IOTA And Coordicide: Steps Towards Complete Decentralization

By late May 2021, there were over 10,000 #cryptocurrency projects listed on the CoinMarketCap.

Admittedly, some of them are independent blockchains, while others launch on smart contracting platforms. For instance, most DeFi tokens and prediction markets rely on oracles and other props.


One of the many projects operating from their independent chain is IOTA.

Running the affairs of IOTA, a global blockchain planning to disrupt the machine economy and power the next era of Internet-of-Things (IoT), is the IOTA Foundation based in Berlin, Germany.

The purpose of IOTA is to serve the machine economy. Accordingly, it is distributed, abiding by the core principles of blockchain, to record and securely execute transactions between machines and all devices that form the internet-of things web.

But IOTA is somewhat differentiated from, say, Bitcoin and Ethereum.

Indeed, it is distributed and made up of nodes that confirm machine and device transactions enabling eventual consensus over the state of the ledger—or the Tangle—in a decentralized manner.

However, instead of being a “blockchain,” the network is “blockless” powered by the Direct Acyclic Graph (DAG), the main distinguishing feature. The combination of Proof-of-work for consensus and the integration of the DAG translates to a slightly altered underlying mechanism that directly impacts the network’s energy efficiency and scaling properties.

Problems with IOTA

As ingenious, ambitious, and multipurpose as IOTA is, critics raised valid concerns that the IOTA Foundation is currently addressing.

Since its launch in 2015, the IOTA’s Tangle (ledger) is protected from third-party attacks by a centralized super node called the Coordinator.

What’s worse, the Coordinator is under the control of the foundation. It calls into question the adherence, as the foundation claims, to the core tenets that glues and defines an actual blockchain.

Ideally, a public ledger should be decentralized with some concessions, especially on scalability. However, with DAG and its architecture, IOTA plans to—in the long run—be scalable, secure, and decentralized.


The Coordinator is supposed to have been deactivated with the increasing adoption and popularity of IOTA solutions. Work is in progress to transit to a Coordinator-free network in a multi-phase procedure called Coordicide.

Naturally, users would ask themselves why Coordicide is necessary and break down the coordinator’s roles in the first place.

The mainnet went live and the team decided to run a central node—the Coordinator—to release zero value transactions and perform checkpoints on the Tangle.

These transactions are called “milestones” and would define the general direction in which the Tangle is being spun.

Note that IOTA—as aforementioned—isn’t a blockchain, and therefore transactions aren’t chronological but instead random with a tendency of more being confirmed towards a particular direction.

Within the IOTA ecosystem, any transaction posted by a user is only valid if it’s confirmed by the Coordinator or indirectly by the milestone.

This arrangement alone means the operator of the Coordicide wields absolute power to even freeze the network or censor transactions in the Tangle. Also, with the IOTA Foundation in charge of proceedings, the Tangle’s ability to scale is limited.

Exposure to Risk

What’s more? Malicious agents can target the coordinator and steal funds.

Unsurprisingly, there was an attempt in early 2020 when fake seeds were generated by hackers, resulting in the loss of funds. In response to this inconveniencing and reputation damaging attack, the IOTA Foundation paused the Coordinator, literally freezing the network, for one long month.

The attack, coupled with a deluge of criticism, made the IOTA Foundation fast-track the process of Coordicide—and after all, the use of the Coordinator was a temporary solution.

Why take over five years anyways?

Still, caution had to be taken considering how overhauling the shift would be. Of note, in the early stages, the IOTA Foundation made it clear that Coordicide will only proceed subject to their research team completely and thoroughly understanding the “Coordinator-free Tangle.”

Consequently, the team activated the Zero-value (Znet) testnet, a Coordinator-free Tangle, setting a solid ground for the creation of what would be the first IoT-focused platform that’s decentralized and infinitely scalable.

How the Coodicide Will Work

There were three approaches that could be adopted to eliminate the Coordinator. One of them was the proposed introduction of a reputation system and node accountability, the other was an improved randomized tip selection algorithm, and the last was a Star-like system incorporating trusted transaction pathways.

There were three main phases that the Tangle would go through before IOTA 2.0.

They were announced in June 2020 by the IOTA Foundation.

These are:

  • Pollen stage, which would serve as the research bed for the team’s network of developers. Here, users would validate concepts as drawn from the Coordicide whitepaper besides simulating possible attack vectors.
  • Nectar stage, which launched towards the end of 2020, implemented Coordicide’s critical modules via an incentivized test network. Herein, the team focuses on picking out bugs before mainnet launch.
  • Honey stage, set for a tentative time in H2 2021, releases IOTA, marking the end of the Coordicide process.

The final version of IOTA 2.0 would be fast, secure, and decentralized, opening up crypto to beyond #DeFi. Markedly different, the transaction processing time will reduce from four minutes to 10 seconds, faster than Ethereum. At the same time, the network would be energy efficient without sacrificing scalability.

Is this the beginning of a machine era?

Leave a Reply

Your email address will not be published.

Related Articles
Read More

A Guide to Maker and MakerDAO

The decentralized financial system is home to various blockchain-based protocols. At press time, the total value of locked assets in DeFi stands at $87.42 billion. Ranking as the second protocol is MakerDAO, which has locked assets worth $13.27 billion. MakerDAO operates like a money market...