By: Tia, Techub News

In 2023, the concept of DePIN has rapidly emerged and become a hot topic in the blockchain field. IoTeX has already seen this trend as early as 2017 and focused on the combination of IoT and blockchain. IoTeX's vision is not only to provide a decentralized trust network for devices, but also to build a "machine world" so that all devices can become part of the "machine society" and achieve autonomous interaction and economic activities.

In the original IoTeX white paper released in 2017, IoTeX was positioned as Layer 1, but from the latest progress disclosed by IoTeX, its current strategic direction has shifted to modularization, which is a big strategic shift. In order to understand the reasons behind it, Techub News conducted an exclusive interview with IoTeX co-founder Jing Sun during the TOKEN2049 event.

Techub News: DePIN only got its own name in 2023 and started to become popular, but IoTeX was very visionary and was established in 2017, focusing on the connection between the Internet of Things and blockchain. Can you share with us the reason why IoTeX was established at that time? And why did you choose to join IoTeX?

Jing: I joined IoTeX in 2017. I worked as a VC in Silicon Valley for five or six years. In 2016, we saw some projects gradually moving towards distributed platforms, and each of them had their own use cases.

For example, I have invested in a project that does 360 live streaming. They found that it is very expensive to build a network on their own because it requires a lot of upfront investment. However, once the network has community participation and the community provides idle streaming capabilities, the entire economy will start to turn. When I personally invested in early distributed projects related to smart contracts, I firmly believed that this technology is not just for one industry, it can support use cases in various scenarios and fields, which makes it a track that is very worthy of investment and long-term layout.

In 2016 and 2017, machines and devices already accounted for a large proportion. If artificial intelligence is added later, it is conceivable that machines will dominate the world in the future. But the problem is that all the devices, including the cloud and data, were centralized at that time. In addition, how to connect these machines is also a difficult problem. Because to some extent, machines are also an economy, just like society. It is impossible for one or two centralized companies like Google or Microsoft to provide all the backend services, because centralization cannot achieve the autonomous circulation of the machine economy.

At this time, we were also looking at blockchain technology, and we felt that the combination of the two was very smooth. We believe that blockchain technology is more suitable for machines because machines need a decentralized system to support it.

Moreover, the economic mechanism of blockchain technology is very compatible with machines. Because the things produced by machines are valuable. So how can machines serve other machines or people after completing production? This requires an economic system. If this system is built on the traditional economic system, it will not work because it needs to be autonomous. In addition, it needs to evaluate the value of what the machine has done.

So when we created Layer1 in 2017, we clearly stated that this public chain was dedicated to machines and equipment. At that time, DePIN was still very far away, and Infra did not exist, so we needed to build Infra from scratch. It took us about three years to build Infra.

In 2019, Crypto exploded with DeFi Summer, and then GameFi developed. After so many Fi appeared, we also began to think about what is the most important thing about the combination of IoT and blockchain. The conclusion we came to is the financialization of machines. So we published the white paper of MachineFi. MachineFi is actually the prototype of DePIN.

Techub News: Can you give us a detailed introduction on how blockchain decentralizes physical infrastructure? For example, what is the specific logic of applications such as IoT data on-chain or distributed energy?

Jing: DePIN connects devices and data in the physical world to the chain through blockchain technology, achieving data transparency and decentralized control.

Specifically, the logic of blockchain in IoT and distributed energy applications is as follows: First, IoT devices or distributed energy devices (such as solar panels, sensors, etc.) need to have a unique digital identity, which we call "Sovereign Smart Devices". These devices will process the data they collect locally in an encrypted manner and perform preliminary verification off-chain to ensure the authenticity and accuracy of the data.

The verified data is then transferred to the blockchain and stored in a decentralized ledger. This process is usually done through an off-chain to on-chain protocol, such as IoTeX's W3bStream protocol. W3bStream can verify the device's data through predetermined rules and upload key data to the chain when certain conditions are met, thereby saving the cost of on-chain operations.

For distributed energy projects, such as solar panels and energy storage systems, they can produce, distribute and trade energy through blockchain. Each device has an identity on the chain and records the power it generates and the transactions. Community users can automatically participate in energy transactions through smart contracts on the blockchain without relying on traditional centralized power companies. This model can not only improve energy efficiency, but also encourage more people to participate in energy production and distribution.

In these application scenarios, the decentralized nature of blockchain means that physical devices and the data they generate are no longer subject to a single centralized organization, but can interact in an open and transparent network. In this way, the behavior and data of any device can be traced and verified, thus achieving true decentralized control and trust.

Techub News: The original IoTeX white paper released in 2017 positioned IoTeX as Layer 1, but judging from your latest disclosed progress, the current strategic direction is modularization. This is a major strategic shift. Can you talk to us about the logic and reasons behind it?

Jing: With the development of the industry, our cognition is also constantly iterating. The needs of the project parties we serve are not quite the same as ordinary NFT or crypto native projects. Such projects only need to find a Layer1 to issue tokens and then complete TGE. However, DePIN has a large amount of off-chain machine data. The premise of putting this data on the chain is to solve the problem of data verifiability. This is very important because the products of many projects are data. If the problem of data verifiability cannot be solved and the authenticity of the data cannot be guaranteed, then the product logic may be difficult to establish.

At present, there are indeed many projects doing DePIN on some Layer1 such as Solana, but this type of Layer1 cannot help DePIN projects complete data verification. From a strategic perspective, we can become a more basic support in the DePIN field, serve all DePINs, and jump out of the competition at the Layer 1 level. Therefore, our strategic route is modularization, providing the middleware and various stacks required by the DePIN project, and technically we can help the project complete the verification of off-chain data.

In our 2017 white paper, we proposed that the architecture is a root chain and a subchain, which is actually the same as Ethereum 2.0. We believe that if the DePIN project is large, it must have its own ecosystem, and behind the ecosystem, there also needs to be a chain that allows different projects to collaborate with each other, which requires a lot of interoperability. This is what IoTeX is doing. It is a DePIN Layer that allows various types of DePIN projects to collaborate together.

At the same time, IoTeX also has W3bStream to help projects complete off-chain calculations and verification of data, allowing the DePIN project to process off-chain data in a more efficient and economical manner and realize the economic value of the data.

Techub News: Can you talk more specifically about the difference between W3bStream and traditional Rollup technology?

Jing: Traditional Rollup is mainly used for asset verification, which requires higher security, so each transaction needs to be uploaded to the L1 public chain for verification. But for the DePIN project, a lot of data does not directly involve asset security. We hope to complete data verification off-chain and upload important information to the chain only when economic incentives need to be distributed.

This can significantly reduce the cost of on-chain operations while ensuring the credibility of device data. W3bStream uses a decentralized verification method that can effectively process data from different devices and convert this data into economic value.

Techub News: IoTeX seems to emphasize the autonomous identity of devices and calls hardware devices Sovereign Smart Devices. Can you talk about the role of Sovereign Smart Devices in the IoTeX ecosystem?

Jing: The identity and data of traditional devices are controlled by centralized platforms, but in the IoTeX architecture, the identity of devices is created and managed by the users themselves. Each device has an on-chain identity, which is controlled by the device owner and does not rely on any third party.

Devices complete authentication and interaction on the blockchain through autonomous identities, thus forming the foundation of a machine society. They can carry out economic activities like people, provide services to the community or other devices and earn income. This model makes devices part of the blockchain economy and realizes the financialization of machines (MachineFi).

Techub News: How does IoTeX attract developers and enterprises to participate in its ecosystem? What specific incentives do you have?

Jing: One is the modular infrastructure provided by IoTeX, which is rarely provided by other infra in the industry. For example, Network3 is a project that is transforming from Web2 to Web3. They have sold 3,000 edge computing devices and have more than 200,000 nodes. They have fully adopted the IoTeX technology stack, including modules such as device identity (ioID) and cross-chain bridge (Liquidity Hub). In addition, through our DePINScan.io, you can also see in which country and region all the nodes are located, as well as the daily profit of each device, which is very detailed. IoTeX can provide very transparent data for the ecosystem, and users can also clearly calculate the return on investment because of these public data.

The second is that we will help incubate projects, which includes some business-related support, such as financing support. We have our own grant plan, and we will also help connect with other investors.

Techub News: DePIN involves a lot of data capitalization and data sovereignty issues. How do you view these issues? What kind of guiding role does IoTeX play in this regard?

Jing: The core issue of data capitalization is the ownership and use rights of data. We believe that the ownership of data should belong to the creator of the data, whether it is an individual or a device. However, traditional data usage models often deprive data creators of their rights and interests, and they cannot benefit from the economic value of the data.

In the IoTeX ecosystem, data creators can obtain due benefits through the Sovereign Smart Device and data verification system, while the data usage path and value transfer are transparent. This not only protects data privacy, but also maximizes the economic value of data.