Progress Report Q1 2023

Latest Developments Across IOTA and Shimmer

Welcome to the first in a new series of quarterly Progress Reports, which attempts to give an overview of all the many developments across the IOTA, Shimmer, and Assembly ecosystem. From a new Shimmer testnet to breakthroughs in the IOTA protocol, inroads into the crypto regulatory landscape, and insights into the social impact of blockchain, it’s been a packed couple of months – so let’s dive in.

Shimmer Updates

The Shimmer network has successfully operated without any bugs or issues since its inception six months ago, which is a testament to the robustness of the network. Furthermore, we are pleased to announce that $SMR was listed on Bitpanda in March, representing an important milestone for the project's growth and development. Also in March, the ShimmerEVM Testnet chain was launched, with several projects actively testing the ShimmerEVM. Watch our recent AMA on the Testnet launch before trying it out yourself,

The following enhancements were incorporated into the Shimmer Explorer: Support for exhibiting metadata of NFT and native tokens; a codebase unification and user interface improvement for address pages with tabified sections; optimization of search speed, improvement in the responsiveness of the UI on compact screens and the inclusion of participation events (e.g. for governance votes) visualization functionality on the address page.

IOTA Foundation Updates

Alongside the massive amount of work that went into the launch of the ShimmerEVM testnet, its tooling and infrastructure, the IOTA Foundation continued to have an incredibly busy quarter, with significant developments in areas ranging from research to governance, regulatory affairs, and Coordicide.

Research Department

The Core Node Team added significant improvements to GoShimmer node software, our current research implementation for IOTA 2.0 (“Coordicide”). These include critical bug fixes and a core component refactor aimed at increasing code portability and reducing dependencies in order to streamline porting the protocol into our production-grade Hornet node software.

The GoShimmer software has been stabilized, now allowing proper snapshot creation and resuming from disk with previously saved settings.

Currently, the codebase is in a feature-freeze state, and the team is completing the refactoring of the conflict tracking component to enhance modularity. The Core Node team also implemented further security measures in GoShimmer by making the main data flow fully synchronous. Testing is ongoing to ensure optimal performance. In addition to these improvements, IOTA’s core codebase was bootstrapped and the first modules were successfully ported. The node now boasts a basic network stack, enabling the exchange of activity blocks over the wire.

After thorough research, our Protocol Research team concluded the first iteration of IOTA 2.0's tokenomics, Mana, congestion control, consensus, and finalization. Additionally, three papers were accepted at the Institute of Electrical and Electronics Engineers International Conference on Blockchain and Cryptocurrency (IEEE ICBC 2023), with publication planned for May, and two talks were prepared for delivery at the UZH Blockchain Seminars: Robustness of the Tangle 2.0 Consensus on March 15th and Beyond Chains: the potential and challenges of DAG-based Distributed Ledgers on April 18th.

Our Smart Contract researchers conducted ongoing analyses and identification of challenges to programmability support on IOTA. Furthermore, a task force was launched to develop a strategy for modeling accounts on IOTA, that will allow for staking and Mana accounting in IOTA 2.0.

The Tangle Dynamics research group had two of its papers accepted for publication in IEEE ICBC 2023. The first covers our modular simulators, which enable the most important aspects of the IOTA 2.0 solution to be studied in a controlled environment. Its modularity also allows our researchers to study and compare other DLT solutions in the future and incorporate more features of the IOTA protocol. The second paper introduces and evaluates mitigation strategies for liveness attacks in DAG-based ledgers. As IOTA 2.0 offers open and permissionless writing access, this aspect is important to the fairness and security of the protocol. Both papers will be available in May, so look out for them!

The Finalization research group implemented several key updates to our network protocols, including the development of a second-level knowledge approach for confirming blocks and transactions. This approach ensures both security and fast confirmation rates, particularly in favorable network conditions. Additionally, the group introduced a finalization rule using slot commitment chains, which greatly enhances the security of our network in asynchronous conditions. The group also updated the tip selection algorithm for validator nodes, leading to improved confirmation rates and better connectivity for the consensus portion of the Tangle.

The Congestion Control research group conducted extensive simulations, using a new tool called TangleSim to evaluate congestion control algorithms based on Mana burning. The results demonstrate that potential inconsistencies are eventually resolved. A paper detailing the results has been accepted by IEEE ICBC with publication planned for May.

As part of the Congestion Control research group’s efforts to develop IOTA 2.0, it also finalized the congestion control mechanism. This will involve a base fee in Mana, which will be burned and will depend on the current traffic levels. Additionally, the group will implement a Mana-based round-robin scheduler to ensure fair throughput sharing for block issuers. And to simplify the user experience, the group introduced a single notion of Mana. Users will be able to spend the Mana they have accumulated within the transaction, making it easier to manage and use.

Our Applied Cryptography researchers conducted cryptographic libraries security audit and upgrade, while our Zero Knowledge research group reviewed various Zero Knowledge Virtual Machine (zkVM) implementations with a view on how to integrate a zkVM into our protocol. The Zero Knowledge researchers also prepared a report that analyzes current zkVM solutions and identifies some use cases of zero knowledge technology on the current version of IOTA.

The ISC Consensus team defined recovery procedures for the ISC consensus and investigated its behavior, and is currently developing its description. Meanwhile, the Incentives research group completed formalizing the Incentives and Tokenomics Whitepaper and created a sketch for a Mana Calculator, both to be made available to the public once ready and sufficiently documented.

Finally, as part of the next phase of the EU Blockchain PCP (EBSI), additional research has been ongoing, according to the Phase 2 roadmap specification of the tender.

Engineering Department

The Rust Libraries team addressed all feature requests and bug reports to support the recent Firefly Shimmer releases, including NFTs and Governance. Internal refactoring was performed to streamline the codebase, specifically Input Selection and, to expand our language support, WASM bindings are now available alongside Python, Java, and NodeJs, with Swift bindings being developed by community members.

The CLI wallet is gradually being elevated to first-class wallet status, while quality assurance has been significantly enhanced through better CI and increased code coverage. Finally, the collaboration between the Rust Libraries and Developer Experience teams (DevEx) continued to provide improved documentation and examples.

There were also several major updates by the Smart Contracts team, including Wasp updates, with significant enhancements to improve the stability and performance of the WASP node; the addition of support for historical lookups to ensure proper functionality of indexers and explorers; the introduction of initial iterations of Rust, Go, and Javascript client libraries and the implementation of an upgraded API, Dashboard, EVM Toolkit, and CLI.

The Identity team shifted its focus from Data Integrity Proofs to VC-JWT, which is a user-friendly method of generating signatures for credentials. This approach is based on the well-established JOSE framework and is well-aligned with EBSI and eIDAS. Additionally, the team implemented DNS verification, also known as Domain Linkage, to establish a verifiable link between a domain and an identity. Finally, with walt.id, IOTA delivered a login solution for Web2 and Web3: read about it here.

Firefly for Shimmer (v2.1.0) underwent a major update, featuring NFT support, including the ability to send and receive NFTs, a collectibles gallery, and a mint NFT developer tool. The update also introduced a governance tab for participating in governance events based on the Governance Framework, as well as the ability to send assets to an EVM address on an IOTA Smart Contract Chain (ISC), among other improvements and bug fixes.

Additionally, work continued on a Shimmer-compatible Firefly mobile app, which is approaching the testing phase. Following thorough planning and design processes, development for main Layer2 support for the ShimmerEVM is also set to begin in iterative milestones and releases.

Developer Experience

Our DevEx team tested our L1 libraries and identified issues that need to be resolved to improve the development experience. The team prioritized and implemented these improvements by using a scrum approach and a Kanban board to help structure items. Additionally, the team initiated the development of a new Wiki section focused on helping beginners with their learning journey. It also launched a four-week ShimmerEVM tutorial series for developer onboarding. Finally, the team defined the Shimmer and ShimmerEVM education path, with a revamp of the wiki tutorial section in progress. Stay tuned for updates!

Governance, Community, and Ecosystem

Our work on Governance saw major developments this quarter. The Governance team worked with the Firefly Team, enabling the Shimmer community to vote on the first four Shimmer Governance proposals. Also, the team supported the community in creating a DAO for the Shimmer Community Treasury, which resulted in them selecting the Marshall Islands as a legal base for the DAO. The team also helped develop a governance framework, with all processes being documented in the Wiki.

The IOTA Foundation’s Community team continued its work with the ever-growing ecosystem and also saw major developments in Q1. The Touchpoint team continued its growth with the addition of exceptional projects and founders, resulting in a current count of over 45 projects and 95 founders, creating a diverse range of Web3 applications, including but not limited to DeFi, NFTs, gaming, DAOs, and infrastructure.

We have completed the concept for a new Grant Program aimed at streamlining internal processes and removing any existing obstacles, also taking into account the new treasuries and funding avenues. The new concept is designed to align efforts across four distinct categories: Vouchers, Investments, Grants, and Bounties, thereby ensuring comprehensive coverage of the ecosystem's requirements. We believe this will greatly benefit the IOTA community and look forward to seeing the impact it will have on the ecosystem.

Additionally, the Community Management team has recently restructured the official Discord server, to simplify the user experience across our various projects and initiatives, enhance accessibility and ensure a more streamlined and user-friendly experience.

Regulatory Affairs, Social Impact, and Sustainability

Our Regulatory Affairs team launched Let's Talk about Regulation, a series of monthly events on Discord where regulatory experts share their knowledge on topics such as the Markets in Crypto-Asset (MiCA) Regulation, NFTs, GDPR, Decentralized Finance (DeFi), taxonomy, and compliance. The webinars aim to initiate policy discussions on how regulation in the EU should evolve concerning digital assets, NFTs, and DeFi. The team also organized a series of roundtables in partnership with FTI Consulting and INATBA to explore and define regulation in DeFi and surveyed different stakeholders on their opinions about DeFi. The team is also closely monitoring relevant bills in the European Institutions, such as AMLR, Data Act, and the AI Act,  to ensure that the industry's voice is being heard during these discussions.

Our collaboration with the Social Impact and Sustainability Working Group of the International Association for Trusted Blockchain Applications (INATBA) continued to highlight sustainable projects in regions outside the EU and the US. This included a report mapping blockchain projects in Latin America to the 17 United Nations' Sustainable Development Goals (SDGs), highlighting at least one project per SDG using relevant KPIs. The report details each project's technology, use case, and social impact measurement.

Additionally, a ReFi and Financial inclusion podcast featuring guest speakers from different ReFi projects is to be launched in Q2.

We have also been invited to participate in BC100+, an initiative held under the High Patronage of H.E. Csaba Körösi, President of the 77th UN General Assembly. BC100+ aims to raise awareness about the potential of blockchain technology to address systemic issues like inequality, poverty, and climate change. It intends to promote debate, raise awareness, and clarify the opportunities of blockchain's role in realizing the UN Charter Values and the 2030 Agenda. The steering committee will publish the manifesto and start onboarding partners in Q2.

Assembly

The ongoing fifth round of staking for Assembly resulted in the distribution of a cumulated current total of 10.8 billion tokens to the community. The development of Assembly has progressed at a slower pace as the team's current focus is directed toward its predecessor, ShimmerEVM.

Coordicide

Last but not least, the core research into Coordicide has been declared as completed, and we are presently engaged in documentation and implementation. In support of our efforts, we’ve published several papers that demonstrate the success of our research and the key events that have facilitated it:

• Access Control for Distributed Ledgers in the Internet of Things: A Networking Approach
• Reality-based UTXO Ledger
• Tangle 2.0 Leaderless Nakamoto Consensus on the Heaviest DAG

Further, structured information is currently being prepared in order to be published as soon as it is ready. In conclusion, the achievements of the IOTA Foundation in Q1 have been considerable. But our success isn’t just limited to our internal teams: our vibrant and engaged community, coupled with a rapidly expanding ecosystem, is a testament to IOTA’s ability to bring people together and drive real-world impact. Catch up with the next chapter in our development in the next Progress Update; in the meantime, if you have any questions, hit us up on our Discord.

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