IOTA is a third generation blockchain based on the concept of a Directed Acyclic Graph (DAG), also called tangle. This allows to solve three crucial issues that severely limit most other blockchain solutions. The IOTA protocol
- is highly scalable,
- has zero transaction costs, and
- allows offline transactions.
This makes IOTA the perfect fit for the Internet of Things. I still owe you an analysis on the optimal inflation rate in such a Machine Based Economy. This is not an easy-to-answer question. I did some extensive reading and my mind hovered over it quite some time; I will likely bring my thoughts to paper soon.
For this post, let me focus on an update of the distribution of IOTA tokens after the recent snapshot of the network from 08th of August 2017. Since no mining process is involved in IOTA, all 2,779,530,283,277,761 Iota or roughly 2,800,000 Gigaiota (Gi) exist since the very beginning and the total supply did not change since then. What did change, though, is the ownership of these tokens.
Before the last snapshot all Iota needed to be claimed by the initial ICO investors. Some tokens remained unclaimed and are now in the sphere of the developers. While no concrete information on this exists, I would deem it likely that the unclaimed tokens are still the top address containing 247,266.66Gi.
The launch of trading at Bitfinex led to a sharp increase in interest in IOTA and the price of the tokens. It is also likely that it led to a much wider distribution, since it allowed a more widespread audience to invest. At the same time, some investors hold their tokens in their exchange wallets at Bitfinex, meaning that the snapshot will not provide us any data on them. Hence, the analysis here is necessarily an underestimation of the actual distribution among users.
Excluding the funds of the foundation, the unclaimed Iota as well as the Finex cold store address yields the following distribution:
Very important to note here is the number of addresses with a positive balance: 22,245. This is a sharp increase compared to the snapshot from two months ago when only 5,229 addresses with a positive balance existed. That is, even without the investors holding their balances with Bitfinex it is safe to state that IOTA adoption increased.
In detail: the number of addresses holding more than 1 Gi increased from 2,850 to 7,216 or by around 153%, addresses with more than 10Gi increased by 49% from 1,770 to 2,641, while the number of richer addresses holding more than 1,000 and more than 10,000 Gi decreased by 11% and 16% respectively. Accordingly, the share of Iota belonging to the richest ten addresses saw a constant decline over the snapshots and is now at around 21.31%. These figures suggest that new addresses are less often whales compared to old addresses and that tokens are distributed from the old investors to new investors.
While the concentration among the top group has decreased, the GINI coefficient as a general measure of wealth that I have used in the past two posts has actually increased to 97%. This is somewhat counterintuitive, given that the wealth of the top holders has decreased. However, this effect can well be overcompensated by a sharp increase in lower value addresses which is certainly the case here. Hence, the GINI figures are not directly comparable, because they refer to a different number of addresses. In essence, the increase in the GINI figure does not mean that the IOTA network is more concentrated than before. Instead, the wider adoption shown by number of addresses clearly shows that IOTA is now more widespread than ever before.