After losing market share to newer blockchains following a hype-fueled rally in 2017, IOTA is set to release an upgraded network, known as IOTA 2.0, which will introduce smart contracts, layer 2 blockchains, and decentralised finance (DeFi) applications to the network, CoinDesk reported on Friday.

The introduction of a new ecosystem fund supported by the release of new MIOTA tokens is one of the key enhancements.

In addition, a hard fork called Stardust, slated for release on October 4, will establish the technical foundation for IOTA 2.0, which is expected to launch in the fourth quarter of this year, according to the report.

Generalised Virtual Machine

The implementation of smart contracts on the IOTA network via a general-purpose virtual machine (VM) will increase demand for MIOTA, the project's native token.

Mana, the IOTA network's reputation system for nodes, will play a crucial role in augmenting security and fostering demand for applications and layer 2 networks on the IOTA platform.

New Ecological Fund

Dominik Schiener, co-founder of IOTA, explained the need for these initiatives, emphasising the significance of funding for cryptocurrency market growth and competition.

To incentivize developers and teams to build on the network, an ecosystem fund will be established, supported by the gradual release of new MIOTA tokens.

After the hard fork, there will be a temporary token release every two weeks for four years, resulting in an average annual inflation rate of 12%.

After this period, the circulating supply of MIOTA will reach 4.6 billion tokens.

Developers told the news outlet that IOTA has also established the Tangle Ecosystem Association in Zug, Switzerland, and the IOTA DLT Foundation in Abu Dhabi, United Arab Emirates, to support its ecosystem.

The Tangle

IOTA is not a traditional blockchain; its network, a Directed Acyclic Graph (DAG), is referred to as the "Tangle."

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