IoTeX 2.0: Unlocking infinite possibilities for the DePIN ecosystem

In the previous bull run, we witnessed the grand narrative and market ignition brought by the concepts of ‘Decentralized Finance Summer’, ‘Non-fungible Token & GameFi Summer’, and ‘Metaverse’. The bull market of 2024 may be halfway through, and the theme of this round’s frenzy has not yet emerged, but the signs of AI and real-world on-chain are increasingly evident. The physical infrastructure network of Decentralization, DePIN zone, is bound to become one of the potential breakout areas. Messari predicts that the total potential market size of DePIN zone is approximately around 90 billion US dollars, which may reach 35 trillion US dollars by 2028. If we extrapolate based on this data, the entry into the DePIN platform construction will face a potential market size increase of roughly 400 times in the medium to long term.

In April 2024, IoTeX, the infrastructure network connecting the real world, raised $50 million in financing. On July 18th, the project also released its 2.0 White Paper, marking a strategic transformation towards a modular future. As a well-established public chain created as early as 2017, IoTeX has found its own security hardware and computing track in the battle of thousands of chains, integrating hardware with connectivity and highly scalable technical architecture. In the new version, IoTeX 2.0 will leverage years of deep cultivation experience and technology, upgrading to a universal network architecture layer for DePIN: the DePIN modular open platform. It not only enables lightweight construction of DePIN applications, but also provides complete cross-ecosystem collaboration and a broader DePIN Layer 2 ecosystem, preparing for the future potential of ‘DePIN Summer’. This article will delve into the strategic upgrade of IoTeX 2.0 and its impact on the DePIN ecosystem.

The necessity of modularization for the DEP Network

Although the existing DEP has demonstrated its unique advantages, meeting the needs of the future internet of things ecosystem and achieving large-scale application and technological innovation is still a long road ahead. The traditional single-chain architecture faces performance bottlenecks and scalability issues, while modular design solves these problems by decomposing complex systems into multiple independent modules, each focusing on specific functions and interacting through standardized interfaces. For the DEP project, modular design is particularly important because they need to handle a large amount of off-chain data and complex interactions with the real world. As a bridge between the real world and the blockchain world, the complexity of the DEP project far exceeds that of traditional purely on-chain projects. This complexity is reflected in both the technical and ecosystem construction.

In terms of technical requirements, the core challenge of the DEP project lies in effectively connecting Web 3.0 with the real world, requiring the handling of a large amount of off-chain data, including data collection, processing, analysis, recording, and verification. A single Block architecture cannot meet the complex requirements of the DEP project. Modular design introduces middleware to handle off-chain data and interact with the Block chain through standardized interfaces. For example, the data processing module adopts advanced data analysis and privacy protection technologies to ensure the security and privacy of data transmission and storage processes. The verification module uses off-chain computing resources for data verification and returns the results on-chain, achieving efficient collaboration between on-chain and off-chain.

In terms of architectural design, the DePIN project requires building a complex physical infrastructure network, including the Block chain itself and a large number of off-chain devices and Nodes. Modular design allows each infrastructure module to be independently developed and optimized, these modules can collaborate within the same system, and can also be used by other Block chain platforms. For example, the storage module can be shared by multiple DePIN projects, forming a Decentralization storage network, the data analysis module provides data mining and market insight services, helping different projects achieve data value-added. This open ecosystem aggregates the big data of various DePIN projects, utilizes Web 3.0 technology to establish a Decentralization public database, realizing data sharing and collaboration between projects, driving technological innovation and the prosperity of the ecosystem.

IoTeX 2.0 Strategic Transformation Towards a Modular Future

Imagine, through modular design, every developer with vision and project can build their own DePIN project, not just those with strong teams and large amounts of funding. This is the future depicted by IoTeX 2.0, expanding the IoTeX network into the world’s largest DePIN ecosystem through modular design and an open platform. According to the official positioning, the core concept of IoTeX 2.0 can be summarized as ‘DePIN for Everyone’, achieving ‘DePIN for the People’.

This modular future is more than just a dream. Compared to traditional single-chain architecture, modular design brings more flexibility and scalability, providing developers with unprecedented freedom and innovation space. IoTeX 2.0 introduces the concept of Modular Security Pool (MSP) to address the trust and security issues brought by the complex technical stack in the DePIN project. The DePIN project needs to integrate on-chain and off-chain components to create a decentralized trust framework, and this complexity can lead to fragmentation of security and decentralization. With the help of the Modular Security Pool (MSP), IoTeX is able to integrate different infrastructure modules (DePIN Infrastructure Module, DIM) together, enabling these modules to collaborate and form a unified trusted layer. This approach allows new infrastructure modules to leverage the security of the underlying blockchain without the need to create their own security infrastructure from scratch. New DIMs can join the MSP through governance proposals, and once approved, they will inherit the security and decentralization attributes of L1/L2.

DePIN ecosystem technology stack overview, Source: IoTeX

The infrastructure module DIM layer provides a complete solution from data processing, validation to storage, allowing physical devices and real-world data to be fully chained. This design philosophy not only optimizes the technical architecture of the system, but also enhances the overall value of the entire ecosystem. At the same time, IoTeX 2.0’s modular design makes it better suited to adapt and integrate various Decentralization applications, creating an open platform for developers to promote innovation. The introduction of public products such as DePINScan and DePIN Liquidity Center provides the DePIN project with opportunities for visibility, Liquidity and user participation.

Compared with other modular solutions such as Celestia, IoTeX 2.0’s modular design pays more attention to practicality and operability. As a pioneer of modular blockchain, Celestia focuses on providing independent Consensus and data availability layers, while IoTeX 2.0 provides a more comprehensive technical solution for the DePIN ecosystem through modular security pool and DIM layer, making it easier for developers to create and manage DePIN projects.

By combining modularization with middleware technology, IoTeX 2.0 can more efficiently achieve seamless connection between physical devices and blockchain, promoting the collaborative development of the entire ecosystem. It is foreseeable that with the widespread application of modular design, the DePIN ecosystem will usher in more innovation and development opportunities, laying a solid foundation for the arrival of the Web3.0 era. This is not only a technological upgrade of a single project, but also a major adjustment in the strategic development of the DePIN ecosystem. It can be said that whether driven by IoTeX or not, the open ecosystem constructed by modular design will eventually become one of the great narratives that Web3.0 can bring to the world.

DIM: The Core Module for Building the DePIN Ecosystem

DIM is defined as a core component of the DePIN ecosystem. Participants in MSP include DIM builders, stakers, and validators. DIM builders are responsible for creating DePIN L2 and off-chain services for specific scenarios, such as data streaming, storage, automation, and identity verification modules. They need to incentivize stakers to allocate their assets to their modules. Stakers delegate assets to network participants of MSP, contribute to network security, and receive a portion of network fees and rewards. Validators provide Node operation for DIM builders, directly serving the DePIN project.

MSP ecosystem architecture, Source: IoTeX

The design principles of MSP include open entry and exit, network effects, and decentralization, ensuring that stakers and DIM can freely enter and exit the market, reflecting the true value of the service, and operating according to supply and demand. DIM, on the other hand, covers the entire DePIN technology stack by providing a set of modular functions. These modules can be provided by the IoTeX core development team, as well as contributed by partners and developers, ensuring their security and trustworthiness. This open DIM layer provides the DePIN project with the choice to create a custom technology stack, enabling it to flexibly address technological challenges in different stages and requirements.

The IoTeX 2.0 White Paper summarizes several core modules, including some specific products such as W3bstream, ioID, ioConnect, ioDDK, and DePINscan.

W3bstream is the world’s first decentralized off-chain computing network that uses verifiable computing technology, aiming to generate verifiable proofs of real-world activities and Settlement these proofs to the blockchain. W3bstream supports off-chain computing requirements for DePIN applications by providing multiple proof mechanisms such as Zero-Knowledge Proof (ZKP), Trusted Execution Environment (TEE), and secure longer computation (SMPC). The introduction of this module greatly improves the computing efficiency and data processing capability of the DePIN project.

ioID is an on-chain and off-chain self-sovereign digital identity system that enables individuals and machines to establish rich digital relationships and interact with each other without relying on centralized identity providers. This system provides trusted identity authentication and management services, offering secure and convenient means of identity identification for all participants in the DEP ecosystem.

ioConnect is an SDK that enables various hardware to connect with W3bstream and various L1/L2. It acts as a hardware abstraction layer and can run seamlessly on mainstream hardware platforms such as Raspberry Pi, ESP32, and Arduino, simplifying the complexity of handling hardware. In other words, devices supported by ioConnect can be easily integrated into various DePIN applications, acting as a multi-Miner. Similarly, there is also ioDDK, which is an L2 SDK that enables DePIN builders to seamlessly launch their own sovereign blockchains while enjoying the security of IoTeX L1.

DePINscan is an industry explorer tool designed specifically for the DePIN field and is part of the IoTeX public product module series. It allows users, miners, and investors to monitor the rise of DePIN projects, discover early-stage projects, and obtain real-time device numbers and project configuration files. DePINscan provides transparency and visibility to the DePIN ecosystem, promoting information flow and interaction between users and developers.

Economic Model Innovation Boosts Ecological Development

The upgrade of the economic model is a key factor for IoTeX to unlock the unlimited potential of the DePIN ecosystem. IoTeX 2.0 has innovatively expanded and optimized its economic model through a series of innovations such as inflation stake rewards, Deflation mechanism, new practicality, and rise incentive plans, constructing a dynamically balanced economic system, providing continuous security and value accumulation for the IoTeX network.

IoTeX 2.0 introduces an inflation stake reward mechanism, where newly minted IOTX will be delivered to Nodes participating in Consensus and Tokenholders staking IOTX to increase the stake rate and enhance network security. At the same time, to balance the inflation in the network, IoTeX 2.0 implements a deflationary burn mechanism based on network usage, similar to Ethereum’s EIP-1559. The new mechanism will incentivize and reallocate value to IOTX Tokenholders based on the increasing usage of IoTeX L1. When creating a new on-chain identity, ioID requires the destruction of a certain amount of IOTX, and the destruction rate will dynamically change based on the total number of registered devices. The interaction between DIM (DePIN Infrastructure Module) and each DIM will also drive the deflationary burn of IOTX.

In addition, in IoTeX L1, Nodestake IOTX to qualify for validating network transactions and participating in Consensus, and receive IOTX rewards. When Dapps deploy Smart Contracts and process transactions on IoTeX L1, they will use IOTX as gas fees. Users can restake their staked IOTX through MSP to extend the security of IoTeX L1 to DIM. DIM builders can incentivize IOTX stakers to provide security for their solutions, DIM needs to stake IOTX to join MSP, obtain security from the re-staked asset pool, and provide services to Dapps, L2, and users.

The utility of DePIN Flywheel and IOTX Token, source: IoTeX

IoTeX’s economic engine design actually forms a strategy that is both offensive and defensive, which helps its Token price achieve a step-by-step spiral rise. The core of this engine lies in achieving dynamic balance and self-regulation of the economic system at different stages of development.

For example, in the rapid development stage of the ecosystem, the number of applications and project deployments has significantly increased, and the number of users has risen rapidly. With the addition of more users and projects, the demand for IOTX has also increased significantly, resulting in a significant rise in the consumption of IOTX. The increase in consumption further drives the operation of IOTX stake rewards and incentive mechanisms, attracting more developers and users to participate, forming a self-reinforcing positive feedback loop. Just like a continuously accelerating spiral, driving the rapid expansion and prosperity of the entire ecosystem.

However, when the ecosystem enters a relatively stable development stage, the deployment speed of applications and projects tends to stabilize, and the user rise slows down, and the consumption of IOTX also stabilizes accordingly. At this time, the incentive mechanism and inflation rate will also remain relatively stable, ensuring the healthy development of the ecosystem. In this stage, the deployment speed of applications and projects slows down, the number of users’ rise tends to stabilize, and the ecosystem enters a mature period. With the stability of activities, the consumption of IOTX also remains stable, and stake rewards and incentive mechanisms are adjusted according to the stable consumption level to maintain an appropriate incentive level, ensuring the health and sustainable development of the ecosystem.

This mechanism enables the IoTeX economic system to maintain flexibility and adaptability in different market environments. In the rapid development stage, the economic flywheel accelerates the rise and promotes the rapid expansion of the ecosystem; while in the stable stage, the economic flywheel maintains stability to ensure the healthy operation of the ecosystem. Through this design, IoTeX can achieve dynamic balance in different market conditions, ensuring long-term sustainable development. In addition, IoTeX has also designed the Marshall DAO, which incentivizes users to vote in support of the DePIN project, further promoting the healthy development of the ecosystem. The introduction of Marshall DAO not only enhances community participation, but also provides strong support for the sustainable development of the DePIN project.

The future driving force and competitive advantage of the IoTeX ecosystem

Overall, although the development progress of the DePIN project may be relatively slow and the structure is complex, its unique characteristics give it a competitive advantage that is difficult to replicate. The independence and fun of the DePIN project make it have unique appeal and lasting value in the market. Unlike other applications, the DePIN project is difficult to be simply copied or forked due to its complex application, economic logic, and Contract Layer design. Therefore, even similar applications, such as smart bracelets, will have significant differences in their implementation on different platforms. In addition, the user quality in the DePIN ecosystem is very high. Compared with projects that have high activity but mismatched on-chain TVL (Total Value Locked) and funds, although the number of users in the DePIN project is relatively small, these users are more similar to traditional Miners, with high quality and loyalty. These users not only have high participation, but also bring practical value contribution to the ecosystem.

The development of the IoTeX ecosystem will rely on the maturity and growth of more interesting and boundary-breaking DePIN projects. For example, current active ecological projects such as Wayru, Network3, WatchX, PowerPod, Inferix, starpower, as well as infrastructure projects in Decentralized Finance like Pinswap, Quenta, Loxodrome, Bedrock, Magma, are all contributing to the early momentum of the IoTeX ecosystem. With the continuous progress of these projects, the IoTeX ecosystem will further demonstrate its strong attraction and rise potential. At the same time, the newly completed $50 million financing will also further drive the rise and adoption of DePIN and invest in IoTeX-based DePIN projects together with the IoTeX Foundation and DePINsurf Accelerator Fund. These investments will further solidify IoTeX’s leading position in the future DePIN ecosystem.

From the perspective of the industry track, the rise of DePIN has undoubtedly brought revolutionary changes to the market. Although DeFi has made waves in the financial sector, its limitations are also gradually emerging. By combining blockchain technology with physical infrastructure, DePIN has built a broader and more diverse ecosystem, expanding the application boundaries of Decentralization technology. The DePIN track is unique in its ability to break the boundaries between the virtual and the real, truly merging the physical and digital worlds. This convergence has not only led to technological innovation, but also to new business models and value creation. IoTeX 2.0 has its forward-looking strategic vision and strong execution capabilities in this field, and the platform is expected to build a “real-world database” and redefine infrastructure construction and resource allocation in a decentralized way, so as to create a more open and inclusive intelligent ecosystem.

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