The Vision of the IOTA Ecosystem DLT Foundation
While the IOTA Foundation is primarily focused on developing the core IOTA protocol, other entities help support the ecosystem around IOTA and Shimmer technology. In June 2022, the Tangle Ecosystem Association was founded in Switzerland to support ecosystems in Europe and America.
Now, as announced at the end of November, the IOTA Ecosystem DLT Foundation has been founded in Abu Dhabi, United Arab Emirates (UAE). This strategic move signals a decisive push to foster and bolster the IOTA ecosystem across the Middle East, Africa, and Asia.
The recent approval of the IOTA Ecosystem DLT Foundation as the first regulated Distributed Ledger Technology (DLT) foundation under the Abu Dhabi Global Market (ADGM) Authority makes it the first fully regulated crypto foundation in the UAE. This endorsement underscores the IOTA Foundation's commitment to regulatory compliance, with an audit of its tokenomics conducted by Zokyo, a leading cybersecurity company specializing in digital assets, and its dedicated division, Zokyo Econ Lab. Notably, Zokyo is the first auditor to set up an auditing framework based on the standards set by ADGM.
Why the UAE? Global Expansion and Collaboration
Expanding our footprint into new regions is key to IOTA’s growth. While crypto is a global and remote-first industry, it’s important to collaborate with regulators and have a presence on the ground. This is not only to secure a sound legal footing but also because IOTA’s targeted use cases, spanning global trade and supply chains, the circular economy and sustainability, public goods and infrastructure, tokenization of real-world assets (RWA), and more, are directly related to real-world applications. The IOTA Ecosystem DLT Foundation can supercharge our efforts to empower new businesses and use cases in the UAE, the Middle East, and around the globe.
The UAE is a rapidly growing market focused on innovation and technology. One of the largest Web3 hubs in the world and the ideal gateway to the Middle East and South East Asia, it has close trade relationships across the Middle East and North Africa (MENA), India, China, and beyond. The UAE has recently made visionary investments in blockchain, smart cities, and the Internet of Things (IoT) and is positioning itself as a leader in sustainable development, crypto, and Web3. According to Fortune, “Abu Dhabi and Asia show crypto is charging ahead”.
At the same time, the UAE is laying the foundation to become a pre-eminent force in the global crypto economy through regulation and legislation. The challenges stemming from regulatory uncertainty are frequently cited by projects in our ecosystem and beyond as the number one roadblock that hinders development. ADGM’s Distributed Ledger Technology Foundations Regulations 2023 is the most advanced and flexible regulation in the crypto space so far and we’re happy that it has received significant input from the global DLT industry. The introduction of token holder governance in a solid legal framework that establishes a legal entity for DLT projects is a milestone for the global regulation and acceptance of DLT.
The work being done in the UAE to remove regulatory bottlenecks is key to ensuring continuous progress of our emerging ecosystem and a major opportunity to speed up the adoption and growth of IOTA and its ecosystem applications.
Other ecosystems have had to set up their companies under opaque conditions and in subpar jurisdictions and are now faced with the consequences of this. Being part of the ADGM crypto ecosystem from the start, and enabling ecosystem projects to set up local operations, will enable us and our partners to get the setup phase right.
Foundation Goals: Long-Term Value Growth and Ecosystem Development
The IOTA Ecosystem DLT Foundation will be seeded with 552,000,000 $IOTAs (equivalent to over 200 million US dollars), constituting 12% of the total supply that will be released over four years.
Embracing an ecosystem-of-ecosystems approach, the IOTA Ecosystem DLT Foundation's core mission is not to directly build products and applications but to create an environment conducive for others to do so, offering support along the way.
The IOTA Ecosystem DLT Foundation will mainly focus on the following areas:
- Education and events: Content, workshops, and collaboration with universities and researchers will raise awareness of DLT and the IOTA technology stack and use cases. The focus will first be on the underlying technology and frameworks, helping developers expand their skills, before shifting to use cases built on top of IOTA to inspire budding entrepreneurs and enterprises. The end goal is to grow the number of pilot projects, proofs-of-concept, and business incubated on top of the IOTA network.
- Business development and partnerships: The aim is to connect existing ecosystem teams and builders in the UAE while fostering new relationships with start-ups, enterprises, universities, and government agencies. These relationships will feed back into efforts to connect existing ecosystem projects with local and regional players, strengthening the ecosystem and facilitating the growth of startups and projects building on top of the technology stack. The regulatory framework provided by ADGM means the UAE is the ideal sandbox environment for realizing pilots and rolling them out in real industry contexts.
- Builder support and funding: These will incubate and grow new projects leveraging IOTA. Activities will primarily focus on helping individual developers, entrepreneurs, and young startups grow, and supporting them from the ideation stage to being sustainable, standalone businesses. This will be done through grants or direct investment support into these projects.
- Regulatory advice and support: Over the past years, we’ve worked with governments and regulators globally, inputting on proposed legislation and regulation and developing pilot projects that showcase the potential of DLT-based applications spanning government services, identity, and other areas. The IOTA Ecosystem DLT Foundation will become a trusted advisor to regulators, shaping regulatory frameworks to maximize adoption and impact, and bridging relationships between UAE and EU institutions to develop an operable global regulatory framework for the DLT space.
- Public DLT infrastructure: IOTA provides public goods and infrastructure to governments and businesses around the world that can be used to create secure, transparent, and efficient systems for a variety of applications. These include a) Supply chain infrastructure like TLIP (Trade Logistics & Information Pipeline), for which a neutral governing body in the UAE will be set up; b) Digital identity platforms like IOTA Identity 1.0 that manage complex certification systems and give digital autonomy and borderless ID to people, entities, and things, which will be rolled out with businesses and governments in the UAE; and c) Government infrastructure for enhancing inter- and cross-border services, similar to the European Blockchain Services Infrastructure (EBSI), of whose pre-procurement phase IOTA is among the three finalists.
- Real-world asset tokenization: The IOTA Ecosystem DLT Foundation will help incorporate real-world asset (RWA) tokenization in the UAE with IOTA, unlocking new opportunities, bridging TradFi with DeFi, and bringing new assets into the IOTA network. IOTA's commitment to RWA tokenization as a means of allowing widespread participation in emerging digital economies stands to gain significantly from the regulatory backing and transparency provided by ADGM. IOTA already occupies a distinctive position to realize these opportunities at scale, forging collaborations and partnerships at governmental and regulatory levels, as in the examples listed above.
Outlook for IOTA in the UAE
The IOTA Ecosystem DLT Foundation will be key to IOTA’s next phase of growth. Through collaboration with local government, regulators, and industry partners, the Foundation will advocate for and support sustainable, positive-sum DLT projects and applications.
Beyond the technical sphere, the Foundation commits to embodying a force for good in the UAE and the broader crypto space. Rooted in the fundamentally collaborative nature of crypto, the Foundation’s success hinges on building relationships with the right partners on the ground to amplify IOTA's reach and capabilities.
On top of this, IOTA will build its presence in the UAE, hiring and training local talent, and becoming a funnel for talent from around the world to enter the UAE and set up operations at ADGM.
Links in this article
- Website of the Tangle Ecosystem Association
- Blog Post: A New Foundation in Abu Dhabi, UAE
- Blog Post: IOTA’s Strategic Expansion
- Website of Zokyo
- Fortune, “Abu Dhabi and Asia show crypto is charging ahead”
- ADGM News: ADGM Introduces the World’s first DLT Foundations Regime
- TLIP (Trade Logistics & Information Pipeline)
- IOTA Identity 1.0 European Blockchain Services Infrastructure (EBSI)