With the launch of the new IOTA network, Chrysalis, the IOTA Community was presented with an option to decide how to treat unclaimed tokens from previous periods. Now that the dust has settled, we wanted to take the time to explain the situation and various options in more detail.
With the proposal for a community treasury we want to ensure that decisions on unclaimed tokens are open and community driven. We also want to further elucidate the IOTA AS fork.
What are the unclaimed tokens?
All major cryptocurrency networks are continuously being upgraded to advance their core technologies and move towards production readiness. Most updates require simple software updates for wallet users, developers or node operators. In rare cases, upgrades include breaking changes which require token holders to migrate their funds. For example, in cases where encryption schemes or address formats are changed fundamentally and backwards compatibility cannot be provided. Migration processes are typically fully automated and simply require token holders to claim their tokens with the same seed.
The IOTA network has had several of these upgrades with resulting token claim processes since the genesis network launched in 2016. While the vast majority of token holders successfully claimed their tokens, a small percentage did not for unknown reasons. Throughout the years, it has been a constant effort for people involved in the IOTA Foundation to keep the claim process running and to allow the rightful token owners to claim and receive their tokens. Before the Chrysalis upgrade, all unclaimed tokens were held in multiple custody wallets controlled by people related to the IOTA Foundation.
With the Chrysalis network launch, the IOTA Community was presented with the opportunity to vote on what would happen to unclaimed tokens from previous periods. It is our belief that no single individual or entity should be in control over these funds, benefit from them personally or single handedly decide over their future use. Only those holding a vested interest in the utility and growth of the IOTA protocol - the IOTA community - are in a position to make a collective decision on what should happen with the tokens in question and how they should be utilized to benefit the ecosystem.
Where are the unclaimed tokens right now?
As part of the Chrysalis upgrade, unclaimed tokens from previous periods cannot or have not been claimed in the new network. The tokens currently reside within the unmigrated funds pool - containing all unmigrated funds from the legacy network - and have not been claimed to a specific address or seed yet. These tokens can only be moved through a snapshot of the ledger, to which the whole IOTA network would have to agree to. The tokens will be moved in the future after a successful community governance vote (either to an address under the control of the IOTA community, or they will be burned officially).
On the IOTA AS network (see below), all corresponding tokens in question are available to their holders and can be freely transferred.
How many tokens are unclaimed?
The unclaimed tokens in question are from several claiming periods between 2016 and 2017: the original crowdsale, where participants had to claim their IOTA tokens from the genesis, two network upgrades conducted in 2016, and the CURL address reuse issue from 2017 where funds were secured for token holders.
The claim process for the CURL address reuse tokens from 2017 is still ongoing and is open until June 16th, 2021. This means that we will only know the exact number of unclaimed tokens after that cutoff date. At current valuation we estimate the unclaimed tokens to exceed $120m.
What is the IOTA AS fork?
The power of decentralization is only enabled if the community is able to choose amongst possible options. The Chrysalis network launch last week presented the community with two networks to participate in:
- IOTA Chrysalis network, where the unclaimed tokens remain within the unmigrated pool. The IOTA Community can decide in an upcoming governance vote whether the unclaimed tokens should be dedicated to an IOTA Community Treasury Fund or be burned.
- IOTA AS network, where the unclaimed tokens are fully available and transferable. No community vote will happen on this network.
The Community went through a public validation process of the genesis snapshot of both networks. After the snapshot validation was completed, both networks were deployed and opened for the community to participate in. In a similar way that Ethereum forked from Ethereum Classic after the DAO hack, IOTA forked from IOTA AS to empower the IOTA community to decide on the future of the unclaimed tokens. Ultimately it is up to the IOTA Community to decide which network they want to support.
If you want to connect to the IOTA AS network, please simply reach out to node operators on our Discord. To provide both networks a fair chance to succeed, migrated tokens from the legacy IOTA network will be migrated to and are available on both forks. The IOTA Foundation will continue to operate the IOTA AS network until May 31st. But leave it up to the community to form a group to continue the maintenance of the IOTA AS network further.
How do I claim tokens if I am affected?
The process for unclaimed tokens will officially continue until June 16th, 2021. Before you reach out to us, please make sure that you have a valid claim or reclaim case. If you think you do, please follow this tutorial for detailed instructions on how to submit your claim to the IOTA Foundation for review:
https://hackmd.io/@IOTA-X-TEAM/r18PcdTwO#IOTA-post-Chrysalis-reclaim-process. You can also reach out to our team on Discord for further assistance.
Make sure you get in touch before June 16th, 2021 at 23:59 UTC
What is the IOTA Community Treasury proposal?
The IOTA Community will be able to vote to allocate all unclaimed tokens from previous network updates into an official Decentralized Community Treasury - or to burn them. This IOTA Community Treasury would operate completely independently to the existing IOTA Ecosystem Development Fund (which is operated by the IOTA Foundation) and would be governed entirely by the IOTA community. Other communities, like Polkadot, have already had a lot of success with their own community treasury.
What makes the IOTA Community Treasury an exciting proposal is that it fully empowers our community to fund and accelerate the growth of the IOTA ecosystem. Anyone would be able to propose grants for new IOTA-based projects and activities, e.g. organizing meetups, hosting community events, building dApps, etc. With a Treasury, the IOTA community would be able to fund many innovations and incentivize teams and projects to build on IOTA.
By empowering the IOTA community with a Community Treasury, we would not only be fully decentralizing the IOTA network by removing the Coordinator, but also further decentralizing our ecosystem and project funding within it. There would be no dependence on any entities or individuals. Instead, the IOTA community would be able to fully govern and fund activities itself, which is a very exciting prospect for fueling our growth and decentralization.
Exact details of how the IOTA Community Treasury would be operated are to be defined by the community itself. If you are interested in participating in discussions and debates, please make sure to join the #community-governance channel on Discord. All details and discussions will be hosted on this Github repository.
With the upcoming release of the IOTA Smart Contract Protocol we will most likely be able to experiment with and implement novel ways of governing the treasury. After a successful governance vote, we expect the IOTA Community Treasury to be fully operational with the launch of IOTA Smart Contracts.
How will the governance vote work? When will it happen?
Exact details of how the governance vote will function are yet to be defined and need to be agreed on by the broader community. In principle though, every IOTA token holder on the upgraded Chrysalis network would be able to participate and vote for their preferred option with their token holdings. To enable everyone to participate in the vote, we will at least wait until the major Exchanges resume operation and the Ledger Nano integration in Firefly has been completed, as well as giving users a few additional weeks to migrate their tokens to the Chrysalis network and participate in the vote. We expect the governance vote to happen through the Firefly wallet and will notify the community well in advance with further details through all our public communication channels.
What will happen after the governance vote?
If the community votes to establish an IOTA Community Treasury Fund, we will build the first IOTA DAO together! The IOTA Community Treasury can only be fully operational once smart contracts are deployed on the IOTA mainnet. Until then the community should have sufficient time to work out, propose, discuss and debate various governance structures to successfully govern the treasury.
Once the IOTA Smart Contract Protocol is live on the Nectar network, the community will be able to experiment with and trial various DAO governance structures.
What about the Trinity hack victims?
With the Trinity wallet hack of last year, more than 40 community members have lost their tokens due to a malicious library integration of a third party provider. After this unfortunate event, a generous promise was made to the community to make the victims whole and repay them from personal funds. Because this never happened, the burden was then put on the IOTA Foundation to fulfil that public promise and come up with a solution.
With the closing of the claim period, we want to take this opportunity to utilize parts of the unclaimed funds for the Trinity hack victims. It should be noted that the unclaimed funds that will be used are in a custody wallet of the IOTA Foundation.
We hope that with the agreement of the broader community we can put a positive end to this and move forward united.
What about unclaimed tokens from the Chrysalis migration?
The migration of the legacy IOTA network to Chrysalis (and IOTA AS) is currently in process and will continue to operate in a fully automated fashion at least until Coordicide (the full decentralisation of the IOTA network by means of removing the Coordinator). After Coordicide we will present the community with another governance vote to decide on the future cutoff date for migrating tokens from the IOTA legacy network. After this cutoff date has been reached, the tokens from the current migration will also be contributed to the hopefully then already established Community Treasury, or burned, depending on the outcome of that governance vote.
Has this been reviewed by lawyers?
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