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IoTeX 2.0 Unleashes Unlimited Potential of DePIN Ecosystem
The open ecosystem, built on modular design, is poised to be one of the great narratives Web3.0 will deliver to the world.
In recent bull markets, we’ve witnessed grand narratives about ‘DeFi Summer’, ‘NFT & GameFi Summer’, and ‘Metaverse’ concepts that ignited market passion. As we approach mid-2024, this cycle’s defining theme has yet to emerge, but signs of AI and real-world blockchain applications are increasingly evident. The decentralized physical infrastructure network (DePIN) sector is likely to become one of the potential breakout areas. Messari predicts that the total potential market size for the DePIN sector could reach about $9 billion, potentially exploding to $3.5 trillion by 2028. This implies a potential market scale increase of approximately 400 times for those entering the full-platform construction of DePIN in the medium to long term.
In April 2024, the DePIN infrastructure network IoTeX secured $50 million in funding to connect the real world. On July 18, the project also released its 2.0 whitepaper, marking a strategic transformation towards a modular future. As a veteran public blockchain created back in 2017, IoTeX found its unique niche in the blockchain wars through secure hardware and computing tracks, deeply integrating hardware with connectivity and a highly scalable technical architecture. The new version, IoTeX 2.0, leverages years of deep cultivation and technology to upgrade to a network universal architecture layer aimed at the entire DePIN domain: a DePIN Modular Open Platform. This platform not only enables lightweight construction of DePIN applications but also supports complete cross-ecosystem synergy and an extensive DePIN Layer 2 ecosystem, preparing for a possible future ‘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 DePIN Network
Although the existing DePIN has shown its unique advantages, meeting the future needs of the IoT ecosystem and achieving large-scale application and technological innovation remains a long road. Traditional single-chain architectures face performance bottlenecks and scalability issues. Modular design addresses these by breaking down complex systems into multiple independent modules, each focused on specific functions and interacting through standardized interfaces. For DePIN projects, modular design is crucial as they need to handle large amounts of off-chain data and complex interactions with the real world. As bridges between the real world and blockchain, DePIN projects are far more complex than traditional pure on-chain projects. This complexity is evident in both technical needs and ecosystem building.
On the technical front, the core challenge for DePIN projects lies in effectively connecting Web 3.0 with the real world, requiring the handling of vast amounts of off-chain data, including data collection, processing, analysis, recording, and verification. A single blockchain architecture cannot meet the complex needs of DePIN projects. Modular design introduces middleware to handle off-chain data and interact with the blockchain through standardized interfaces. For example, data processing modules use advanced data analysis and privacy protection technologies to ensure the security and privacy of data transmission and storage. Verification modules utilize off-chain computing resources for data verification and return results to the blockchain, achieving efficient on-chain/off-chain synergy.
Structurally, DePIN projects need to build complex physical infrastructure networks, including the blockchain itself and numerous 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 or be used by other blockchain platforms. For instance, storage modules can be shared among multiple DePIN projects to form a decentralized storage network, while data analysis modules provide data mining and market insights services, helping different projects to realize data value addition. This open ecosystem aggregates big data from various DePIN projects, using Web 3.0 technologies to establish a decentralized public database, enabling data sharing and collaboration among projects, and driving technological innovation and the prosperous development of the ecosystem.
IoTeX 2.0’s Strategic Transformation Towards a Modular Future
Imagine a future where every developer with a vision and project can build their own DePIN project, not just those with strong teams and significant funding. This is the future envisioned by IoTeX 2.0, which extends the IoTeX network into the world’s largest DePIN ecosystem through modular design and an open platform. Officially, the core philosophy of IoTeX 2.0 can be summarized as ‘DePIN for Everyone’, realizing ‘the People’s DePIN’.
This modular future is not just a dream. Compared to traditional single-chain architectures, modular design offers greater flexibility and scalability, providing developers with unprecedented freedom and creative space. IoTeX 2.0 introduces the concept of a Modular Security Pool (MSP) to address trust and security issues arising from complex tech stacks in DePIN projects. DePIN projects need to integrate on-chain and off-chain components to create a decentralized trust architecture, but this complexity can lead to fragmented security and decentralization. With the MSP, IoTeX can integrate different infrastructure modules (DePIN Infrastructure Module, DIM) together, allowing these modules to collaborate and form a unified trust layer. This approach allows new infrastructure modules to utilize the underlying blockchain’s security without having to create their own security infrastructure from scratch. New DIMs can join the MSP through governance proposals, and once approved, they inherit the L1/L2 security and decentralization properties.
The DIM layer primarily provides a complete solution from data processing and verification to storage, enabling physical devices and real-world data to be fully integrated into the blockchain. This design philosophy not only optimizes the system’s technical architecture but also enhances the overall value of the entire ecosystem. Additionally, IoTeX 2.0’s modular design allows it to better adapt and integrate various decentralized applications, creating an open platform for developers and fostering innovation. The introduction of public products like DePINScan and DePIN Liquidity Center provides DePIN projects with visibility, liquidity, and user engagement opportunities.
Compared to other modular solutions like Celestia, IoTeX 2.0’s modular design focuses more on practicality and operability. Celestia, as a pioneer of modular blockchains, focuses on providing independent consensus and data availability layers, while IoTeX 2.0, through its Modular Security Pool and DIM layer, offers a more comprehensive technical solution tailored to the DePIN ecosystem, 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 integration of physical devices with the blockchain, driving the collaborative development of the entire ecosystem. It is foreseeable that with the widespread application of modular design, the DePIN ecosystem will welcome more innovation and development opportunities, laying a solid foundation for the arrival of the Web 3.0 era. This is not just a technical upgrade for a single project but a significant adjustment in the strategic development of the DePIN ecosystem. Whether driven by IoTeX or not, the open ecosystem built through modular design will inevitably become one of the great narratives that Web 3.0 can bring to the world.
DIM: The Core Module for Building the DePIN Ecosystem
DIM is defined as a core component for building the DePIN ecosystem. Participants in the MSP include DIM builders, stakers, and validators. DIM builders are responsible for creating specific scenario-based DePIN L2 and off-chain services, such as data streams, storage, automation, and authentication modules. They need to incentivize stakers to allocate their assets to their modules. Stakers are network participants who delegate their assets to the MSP, contributing to network security and receiving a portion of the network fees and rewards. Validators provide nodes for DIM builders, directly serving DePIN projects.
The design principles of MSP include open entry and exit, network effects, and decentralization, ensuring that stakers and DIMs can freely enter and exit the market, reflecting the true value of services, and operating according to supply and demand laws. DIMs provide a set of modular functions covering the entire DePIN technology stack. These modules can be provided by the IoTeX core development team or contributed by partners and developers, ensuring their security and reliability. This open DIM layer offers DePIN projects the choice to create customized tech stacks, allowing them to flexibly address technological challenges at different stages and needs.
IoTeX 2.0’s whitepaper summarizes several other core modules, including some that have been concretized into products, such as W3bstream, ioID, ioConnect, ioDDK, and DePINscan:
W3bstream is the world’s first decentralized off-chain computing network utilizing verifiable computation technology, designed to generate verifiable proofs for real-world activities and settle these proofs on the blockchain. W3bstream supports the off-chain computing needs of DePIN applications by providing various proof mechanisms, such as zero-knowledge proofs (ZKP), trusted execution environments (TEE), and secure multi-party computation (SMPC). The introduction of this module significantly enhances the computational efficiency and data processing capabilities of DePIN projects.
ioID is an autonomous sovereign digital identity system for on-chain and off-chain, enabling people and machines to establish rich digital relationships and interact without relying on centralized identity providers. This system provides trusted identity verification and management services, offering secure and convenient identity recognition for all participants in the DePIN ecosystem.
ioConnect is an SDK that enables various hardware to connect with W3bstream and various L1/L2s. It acts as a hardware abstraction layer, running 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 easily integrate into various DePIN applications, acting as multi-miners. Similarly, ioDDK 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 domain, part of the series of public product modules launched by IoTeX. It allows users, miners, and investors to monitor the growth of DePIN projects, discover early projects, and obtain real-time device numbers and project profiles. DePINscan provides transparency and visibility for the DePIN ecosystem, promoting information flow and interaction between users and developers.
Economic Model Innovation Boosts Ecosystem Growth
The upgrade of the economic model is a key factor in unlocking the infinite potential of the DePIN ecosystem for IoTeX. IoTeX 2.0 has expanded and optimized its economic model through a series of innovations, including inflationary staking rewards, deflationary mechanisms, new utility and growth incentives, building a dynamically balanced economic system that provides continuous security and value accumulation for the IoTeX network.
IoTeX 2.0 introduces an inflationary staking reward mechanism, with newly minted IOTX delivered to nodes participating in consensus and token holders staking IOTX, to increase the staking rate and enhance network security. At the same time, to balance the inflation in the network, IoTeX 2.0 implements a deflationary destruction mechanism based on network usage, similar to Ethereum’s EIP-1559. The new mechanism incentivizes and redistributes value to IOTX token holders based on the increased usage of IoTeX L1. ioID requires the destruction of a certain amount of IOTX when creating new on-chain identities, with the destruction rate dynamically changing based on the total number of registered devices. Direct interactions between DIM (DePIN Infrastructure Module) and various DIMs will also drive the deflationary destruction of IOTX.
Furthermore, in IoTeX L1, nodes stake IOTX to qualify for verifying network transactions and participating in consensus, earning IOTX rewards. Dapps deploy smart contracts and process transactions on IoTeX L1, using IOTX as gas fees. Users can re-stake their staked IOTX through MSP, extending the security of IoTeX L1 to DIM. DIM builders can incentivize IOTX stakers to provide security for their solutions, with DIM needing to stake IOTX to join MSP, gaining security from the re-staked asset pool, and providing services to Dapps, L2, and users.
The economic flywheel design of IoTeX essentially forms an offensive and defensive strategy, thus contributing to the stair-step rise in its token price. The core of this flywheel lies in achieving dynamic balance and self-regulation of the economic system at different stages of development.
For example, during the rapid development stage of the ecosystem, the number of applications and projects deployed increases significantly, with user numbers growing rapidly. As more users and projects join, the demand for IOTX also increases significantly, and the consumption of IOTX rises sharply. The increase in consumption further drives the operation of IOTX staking rewards and incentive mechanisms, attracting more developers and users to participate, forming a self-reinforcing positive feedback loop. Just like a continuously accelerating spiral, this drives 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 stabilizes, and user growth slows, the consumption of IOTX also stabilizes accordingly. At this time, the incentive mechanisms 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, and the growth of user numbers stabilizes, marking the maturation period of the ecosystem. As activities stabilize, the consumption of IOTX also remains stable, and staking rewards and incentive mechanisms are adjusted according to the stable consumption, maintaining an appropriate level of incentives to ensure the health and sustainable development of the ecosystem.
This mechanism allows the economic system of IoTeX to maintain flexibility and adaptability in different market environments. During the rapid development stage, the economic flywheel accelerates upward, driving the rapid expansion of the ecosystem; while in the stable stage, the economic flywheel maintains stability, ensuring 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 designed Marshall DAO, which incentivizes users to vote in support of DePIN projects, 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 continuous development of DePIN projects.
Driving Forces and Competitive Advantages of the IoTeX Ecosystem
Overall, although the development speed of DePIN projects may be relatively slow and their structures complex, their unique characteristics provide them with competitive advantages that are difficult to replicate. The independence and fun of DePIN projects make them uniquely attractive and of enduring value in the market. Unlike other applications, DePIN projects, due to their complex applications, economic logic, and contract layer designs, are difficult to simply replicate or fork. Therefore, even similar applications, such as smart bracelets, will have significant differences in their implementations on different platforms. Additionally, the user quality in the DePIN ecosystem is very high. Compared to some projects with high activity levels but mismatched on-chain TVL (total value locked) and fund volumes, although DePIN projects have fewer users, these users are more akin to traditional miners, with high quality and loyalty. These users not only have high participation levels but also bring actual value contributions to the ecosystem.
The development of the IoTeX ecosystem will depend on the maturation and growth of more interesting and breakout DePIN projects. For instance, currently actively interacting ecosystem projects like Wayru, Network3, WatchX, PowerPod, Inferix, starpower, as well as DeFi infrastructure projects like Pinswap, Quenta, Loxodrome, Bedrock, Magma, are all driving the early momentum of the IoTeX ecosystem. As these projects continue to advance, the IoTeX ecosystem will further demonstrate its strong attractiveness and growth potential. At the same time, the newly completed $50 million funding will further promote the growth of DePIN and ecosystem adoption, and together with the IoTeX Foundation and DePINsurf Accelerator Fund, invest in IoTeX-based DePIN projects. These investments will further consolidate IoTeX’s leading position in the future DePIN ecosystem.
From an industry track perspective, the rise of DePIN undoubtedly brings revolutionary changes to the market. Although DeFi has stirred up waves in the financial sector, its limitations are gradually becoming apparent. DePIN, by combining blockchain technology with physical infrastructure, builds a broader and more diversified ecosystem, expanding the application boundaries of decentralized technology. The unique aspect of the DePIN track lies in its ability to break the boundaries between the virtual and real worlds, truly integrating the physical world with the digital world. Such integration not only brings technological innovation but also gives rise to new business models and value creation methods. IoTeX 2.0’s layout in this field, with its forward-looking strategic vision and strong execution capability, is expected to build a “real-world database”, redefining infrastructure construction and resource allocation in a decentralized manner, thus creating a more open and inclusive intelligent ecosystem.
