What Makes the IOTA Smart Contracts’ Proposed Solution So Effective?

IOTA Protects Integrity and Verifiability of data.  IOTA fundamentally reengineered, the distributed ledger technology, thus enabling secure exchange of both value and data, without any fees.  IOTA promotes digital identity, global trade, smart cities, and mobility thus creating a social impact.

IOTA is focused on making digital identity possible beyond borders.  Identity is a unique piece of information associated with an entity.  Digital identities permit access to computers and the services they provide to be automated, thus computers and protocols will be able to make it possible for computers to mediate relationships.

Secure digital identities are crucial to the foundation for the digital economy.  With so much business, communication and purchases happening online, it has become more important than ever to be able to trust in people’s digital identity.

“Digital identity is essentially any personal data existing online that can be traced back to the real you.”

IOTA Identity builds on the W3C’s proposed standards for a digital identity framework. This framework includes three roles:  For holders, for issuers, and for verifiers.  Decentralized Identifiers (DID) have public keys which uniquely helps the holder to prove ownership over their personal data. Some common uses of digital identity are Address verification, age verification and authority login.

Identity of Things helps “Devices” prove their unique capabilities, specifications and authenticity, thus making those who are transacting feel the entire process to be reliable through the transaction process.

Self-Sovereign Identity helps individuals have a borderless identity verifiable from across the world.  Digital Identity is a very important part of regulatory compliance, which is crucial for organizations.

IOTA have a vision to provide for Unique Digital Identity for Things, Organizations, and Individuals.

IOTA retweeted about MEV recently:  MEV is a usual blockchain phenomenon and is rooted within the traditional consensus design. It allows miners to include, exclude or change the order of transactions to their own benefit, as the VM is run pre-consensus.

Annual losses in the DeFi sector due to MEV amount to hundreds of millions of dollars on ETH alone (imagine all the potential losses on other chains.

Common exploits of this consensus design include “sandwich attacks”, “liquidator bots”, “time bandit & flash loan attacks” – taking advantage of the average DeFi traders who often don’t realize what is happening to them.

Fortunately, awareness around the MEV issue is growing! The search for viable solutions is ongoing. The most common fix is using bots in order to prevent other bots from extorting this weakness. It’s a band-aid on a bullet wound.

So, what makes the IOTA Smart Contracts proposed solution so effective? Simple – the consensus – tackling the issue at its core.

IOTA’s Smart Contracts consensus solution makes it impossible to include, exclude or change the order of transactions of a smart contract chain by running the VM post-consensus.

Validators can’t determine the order in the block as the batch is randomized in a deterministic pseudo-random way. It’s unpredictable to validators.

This way, the underlying framework of Assembly, the IOTA Smart Contracts Protocol, offers a great solution to transform DeFi markets into a fair space for investors and eliminates their potential loss of millions.

Community Reaction:  Looks like a serious loophole in traditional blockchains. If smart contracts are also processed in such a manner, sky is the limit for insider trading crimes!