IOTA has made a significant move by launching its layer 2 Ethereum Virtual Machine (EVM) network, designed to focus on real-world asset usage and introduce new functionalities to the IOTA ecosystem. The layer 2 network aims to bring real-world assets on-chain, with a particular emphasis on the tokenization of physical assets. It also features built-in protections against transaction ordering and Maximal Extractable Value (MEV), ensuring the security and integrity of transactions.

The launch of the layer 2 network has introduced functionalities such as smart contracts, cross-chain capabilities, parallel processing, and security against MEV into the IOTA ecosystem. This has strengthened the fundamentals of the IOTA token, which has seen a 6% increase in the past 24 hours. In contrast, the broader crypto market, as measured by the CoinDesk 20 Index (CD20), gained less than 2%.

The layer 2 network will particularly focus on decentralized financial (DeFi) applications and real-world assets (RWA) usage, according to IOTA co-founder Dominik Schiener. RWA refers to a sector within the cryptocurrency market that focuses on the tokenization of tangible assets that exist in the physical world. Schiener stated that IOTA is being positioned to bring the real world to Web3 and help bring trillions of assets and institutional investors on-chain.

Schiener also mentioned the establishment of the IOTA Ecosystem DLT Foundation as the first DLT foundation registered under the Abu Dhabi Global Market (ADGM) regulations, which uniquely positions IOTA to lead in RWA tokenization. He added that their technology stack has been adapted specifically to meet the needs of institutional investors, including their on-chain KYC project to identify investors and enable institutional DeFi trading pools, and the MEV-resistance of their network to protect investors and meet regulatory compliance.

The IOTA EVM claims to have a built-in feature to prevent transaction ordering, which helps avoid extracting value from the fees users pay to use the network. Parallel processing, another feature of the network, involves sending multiple network transactions simultaneously instead of sequentially. This enables blockchain scaling, lower gas costs, and higher transaction processing speed. The launch of the layer 2 network is a significant step forward for IOTA, as it enhances the security and functionality of the IOTA ecosystem, making it more attractive to institutional investors and real-world asset holders.