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Dubbed the IOTA Ecosystem Fund, the idea is to incentivize expanding and shaping the IOTA ecosystem through use cases, libraries, tools and hackathons.
"Every great open source project has a great ecosystem surrounding it, in many ways it is the defining characteristic that separates a mediocre project from a great one," said David Sonstebo, founder at IOTA. "A thriving ecosystem is a prerequisite for long-term success. The IOTA Ecosystem Fund is backed by over $2m to open up a world of possibilities for developers and researchers to take the IOTA ecosystem even further."
IOTA is based on Tangle, a third-generation blockchain technology based on a directed acyclic graph. Traditional blockchains rely on miners that compete to hash blocks of transactions in exchange for cryptocurrency (like Bitcoin). In IOTA, issuing a transaction requires users to work to approve other transactions, eliminating the transaction fees.
"It is quite evident that Bitcoin and nearly all other cryptocurrencies weren't made to function as the network of the IoT," writes Steffen Marburg in the the Tangler blog. "Considering hundreds of thousands of nano-payments each day in the near future, these blockchains would generate an enormous amount of fees, just for conducting transactions, while costs of these nano-payments oftentimes undermatch the fees."
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