IOTA’s tokenomics stopped being “fixed supply and feeless” the day the network committed to validator security budgets and ongoing incentive spend. On the current Rebased mainnet, $IOTA has an explicit monetary loop: mint a fixed daily subsidy, burn baseline fees, and use stake to decide who earns the spread. It is a more honest design for a general-purpose execution layer. It is also a design that forces IOTA to justify inflation with real economic throughput, not just narrative.

Token role in the Rebased network

$IOTA is the native asset of the Rebased IOTA mainnet and sits directly inside the protocol’s security and resource-pricing design. It is used for staking (delegation to validators in DPoS), for transaction fees, and for storage deposits that are locked while a user’s state increases validator storage burden, as defined in the tokenomics whitepaper.

Staking is not ornamental here. Validator influence is determined by delegated stake, and rewards are paid out at epoch boundaries to validators and delegators based on stake share, validator performance, and validator commission settings.

Rebased IOTA is also explicit about denomination and accounting. The token is represented on-chain as an object type, and 1 IOTA = 1 billion NANOs. If you want a quick refresher on standard token concepts that show up in models like this, see our tokenomics FAQ.

This matters for “what the token does” in the product. The design is not trying to route value through a single fee market. It tries to price compute and state separately, then uses monetary policy to pay for security. That is structurally closer to modern PoS execution layers than to IOTA’s original pitch.

Supply, emissions, and the unlock overhang

At the Rebased network launch on May 5, 2025, 4,600,000,000 IOTA were migrated from the prior Stardust network into the new mainnet; the migration path is described in the mainnet upgrade post.

From there, IOTA moved into ongoing issuance. At the end of each ~24-hour epoch, 767,000 new IOTA can be minted and distributed as staking subsidy, which the whitepaper describes as an initial annual minting rate of 6% relative to the starting supply. Critically, the protocol fixes issuance in absolute terms, so the percentage inflation rate declines over time unless governance changes the rule.

The docs are also unambiguous that Rebased IOTA is not capped. Total supply “fluctuates” due to minting and fee burning, and supply growth is designed to be “at most linear over time.”

Unlocks sit on top of emissions. The Rebased whitepaper states that at mainnet launch on May 5, 2025, circulating supply was 3,746,223,720 IOTA, with scheduled unlocks continuing until October 2027, at which point total and circulating supply are expected to converge (absent additional minting and burning effects).

The same appendix specifies the unlock cadence: from May 14 to October 1, 2025, 19,137,719 IOTA unlock every two weeks (totaling 210,514,906 IOTA by October 1), then from October 2025 to September 29, 2027, unlocks drop to 12,370,411 IOTA biweekly (totaling 643,261,373 IOTA across that period).

On the secondary-data side, CoinGecko reflects the post-launch reality that total supply is now above 4.6B due to minting plus unlocks. As of March 5, 2026, CoinGecko shows circulating supply 4,283,522,973 and total supply 4,826,954,596, and it labels max supply as infinite in its supply metrics view.

Allocations and distribution (Stardust tokenomics update baseline) - the baseline categories below follow IOTA’s 2023 tokenomics update.

One nuance worth stressing. The current design stacks three supply vectors on top of each other: scheduled unlocks (until October 2027), fixed daily minting, and variable fee burn. That makes “inflation” a moving target. For sustainability analysis, you do not look for a single rate. You look for whether burn + real demand can plausibly outrun subsidy + unlock-driven sell pressure over multi-year windows.

Fees, burns, and where value can actually accrue

IOTA’s post-Rebased fee model is a deliberate reversal from the old “feeless” identity. The protocol now prices resources, then burns part of what it collects.

In the Rebased whitepaper, the fee a user ultimately faces is framed as:

net_gas_fees = computation_fee + storage_deposit − storage_rebate.

Storage is treated as a deposit, not a tax. The design maps each byte stored into storage units and charges a storage fee that is “100% rebatable” when state is deleted, which is meant to incentivize cleanup rather than permanent ledger bloat; if you’re comparing models for pricing state growth, our state-cost review is a useful second reference point.

Compute fees are where the monetary loop becomes concrete. The whitepaper defines a protocol reference_gas_price. The portion of compute fees equal to computation_units × reference_gas_price is burned, while any extra paid above that reference is treated as a tip and distributed to validators together with epoch rewards.

The practical minimum is also specified. The whitepaper notes a minimum gas budget of 0.001 IOTA (assuming the stated minimum computation units and a reference gas price example).

Finally, there is “UX policy” sitting above monetary policy. IOTA promotes “sponsored transactions” via an IOTA Gas Station concept, where an application can cover user fees while the network still collects the underlying burn and anti-spam payments.

What this means for value capture

From a long-horizon emissions sustainability lens, the key question is whether IOTA can generate enough fee burn and deposit demand to justify paying 767,000 IOTA per day for security.

Fee burn is productive only when it reflects real usage that someone is willing to pay for. Deposit locking is helpful for float reduction but it is not an income statement. It reduces tradable supply while the storage exists, then returns the principal when state is freed. It is closer to a refundable bond market than to a burn-based sink.

So the equilibrium story is tight. If on-chain activity is weak, burn will be weak. In that regime, the subsidy is just dilution. If activity is strong, burn rises automatically, and IOTA can move toward a “security budget funded by users” profile. The protocol gives you the mechanism. It does not give you the demand.

Governance and who can change the money

IOTA’s governance is a blend of forum-driven protocol process and token-holder voting for specific treasury decisions. On the protocol side, the IOTA Foundation has described the TIP protocol governance as the main way to improve and change the core protocol, with the IOTA Governance Forum as the coordination hub.

On the treasury side, IOTA has run binding community votes with published results. In the June 14, 2022 “Build vs Burn” treasury vote, the IOTA blog states the community decided to “BUILD” and establish a community treasury DAO using unclaimed tokens, with details in the treasury vote results.

In the 2023 tokenomics update, IOTA also makes a forward-looking governance commitment around unclaimed balances from migrations. It describes that after a two-year claim period, the community can decide whether certain unclaimed tokens should be burned to reduce total supply or assigned to the IOTA Treasury DAO.

For tokenomics, the material point is not just “does governance exist.” It is what governance can touch. Rebased introduces ongoing emissions at a fixed daily rate and a burn mechanism tied to reference gas pricing. The whitepaper does not frame these as immutable. That means parameter stability is ultimately a governance and social-layer question, not only a code question.

History of the monetary regime shift

IOTA’s current token design is easier to understand if you acknowledge how many monetary regimes it has crossed.

In the September 15, 2023 tokenomics update, IOTA explicitly states that since the start of IOTA in 2015, 100% of the token supply was issued to the community, with no reserved allocation for founders, team, or the foundation, and that early development was funded by community donations.

That same post is where IOTA publicly justified its first “final” distribution adjustment. It describes a temporary, bi-weekly release over four years to reach a new fixed total supply of 4,600,000,000 IOTA, and it links this to creating an Ecosystem Fund and dedicated entities like TEA and the IOTA DLT Foundation.

Then Rebased hit. On May 5, 2025, the network migrated from Stardust to the “new IOTA network” in the Rebased mainnet upgrade.

The May 30, 2025 technical and tokenomics whitepaper documents the consequences: an uncapped supply, a fixed daily subsidy of 767,000 IOTA distributed through staking, and fee burning as a counter-force.

From a sustainability perspective, this is the real “Coordicide-era” economic pivot. Security is no longer a pure externality shouldered by a foundation or a permissioned committee. It is paid for by token holders via dilution unless and until usage burn takes over.

Risk analysis

IOTA’s design is mechanically coherent. It is also unforgiving. When you fix a daily subsidy and hope burn catches up, you are making a macro bet: future demand must convert into on-chain compute and state rent at scale, or holders fund security indefinitely.

Top 3 risks

  1. Usage-burn fails to catch subsidy (dominant macro risk). Trigger: multi-quarter stagnation in meaningful transaction volume and fee-paying execution while subsidy continues at up to 767,000 IOTA per day. Mechanism: absolute issuance is fixed per epoch, while burning is proportional to usage at the reference gas price, so low activity implies structurally positive net issuance. Who bears it: passive holders first (dilution), then stakers via real-yield compression if price weakens. Measurable indicators: daily/weekly burned fees versus minted subsidy, circulating supply slope, and share of rewards that come from subsidy versus tips.
  2. Unlock-driven sell pressure and treasury monetization optics. Trigger: bi-weekly unlock events through October 2027 combined with sustained operational funding needs of ecosystem entities. Mechanism: newly unlocked supply becomes liquid float, and if treasury entities liquidate into thin demand, price can lag adoption even if tech improves. Who bears it: spot holders and long-duration stakers (price drawdowns), ecosystem builders (treasury purchasing power volatility). Measurable indicators: unlock calendar versus exchange inflows, treasury address net outflows, and deviation between total and circulating supply trajectories.
  3. DPoS stake concentration and validator set brittleness. Trigger: insufficient distribution of delegated stake, leading to a small set of validators persistently meeting thresholds while others fail to enter or remain in the committee. Mechanism: validator entry and survival depend on delegated stake minimums (2M to request entry; removal if below 1M at epoch boundary, with intermediate thresholds). Who bears it: users and application teams via censorship-resistance and liveness risk, and delegators via correlated slashing or operational risk. Measurable indicators: Nakamoto coefficient of stake, share of stake in top N validators, churn rate in the active validator set, and frequency of validators hitting the 1.5M and 1M thresholds.

Dominant risk: subsidy without productivity

The core sustainability question is simple. IOTA mints up to 279,955,000 IOTA per year if maximum daily issuance is realized, and the whitepaper frames that as a first-year maximum growth rate of about 6.1% absent burning.

In a vacuum, that is not “good” or “bad.” It is a security budget. The problem is that inflation becomes economically defensible only when it is tied to productivity. Here, productivity is mostly “fee-paying execution and state usage” because that is what creates burn (and tips) in the protocol’s own terms; for a comparison case where incentives and emissions sit at the center of the system, see our emissions-led review.

If usage stays thin, burns stay thin. Deposits do not save you because they are designed to be refunded. Tips do not save you because they are voluntary and typically near-zero in calm networks. That leaves a structural outcome: holders fund security by dilution, and the “real yield” of staking becomes a nominal illusion that depends on market price support.

That dynamic is worsened by the unlock phase. The protocol is not only issuing. It is also releasing previously locked supply until October 2027. If ecosystem treasuries are deploying capital productively into adoption, you can get a flywheel. If the market experiences it as routine sell pressure, you get reflexivity in the wrong direction; if you’re building internal models around these indicators, our research reports may help as a starting reference library.

The best defense IOTA has is also the thing it must prove: predictable low fees that still burn at scale, plus application design that pushes meaningful activity onto L1 instead of routing value off-chain or to L2s that do not meaningfully touch the burn path. The mechanism exists. The sustainability outcome is contingent.

If you are building on IOTA and need a second set of eyes on emissions sustainability, fee-to-burn pathways, and treasury unlock risk, that is the slice of work where tokenomics consulting is most valuable. Keep it mechanistic. Model burn under realistic usage. Treat unlocks as a market microstructure problem, not a community narrative problem.



This article is part of our Tokenomics Deep Dive series.