State of IoTeX Q1 2024

Key Insights

• As of Q1’24, the IoTeX Network was secured by 108 active delegates staking $29 million, up 73% QoQ. The average staking participation reached an all-time high of 40.6% in Q1’24, up from 36.8% in Q4’23.
• In Q1’24, rewards to validators grew 71% QoQ to $3.3 million. This increase was due to the IOTX-USD price appreciation, as IOTX rewards decreased 8% from 65 million IOTX in Q4'23 to 60 million IOTX in Q1'24.
• As the inscription activity cooled off in Q1’24, IoTeX's network transaction activity and fees resumed to the levels seen prior to Q4’23. Q1’24 transaction fees grew 3x from Q3’23 and 13% YoY.
• IoTeX’s verifiable offchain compute infrastructure — W3bstream — is expected to launch on mainnet in 2024.
• The Marshall DAO proposal passed, aiming to improve the effectiveness of incentive programs. The proposal covers liquidity support for early-stage DePIN projects, public goods grants, and ecosystem donations.

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 smart devices and real-world data to blockchains. The real-world data is sourced from smart devices, machines and sensors, and decentralized applications (dApps) across the physical and digital world.

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 delegates, who manage consensus on behalf of the IoTeX Network.

IoTeX's middleware solution W3bstream computes and verifies real-world data, bringing it on-chain. 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 an 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, and Optimism. Following W3bstream’s devnet launch in 2023, its mainnet is projected to go live in Q2’24.

Performance Analysis

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.

Usage

Demand for IoTeX comes from apps and developers in need of data streaming and offchain compute capabilities. As of the end of Q1’24, the IoTeX ecosystem has over 200 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. Popular projects building on the IoTeX network include Drop Wireless (communications infrastructure protocol), and Network3 (Layer-2 protocol focused on AI developer needs).

In line with other Layer-1 protocols, the IoTeX transaction activity resumed to usual levels in Q1’24, after experiencing a significant spike during the inscriptions craze in December 2023.

For context, transactions activity on IoTeX Network grew over 1,800% QoQ in Q4’23, before resuming to levels seen in Q3’23, prior to the heightened activity driven by inscriptions.

Staking Overview

Staking represents a core component of decentralized governance on the IoTeX Network.

Holders of the native IoTeX token — IOTX — deposit the token to support network operations, consensus, and governance. If IOTX holders stake their IOTX tokens, they can vote for delegates to manage consensus on their behalf. Simultaneously, token holders earn IOTX rewards in return for staking.

As of Q1’24, the IoTeX Network was secured by 108 active delegates staking $29 million, up 73% QoQ. The average staking participation reached an all-time high of 40.6% in Q1’24, up from 36.8% in Q4’23.

Notably, average staked in USD terms increased 73% QoQ to over $29 million, mainly driven by the IOTX-USD price appreciation.

Financial Overview

As of the end of Q1’24, IOTX market capitalization reached nearly $700 million, up 48% QoQ from $471 million in Q4’23. Simultaneously, IOTX-USD price appreciated 48% QoQ in Q1’24.

Revenue

The gas fees from transactions on the IoTeX Network represent the demand-side revenue.

As the inscription activity cooled off in Q1’24, IoTeX's network transaction fees saw a 97% decrease QoQ. To put this in context, IoTeX's network transaction fees resumed to usual levels seen prior to Q4’23. While Q1’24 transaction fees dropped 97% QoQ, they grew 3x from Q3’23 and 13% YoY.

Similar to other Layer-1 networks, IoTeX saw a big spike in network transactions due to the heightened inscription activity in Q4’23. Inscription activity began to emerge on IoTeX in the second half of December. From December 18 to 31, IoTeX netted nearly $200,000 in revenue from gas fees — i.e., roughly 94% of the overall quarterly revenue, mostly attributed to inscriptions. The activity cooled off in Q1’24, returning to gas fee levels that are higher than the ones seen in Q3’23.

Rewards

To deploy and maintain a community-contributed infrastructure network, IoTeX leverages token incentives. That is, rewards are paid to validators on the IoTeX Network from inflationary token issuance.

In Q1’24, rewards to validators increased 71% QoQ to $3.3 million. This increase was due to the IOTX-USD price appreciation, as IOTX rewards decreased 8% from 65 million IOTX in Q4'23 to 60 million IOTX in Q1'24.

Qualitative Analysis

Key Developments

V1.13 Series

IoTeX Core V1.13.0 was released on February 7, 2024. This release includes a hard fork on the IoTeX mainnet on February 19, 2024. This release upgraded the EVM to the latest Shanghai version, bringing in the new opcodes with improvements in smart contract execution and enabling deterministic deployment functionality on the IoTeX network.

IoTeX Core V1.13.1 was released on March 8, 2024. This maintenance release followed the V1.13.0 version, introducing a bug fix related to nonce calculation for certain wallet addresses. The bug was first reported by users after the V1.13.0 launch.

V1.14 Series

The V1.14 hard fork arrived on April 4, 2024, and added the following features:

• IIP-24: Raise Block Gas Limit to 50 million IOTX to enhance transaction processing capabilities
• IIP-25: Delegate Endorsement, introducing a new governance model allowing stakeholder endorsements for delegates, aiming to improve network participation and ecosystem diversity.

The complete list of changes can be found in the release notes.

DePINscan 1.0 Launch

IoTeX launched DePINscan 1.0 in partnership with DePIN projects Helium, Akash, Streamr, Theta, POKT, Drift, WiFi Map, and DIMO. DePINscan’s new features include: top trending projects; DePIN market cap, volume, and total devices; pre-token launches; and detailed project pages.

Key Events

DePIN Surf Accelerator Program

The DePIN Surf Accelerator was launched at ETHDenver 2024 by FutureMoney and Foresight X in partnership with the IoTeX Foundation. The $5 million decentralized physical infrastructure network (DePIN) accelerator 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.

Liquidity Mining Program

IoTeX launched a liquidity mining program with WiFi Map, GEODNET, and XNET. The program is part of the overall DePIN Liquidity Hub program that 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, developers created ioTube (multichain bridge), ioPay (DePIN wallet), and mimo (decentralized exchange). The current initiatives include bridging DePIN tokens from other chains to IoTeX L1, creating a two-sided liquidity pool using another chain’s token and IOTX on mimo and running liquidity mining campaigns.

DePIN Demo Day

IoTeX hosted R3al World, the largest DePIN event at ETHDenver. The event featured contributions from Borderless, a16z, SamsungNext, EV3, and IoTeX. It also showcased the first cohort of the DePIN Accelerator Program, including projects like Geodnet, Streamr, Ator, Exabits, EMC, Tableland, Powerpod, Network3, Inferix, Starpower, Wayru, Dephy, and Acurast.

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 successful 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. It aims to improve the effectiveness of incentive programs in the DePIN sector. Its goals also encompass supporting DePIN projects and funding broader network initiatives.

The proposal aims to establish a governance system that allows stakeholders to decide on funding new DePIN projects. The Marshall DAO would then allocate IOTX to various scenarios, such as liquidity enhancement, supporting early-stage and growing DePIN projects, grants for public goods, and donations to the ecosystem.

The proposal includes integrating previous IIPs, such as IIP-15 for sharing gas fees with apps, and IoTeX programs like Burn-Drop into The Marshall DAO. It also introduces new functionalities like IOTX staking through NFT buckets. Additionally, it offers MachineFi DAO NFT holders an increased voting power, subject to certain limits based on their NFT holdings.

Raise Block Gas Limit (IIP-24)

This successful proposal increased the block gas limit on the IoTeX blockchain to 50 million IOTX. The proposal aims to address scalability concerns during periods of high network activity. Its plan is to enhance the network's throughput by allowing more transactions and smart contract computations per block. The change was implemented as part of the V13 hard fork.

ioTube Support for BTC (IIP 29)

This successful proposal aims to develop a bridge to facilitate the transfer of Bitcoin assets to the IoTeX Network to enhance the network’s value interoperability.

Closing Summary

By the end of Q1’24, the IoTeX Network was secured by 108 active delegates staking $29 million, up 73% QoQ. The average staking participation reached an all-time high of 40.6% in Q1’24, up from 36.8% in Q4’23. In Q1’24, rewards to validators grew 71% QoQ to $3.3 million. This increase was due to the IOTX-USD price appreciation, as IOTX rewards decreased 8% from 65 million IOTX in Q4'23 to 60 million IOTX in Q1'24.

As the inscription activity cooled off in Q1’24, IoTeX's network transaction fees resumed to the levels seen prior to Q4’23. While Q1’24 transaction fees dropped 97% QoQ, they grew 3x from Q3’23 and were up 13% YoY.

The W3bstream middleware, which serves as open infrastructure for verifiable data streaming and processing, 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, public goods grants, and ecosystem donations.

All in all, IoTeX's recent efforts highlight its commitment to building a decentralized infrastructure network for IoT devices and dApps.

Source : Messari / May 9, 2024