While IOTA Mainnet is still waiting for its final decentralization, IOTA 2.0 applications are already being tested in the Devnet 2.0 Test Network. With the NFT Marketplace, the IOTA Network has now sent its first marketplace for non-fungible tokens into beta operation. The IOTA Foundation announced this on July 12 on its blog.
Ethereum fee problem
So far, Ethereum is still setting the tone in the field of non-fungible tokens. Most of the NFT exchange platforms are based on the Primus smart contract, despite the aging issues, mainly manifested by poor network scalability. The result: higher network usage leads to higher gas prices, i.e. the costs of individual smart contract operations. For small investors in particular, NFT trading on Ethereum can become an expensive pleasure in peak times. While there are plenty of solutions – from Layer 2 networks like Polygon, which mitigate the Ethereum blockchain, to the upcoming update in London, to a planned switch to Proof of Stake, there are many indications that ETH fees will not rise for the foreseeable future not only More predictable (London), but also less. In some cases, the effects of second-layer solutions can already be felt. Gas prices have been at a relatively low level since the end of May.
However, especially with more complex smart contract implementations, as is common in the DeFi sector, gas fees still add up, so for many creating NFTs and executing token swaps, yields are growing and the company is still imprecise paying from Porto wallet.
IOTA has been known to announce that its technology, Tangle, enables fee-free transactions. The project aims to provide at least the technological backbone of the Internet of Things. But IOTA has long expanded its focus and is increasingly thinking about the (decentralized) financial sector. IOTA’s NFT Market, which is now in beta operation, is the latest example of this development.
What IOTA wants to do better with its NFT Market
The same logic that IOTA wants to revolutionize the IoT sector can also apply to the platform’s NFT ambitions. It concerns, among other things, the fact that the exemption from fees should significantly reduce the threshold for entering new participants in the network. This includes not only potential buyers of NFT, but also creators, such as visual artists or musicians. However, the IOTA NFT Marketplace does not come for free either. IOTA Blog says:
Transactions are always fee-free on the IOTA network, so that barrier has already disappeared. Mint fees are also negligible due to the IOTA digital asset framework. Only the IOTA NFT market commission remains, since the infrastructure must be electrified in some form. In general, the IOTA network-based NFT solution will be much cheaper than any other existing solution and therefore will be more attractive to all market participants.
Source: IOTA Blog
Of course, the issue of decentralization arises here. Who runs the market? Who do the fees go to? Who takes care of guarding crypto assets? The IOTA Foundation explains that the NFT Marketplace beta is a centralized interim solution. This means that the funds are held in a custodian wallet, similar to centralized bitcoin exchanges such as Binance, Coinbase and Co., Ltd. IOTA’s NFT Marketplace can already be tried through this link. As noted before, this is an MVP that still has fundamental changes coming. In addition to the rebranding, this includes the implementation of IOTA smart contracts and the integration of browser wallets, which are intended to replace centralized crypto storage.
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