Outside Source
Upbit has warned investors as IOST plans a layer-2 transition, with 21 billion new tokens and a tokenomics overhaul.
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Upbit, a South Korean cryptocurrency exchange, has warned that the Internet of Services Token (IOST) has been flagged for caution by the Digital Asset eXchange Alliance (DAXA) to protect investors.
IOST is a blockchain project focused on decentralized applications (DApps) and designed for high throughput and scalability.
The project is set to transition into a layer-2 blockchain, which will significantly overhaul its tokenomics and network structure. As part of the transition, 21 billion new IOST tokens will be issued, a process often associated with short-term price volatility.
Upbit’s cautionary statement on IOST follows DAXA’s guidelines to notify users about significant network or tokenomic changes that could affect an asset’s stability.
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Investors cautioned
Upbit issued a notice on Jan. 13, urging investors holding or trading IOST to exercise caution. The statement followed updates from the IOST development team regarding the project’s upcoming migration to a layer-2 blockchain in the coming weeks.
According to Upbit’s notice, the move could lead to substantial changes in the token’s structure and have ripple effects on investor sentiment and market value.
Upbit said that it would remain in close communication with the IOST team during the process to keep assets protected and users informed of any further updates or changes.
Upbit Korea IOST announcement. Source: Upbit Korea
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DAXA notice and market implications
DAXA is an organization focused on creating unified standards among major Korean exchanges. It regularly flags digital assets undergoing structural changes or exhibiting unusual market activity as part of its investor protection mandate.
While IOST’s transition is not a suspension of trading or delisting announcement, DAXA has spotlighted the impending L2 transition due to the impact it could have on traders.
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The L2 transition
After its second governance vote on the transition, which was passed on Jan. 12, the IOST team plans to issue 21.32 billion new tokens to support validator rewards, user incentives and future ecosystem development.
By bridging its existing layer-1 network with the new L2, the team seeks to handle more transactions, improve efficiency and lower fees. The new tokens will be released gradually in a phased supply expansion.
Of the new tokens, 60% will go to validator rewards, 20% to airdrops, 8% to community incentives, 5% to developer grants, 4% to governance through Nexus DAO and 3% to the team for compensation and other expenses.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article first appeared at Cointelegraph.com News
