- IOTA has devised a solution to tackle the limitations of current decentralized betting platforms, offering scalability and customizable fees.
- IOTA’s architecture allows for the efficient management of Smart Contracts and also provides a robust framework for generating and transferring NFTs, which can serve as betting slips.
Deciphering IOTA’s Dual-Layered Approach
Decentralized betting platforms like Augur have aimed to solve issues around the rigidity and fees imposed by traditional bookmakers. However, these platforms have run into their own set of problems, primarily related to scalability and transaction costs. Current platforms, mostly based on Ethereum, can only process about 15 transactions per second, rendering them inadequate for high-speed betting environments. Additionally, the fees for executing Smart Contracts often outweigh the potential winnings from low-stake bets.
Enter IOTA’s revolutionary architecture designed to mitigate these challenges. IOTA’s design employs a two-tiered approach, distinguishing it from conventional blockchain structures. The base layer, known as Layer 1 (L1), relies on a unique, fee-free data structure called the Tangle. Unlike traditional blockchains, where transactions are grouped in blocks, Tangle uses a Directed Acyclic Graph (DAG) that allows transactions to validate multiple parent transactions, thus significantly increasing transaction throughput.
Advancing Smart Contracts and NFTs on IOTA
While Tangle’s design facilitates a high transaction rate, it does not support a globally consistent state essential for deterministic Smart Contract execution. IOTA resolves this by introducing a second layer, Layer 2 (L2), consisting of traditional unidirectional blockchains. Smart Contracts run on special nodes called Wasp Nodes that form a committee for consensus. These nodes reconcile L2’s global state with L1’s Tangle at regular intervals.
IOTA’s L2 architecture also enables the generation of Non-Fungible Tokens (NFTs), which can serve as unique betting slips. Notably, IOTA allows the management of multiple asset types, including custom currencies and NFTs, on its L1 Tangle layer. This is in stark contrast to most blockchains that usually manage just one asset type. On IOTA’s platform, an NFT comprises an IOTA address, immutable metadata, and issuer verification.
IOTA’s architecture supports both Ethereum Virtual Machine (EVM) and WebAssembly Virtual Machine (Wasm VM) contracts. EVM compatibility allows the new system to tap into the extensive tools of the Ethereum ecosystem. Therefore, one can create NFTs with maximum flexibility on the L2 layer while manipulating native L1 assets.
By resolving the issues of scalability and fees associated with current decentralized betting platforms, IOTA offers a scalable system with the option of fee-free Smart Contracts. This innovation brings unprecedented flexibility and efficiency to the decentralized betting arena.