In this thesis, we first conduct a comprehensive literature review on both distributed ledger technology applications in IoT and the performance evaluation of such decentralized systems. Then we present a detailed technical overview of IOTA, following a contractive review of different DAG-based distributed ledger technologies. Next, we propose a scalable transactive smart homes infrastructure by leveraging IOTA protocol and following the separation of concerns (SOC) design principle. Based on the proposed solution, an experiment with 40 home nodes is conducted to prove the concept at large scale in a cloud environment. The results show that our solution provides a high transaction speed and scalability, as well as good performance on micropayment which is important in IoT initiatives. We conduct an analysis and discuss how the new system breaks out the Blockchain Trilemma, which claims that it is almost impossible for a blockchain platform to simultaneously reach decentralization, scalability and security. Based on our findings on scalability and performance, we conclude that the proposed DAG-based distributed ledger is an effective solution for building an IoT infrastructure for smart communities, in which local residents can freely and securely transfer values.