Can lightning serve as a silver lining?

As the co-founder of IOTA, IOTA Foundation, SPYCE5, and BUILD5, as well as being the largest holder of IOTA, the last two days have been upsetting, to say the least. I have had endless conversations with community members, Foundation members, ecosystem contributors, and legal counsel. While I have a lot of strong personal opinions on this, I’ll save most of those for another time. My sole goal with this post is to deploy some common sense, empower the community and attempt to identify a silver lining among these all consuming gloomy clouds to ensure IOTA, as a project, community, and vision, has a future people not only can believe in but want to be a part of.

Transparency

Never before has the IOTA community been asked to accept something so radical and significant while simultaneously having less information than ever. This must change immediately. The extraordinary claims are not supported by a shred of evidence thus far. The grand assertions being presented need to be quantified and elaborated, so the community and ecosystem can take part. When it is stated that “UAE is on board”, what precisely does this entail? Is there an actual binding plan for IOTA to become integral to UAE’s digital blueprint? Are funds allocated and budgets drawn up? Or is there only a potential pilot project? While both prospects would be exciting, they have distinct implications and vastly different scopes. IOTA can not stake its entire future on vague allusions to a rich country being “on board” or “backing IOTA”. Tangible plans and hard facts are desperately and urgently needed. If the level of involvement and plans match the extraordinary ask of the community, disclose it and let it speak for itself; that way, it can serve to unify the community and excite and instill enthusiasm rather than undermine it as it currently does.

In the same vein, who exactly are the contributors, and what justifies them receiving 5% (at current mcap tens of millions of dollars)? Given that no one in the ecosystem was informed or contacted about this, the genuine contributors who have kept IOTA alive for years are not considered contributors here. So who are they, what exactly are they contributing, and at what terms? The community is forced to pick up the bill, so what is being paid for? These rash and hasty decisions are “justified” under the guise that IOTA must suddenly act right now or be left behind and die. Yet, the community is told to wait indefinitely and rendered powerless to act on anything. This is incongruent and erodes the last iota of trust that this decision is rationally informed and remotely good for the project.

Until very recently, the Foundation claimed everything was fine and on track. Why was this recent catastrophic development not shared with the community at all so they could, at the very least, be informed? At BUILD5 and SPYCE5 we collaborate with large international enterprises all the time, so IOTA in this current climate is far from dying. From within IF there are several voices statitng they would continue working on IOTA no matter what, and that they do not agree with either the diagnosis or the treatment presented. This exaggeration to force through a decision has to stop. Without a fundamental level of reciprocal trust between IF, the community, and the broader ecosystem, going forth with this will result in a permanent negative sentiment and lack of involvement in the vaguely defined plans of an Ecosystem Fund and multiple organizations. This would defeat the whole purpose of this from day 1. Rebuilding this trust has to be number one on the agenda, not after the fact, before.

Accountability

While the leadership of IF acknowledges full responsibility for all these issues and professes remorse, tangible actions such as offering to resign or empowering new leaders to prevent this from occurring again remain absent. If the Foundation is genuinely committed to taking responsibility and wishes for the community to mold its trajectory, such steps should be taken immediately. At the end of 2020, I led several official Board decisions within IF that had full support from the Supervisory Board on a financial plan, appointing a CEO/COO, and expanding the Board with experienced people. These were legally binding board decisions that the current leadership inexplicably and consciously chose not to adhere by, causing all of this avoidable mess, so merely offering empty platitudes without presenting concrete solutions is insufficient. Paramount to this process is the current leadership’s willingness to offer to step down fully or partially and enable the community to nominate trustworthy individuals to steer the IOTA Foundation going forth in this new era to get it back from this persistent mismanagement by the current leadership. I don’t care, as long as, at the very least, the board is expanded with experienced long-term veteran community members, ideally, someone who has voiced their disagreements with the current leadership to balance it out. There is a big pool to select from, including people with executive experience from enterprises.

Empowering and involving the ecosystem and community

For many community members and contributors to the ecosystem, it feels as though their individual opinions are overshadowed and the outcome inevitable. However, this perception is far from reality. The power to shape the forthcoming course of action rests firmly in the hands of the community. The measures taken would likely not withstand legal examination by any authoritative body, and the arguments posited would hardly find ground in a court, especially given the expectations for a non-profit open-source foundation under German jurisdiction. I sincerely hope it doesn’t escalate to such extremes, but this situation is extreme. Without community-wide support, this goes nowhere, whereas, with support, it can lead to something good long-term. Rushing this out in 2 weeks and hiding behind a very recent quasi-decentralized Coordinator does not change this context or legal responsibilities. These solid legal foundations are precisely given as the reason for the necessity to set up outside of Germany, so this is the community’s chance to have a say in its future. It’s essential to recognize the community’s substantial influence and decision-making capacity. The community has weathered profound challenges and made difficult decisions before. With transparency and inclusion, this entire debacle can evolve into something the community can get behind.

If the ecosystem and community are going to swallow a pill of this kind, they should at least be able to influence its flavor. Everyone understands that to get buy-in from stakeholders significant enough to warrant this unprecedented action, it must part with a significant sum, but how significant is still up in the air. Furthermore, why should only these unidentified contributors receive tokens? What about the actual known projects that have been with IOTA for years, pouring their time, capital, and energy into bootstrapping on a shoestring budget? If we are to take such drastic action, the very first beneficiaries should surely be them so they can partake in this grand leapfrogging. It makes no sense to ask them to wait for separate funds and structures to be set up while newcomers do not have to wait.

If we are going to fix this, let’s start with the most obvious. Boosting the current ecosystem, fixing leadership and empowering the ecosystem is an opportunity these actions would afford, and that is the silver lining here.

Suggested concrete next steps:

• Publish a transparency report answering who these new stakeholders are, what legal guarantees are in place and how much money is switching hands
• Let the community weigh in on % and the duration of lock-up periods
• Let the community decide which current known actors in IOTA should be eligible for funding
• Expand the Board with at least two new members from the community
• Host an AMA with the Supervisory Board so that the community can verify that they are informed, take full legal responsibility, and hear their perspective