Upbit Warns Investors as IOST (IOST) Token Flagged for Caution by DAXA Alliance

South Korean cryptocurrency exchange Upbit has flagged Internet of Services Token (IOST) for caution, following an announcement from the Digital Asset eXchange Alliance (DAXA) to protect investors.

As IOST prepares to transition into a layer-2 blockchain in the coming weeks, the move will also trigger changes in the IOST tokenomics and network structure, including the issuance of 21 billion new IOST tokens.

Investors cautioned

On Jan. 13, Upbit issued a notice, urging investors who are holding or trading IOST to exercise caution. The statement follows updates from the IOST development team regarding the project’s forthcoming migration to a layer-2 blockchain.

According to Upbit’s notice, the move will also lead to substantial changes in the token’s structure, which could have a ripple effect on investor sentiment and the asset’s stability in the market.

Upbit added that it will be maintaining close communication with the IOST team during the process to keep assets protected and users informed of any further updates or changes.

DAXA notice and market implications

DAXA is an organization that is focused on creating unified standards among major Korean exchanges. As part of its investor protection mandate, it flags digital assets that are undergoing structural changes or exhibiting unusual market activity.

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.

The L2 transition

Following its second governance vote on the transition, which passed on Jan. 12, the IOST team plans to issue about 21.3 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 aims 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.

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.