architecture is the real added value of the communication network. Thus, existing resources and loads are distributed across many network nodes, increasing security against attacks and outages and also promoting collaboration and democratization on the Web3.

ETO has been appointed to this IOTA validator committee along with a handful of other well-known companies and institutions since November 2023. Validators are an important institution in IOTA's so-called consensus mechanism.

This mechanism is based on the so-called "Tangle". It consists of linked transactions, i.e. the exchange of IOTA tokens between two parties in the network. Unlike traditional blockchain systems, in which transactions are grouped into blocks and then linked in a chain, IOTA uses the "Tangle", a directed acyclic graph structure. In order for the Tangle to be created and grow, each sender of a new transaction must validate two previous transactions. This process is known as "tip selection". Ideally, the Tangle grows continuously as each participant confirms transactions and creates new transactions. This means that the users of the network validate it simultaneously by constantly checking and confirming transactions. In this way, they jointly contribute to the monitoring and integrity of the network and enable it to run smoothly and trustworthily.
Validators also have the task of preventing possible manipulations such as so-called "Double Spends". Such attacks represent the successful use of the same funds twice and would torpedo the IOTA protocol. In fact, all nodes within the decentralized network rely on the committee's decisions. The validators therefore ensure the security, functionality and democratization of the network.

Time periods such as the validators' "period of office" are divided into units for which IOTA has chosen its own terms. They are currently called "milestones". These are issued by the "coordinator" every six seconds – i.e. currently still by IOTA itself – and determine the validation time of the network. From IOTA 2.0 onwards, the milestones will be replaced by so-called "epochs". IOTA will then also use the Delegated Proof of Stake (DPoS) method to automatically determine from the validators available those which will take over the security tasks of the network during such an epoch.

The verification of transactions will change again, too. IOTA will use the white flag procedure for this purpose. It can be used to confirm transactions without having to use a vote or another consensus procedure, for example in the case of conflicting transactions. Instead, the white flag method is deterministic. Based on their appearance, it retroactively determines the confirmation order of transactions, eliminating the need for decision making during the transaction confirmation phase.

We were given the special honor of being one of the first IOTA validators because we have been working with IOTA for several years. We use the IOTA protocol and distributed ledger technology for communication and secure transactions with digital currencies within our Web3 applications. The communication protocol is a basic technology of digitalization, as it could also develop into a new form of financing for start-ups and small and medium-sized enterprises with the issuance of crypto tokens.

We would like to thank IOTA for their trust and are proud to be able to make an important contribution to a secure and democratic Web3 as a validator.