IOTA is looking to add value to its ecosystem through staking and expects a test run with Shimmer (SMR) soon. We examine here whether this can be worthwhile and how IOTA envisions Staking.
Staking has emerged as a proven method for earning interest on balances in altcoins like Cardano (ADA), largely without risk. Bonuses are paid out for deposited capital in Staking because the coins contribute to the security and stability of the respective blockchain. With IOTA, as is well known, some things are technologically different than with typical altcoins. Thus, the first staking project at IOTA will also be somewhat different from the known implementations, as the official announcement makes clear. This is because no IOTA will be distributed as an incentive for staking IOTA, but Shimmer (SMR) will be distributed in the first test run. Shimmer is under the umbrella of the IOTA Foundation and wants to use SMR to place a possible DeFi token for IOTA.
Shimmer (SMR) staking on IOTA – here’s the plan.
Shimmer’s web presence states that the exact launch date for Staking will be announced 24 hours in advance. This has not happened yet and the vague “in the near future” applies. Those who then register IOTA for Staking via the wallet Firefly will be allocated one shimmer per deposited IOTA every ten seconds for up to 90 days. SMR is not yet tradable and is expected to become the native token at Shimmer in the future. Whether this will result in a monetary value is an open question.
The IOTA Foundation compares its approach to staking to permanent airdrops. This is because deposited IOTA is not currently needed in Tanglenet for stability and security. In this respect, staking with Shimmer is also a feasibility study for use cases of the future in a decentralized IOTA 2.0.
Conclusion: IOTA Staking – Success Uncertain.
The IOTA Foundation and Shimmer assure that staked IOTA will be absolutely safe and you can also withdraw them at any time. So the risk seems manageable. However, since the staking is being tried out on a test level, it is also completely uncertain whether Shimmer will ever build a functioning platform and whether prices will emerge for SMR on a secondary market. Critics see the project as a red herring from IOTA, where all-time highs of over $5 from 2018 look out of reach at today’s levels of under $1.50. After all, IOTA’s price curve recently gained a good 10 percent, and the announcement of staking with Shimmer may have exerted influence here as a positive factor. The big challenge for IOTA, however, remains the transition to a decentralized IOTA 2.0. If SMR likes Staking as a test to demonstrate future use cases, this would be good news. But as I said: The practical test is still to come and until then, as usual with IOTA, it is important to wait for the real developments and not to rely on announcements.
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