The Internet of Things (IoT) is experiencing widespread adoption across industry sectors ranging from supply chain management to smart cities, buildings, and health monitoring. However, most software architectures for IoT deployment rely on centralized cloud computing infrastructures to provide storage and computing power, as cloud providers have high economic incentives to organize their infrastructure into clusters. Despite these incentives, there has been a recent shift from centralized to decentralized architecture that harnesses the potential of edge devices, reduces network latency, and lowers infrastructure cost to support IoT applications. This shift has resulted in new edge computing architectures, but many still rely on centralized solutions for managing applications. A truly decentralized approach would offer interesting properties required for IoT use cases. To address these concerns, we introduce a decentralized architecture tailored for large scale deployments of peer-to-peer IoT sensor networks and capable of run-time application migration. The solution combines a blockchain consensus algorithm and verifiable random functions to ensure scalability, fault tolerance, transparency, and no single point of failure. We build on our previously presented theoretical simulations with many protocol improvements and an implementation tested in a use case related to monitoring a Slovenian cultural heritage building located in Bled, Slovenia.