Ondo (ondo) 
IOTA is set to undergo its most significant network upgrade to date on May 5, transitioning its mainnet to the new IOTA Rebased protocol. This upgrade introduces critical enhancements, including full decentralization, staking rewards, Layer 1 smart contract support via MoveVM, and the ability to scale beyond 50,000 transactions per second.
Transition to Delegated Proof-of-Stake (DPoS)
The new Rebased protocol replaces the previous architecture of IOTA with a Delegated Proof-of-Stake (DPoS) model. The upgrade will launch with 50 permissionless validator slots, with plans to scale this number to 150 in the future. This shift marks IOTA’s full transition to decentralized consensus, paving the way for more complex applications and broader adoption.
In essence, IOTA is transforming its system to become faster, more secure, and entirely community-driven. This update also allows users to earn staking rewards and develop decentralized applications (dApps) directly on the IOTA network without relying on external tools.
MoveVM Smart Contract Integration
One of the most noteworthy features of the upgrade is the integration of MoveVM, a Layer 1 smart contract functionality. This addition enables developers to create decentralized apps directly on IOTA’s base layer. IOTA becomes the third blockchain network, after Aptos and Sui, to support MoveVM on Layer 1.
Additionally, the upgrade reactivates the IOTA EVM (Ethereum Virtual Machine), which will operate alongside MoveVM, further expanding the network’s capabilities and appeal to developers.
Staking Rewards and Fee Innovations
For the first time in its history, IOTA will introduce staking rewards for $IOTA holders. These rewards are expected to offer annual yields ranging between 10% and 15%, making it an attractive incentive for investors. A new fee-burning mechanism is also being implemented, along with minimal adaptive transaction fees, ensuring cost efficiency for users.
The introduction of the IOTA Gas Station feature will allow developers to subsidize transaction costs on behalf of end users. This functionality is designed to enhance the user experience and foster greater adoption of dApps built on the IOTA network.
Initial Genesis Validators
The network’s initial Genesis validators will include a mix of foundations, ecosystem players, and staking providers. Organizations such as the IOTA Foundation, Luganodes, Stakin, and others will play a critical role in maintaining the network’s security and reliability during its early stages.
Positioning for Institutional and Governmental Use Cases
IOTA aims to position itself as a go-to solution for institutional and governmental use cases following this upgrade. Potential applications include digital identity systems, supply chain infrastructure, and on-chain finance solutions. The Rebased upgrade has received approval through community governance and has undergone a full audit process to ensure its reliability and security.
This upgrade represents a major milestone in IOTA’s evolution, aligning the network for future growth and increased adoption across various industries.
