Let's Make the World a Better Place with Raullen Chai, IoTeX CEO

TechFlow: Sunny IoTeX: Raullen Chai

Original Article

"We want to make the world a better place: DePIN and distributed technology may be a very good entry point." – Raullen Chai, CEO of IoTeX

Speaking of decentralized hardware infrastructure, you might think of Elon Musk's Starlink, which aims to provide internet access via a large number of small satellites operating in Low Earth Orbit (LEO), rather than relying on large, centralized Internet Service Providers (ISPs) and their infrastructure. If one satellite encounters an issue, others can take over its functions. This is different from more centralized networks, where a failure at a major hub can lead to service disruptions for a large number of users. Starlink achieves physical decentralization of communication infrastructure, not ownership and control of the network, which is owned and operated by a single entity, SpaceX.

So, can a situation exist where both 1. physical decentralization of hardware infrastructure, like communication facilities, and 2. network ownership and control, can be achieved? In an ideal state, both single-point failures and trust issues can be resolved, and users who are also owners can share in the economic success of the shared network. Raullen, former head of Uber's crypto research department and tech lead at Google headquarters, believes that the combination of blockchain and physical decentralization is the way to achieve this ideal, and is the technology that can truly lead to a better life. "If the DePIN network succeeds, it will have a profound impact on the entire human society."

Raullen and his co-founders have been dedicated to this vision since 2017, working tirelessly to build IoTeX. In the future, when robots can replace human repetitive labor, Universal Basic Income (UBI) becomes the basic cost of human life, and everyone can maintain and build decentralized infrastructure to support communication, energy, and data operation on the earth's surface, creating more meaningful work and value for themselves and others, that would be the moment when DePIN subtly connects with human life.

In the conversation, Raullen shared IoTeX's experiences in trial and error over the years in search of development strategies, and his efforts to define the direction of the industry along with other leading companies. As IoTeX is building a middle layer between the decentralized world and the real world, the development of IoTeX has actually shaped the entire industry, including the derivation of terms such as DePIN from its achievements.

Unfolding DePIN's Journey with IoTeX

TechFlow: Could you please describe the journey of IoTeX, including its past, present, and future development directions?

Raullen: IoTeX is actually an old project. At the end of 2017, our three co-founders, myself, Jing, and Qevan from Facebook, jointly established IoTeX. Our primary goal was to build an IoT blockchain on a technical level, but more importantly, how to better connect cryptocurrency to the real world. We realized that if cryptocurrency is to truly become a mainstream technology, it needs to establish an interface with the real world. Therefore, we are committed to building this interface to achieve a seamless connection between cryptocurrency and the real world.

In early 2018, IoTeX successfully raised $30 million from the top venture capital firms at the time. After that, we formed a team, wrote our own white paper and vision, and began to build our Layer1 blockchain.

At that time, there were many uncertain factors in the combination of IoTeX and blockchain, so we decided to start with the most basic blockchain. We chose Layer1 because this field is relatively mature and is seen as the cornerstone for building the entire blockchain foundation.

Over the next three years, from 2017 to 2019, we focused on developing our Layer 1, a POS-based EVM public chain. After this chain was developed, many DeFi and NFT projects were bred on it, amounting to about two hundred.

In 2020, we started to seriously consider how to combine blockchain and the Internet of Things (IoT). Because IOTA had proposed this concept earlier, but they encountered some problems in micropayments. Therefore, we decided to revisit the way the Internet of Things and blockchain combine. In this process, we conducted two vertical experiments to find a better solution.

The first experiment was about the combination of IoT and blockchain in terms of privacy. We realized that the data generated by devices could be owned by users through decentralized identities (DID) on the blockchain and monetized in the future. Therefore, we conducted the first experiment and launched a smart home camera product called Ucam. This camera is fully combined with our own blockchain, allowing users to own all the data captured by the camera.

However, when we pushed this product to the market, we found the response was relatively lukewarm.

We found that, especially for ordinary users, they care more about the cost of the camera. For them, the difference between spending $40 and $50 on a camera is huge. So later we found that for these users, privacy protection doesn't have much appeal. For example, if a camera costs $40, and adding privacy protection requires paying $50, they may not feel that privacy protection is really worth an extra $10.
Therefore, although this camera experiment sold several tens of thousands, it is not our main business. But this experiment showed us that at least for now, privacy protection is not a major concern for IoT users.

Then we started the second experiment and launched a product called "Pebble Tracker". This is a very small open-source hardware GPS tracker, which also has some other sensors attached to it, which can monitor speed, direction, air quality, humidity, light, and so on.

Then we promised that this tracker could be used for DePIN, and also for token mining, so we put this product on CrowdSupply, the largest hardware crowdfunding site in the US.

In just two weeks, we sold 2000 units and made $200,000 in revenue. Actually, money is not our main concern, but this gave us a good insight. We realized what users really care about: users want to contribute some data by purchasing this device and get mining returns from it.

The concept of passive income is very appealing to users.

At that time, Helium also did very well, selling devices to build a LoraWAN network. There were also other companies proposing similar ideas, like Borderless's Hi-Fi and Multicoin's Proof of Physical Word, which were very similar concepts.

At that time, we thought this concept should be called "MachineFi", because "Machine" provides practicality, plus the DeFi (distributed finance) system. So, we call it "MachineFi", which is the industry's definition of DePIN now.

This actually laid the groundwork for our work in the next few years, and we continued to move in this direction.

TechFlow: At that time for DePIN, what was the painpoint in the current MachineFi Technology?

Raullen: We visited many DePIN projects, and we found that there were many pain points in this, because DePIN is not the same as DeFi.

DeFi is relatively simple. For DeFi, a developer, even a relatively junior one, can fork a contract, such as Compound or Uniswap, make a few modifications, do some front-end work, and launch a project, it's very simple. Therefore, a lot of innovation has emerged in DeFi.

However, the circumstances for DePIN are quite challenging. You need hardware devices, communication technology, blockchain, mobile apps, and so forth, all of which are complex. Unless you can raise a substantial amount of funds and assemble a competent team, it's difficult to create a satisfactory project.

Therefore, we believe that a key missing link is how to allow data, once entered into the system and computed, to generate a proof. This proof can then be provided to a smart contract, prompting the smart contract to perform a certain operation, such as rewarding users with tokens or NFTs.

This link is greatly lacking. Hence, we decided to build this infrastructure, Infra, to assist DePIN developers. If they succeed, we will also succeed. This is my thought process.

So, starting from 2021, we commenced the development of the W3bStream project.

At present, W3bStream has or is collaborating with dozens of DePIN project parties, providing them with infrastructure support to help them become more successful and scalable. This is the development direction of IoTeX from the past to the present and into the future.

For the future, we hope W3bStream can become the standard for the entire industry.

For all developers delving into the DePIN field, you can see that the number of projects involving DePIN is not many, probably twenty to thirty or fifty at most. However, I hope that if we do our work well, hundreds of similar DePIN projects will emerge in the future.

The Ideals, Current Status, and User Acquisition Strategies of the DePIN Track

TechFlow: Most people may not be familiar with the concept of DePIN. Without the incentive of alpha, few people seem to delve into what IoTeX does. Therefore, I want to know why you chose to become the founder of the high-threshold DePIN project, why you are willing to embark on this arduous journey of IoTeX entrepreneurship? As an industry pioneer, are there any difficulties?

Raullen: The goal of me and our other two co-founders is to do something that can change the world. We want to make the world a better place: DePIN and distributed technology may be a very good entry point.

If we can truly realize a distributed Uber or Airbnb, or a distributed 5G network, or other similar machine networks, that can make people live happier lives, then it will be very meaningful. For example, taking a taxi, your cost can be reduced by 50%; or renting a house on Airbnb, the cost of using your mobile phone can also be reduced by 50%.

My previous experience at Uber made me deeply understand why a company like Uber has such high overhead. In fact, most of the work revolves around how to optimize the match between drivers and passengers, plan routes, and control risks, etc.

Another example is telecommunications companies. They have to set up 5G base stations, and after setting them up, they need to send people to maintain them. This is a huge cost, but this part of the cost can be spread to everyone.

For example, if you, as an individual, can undertake the operation and maintenance of a 5G base station, then you will have a strong motivation to do this well, because the money you earn is all yours. This low-cost and efficient model will better allocate resources, reduce waste, and allow consumers to enjoy more favorable prices.

If the DePIN network can be successful, it will have a profound impact on the entire human society.

In fact, I think from a public point of view, DePIN is like Sharing Economy 2.0. It is actually a more thorough reform of the sharing economy.

TechFlow: Back to reality from ideals, how many DePIN hardware manufacturers are actively doing this now?

Raullen: The market architecture of the DePIN industry is like this:

1. First, there is a demand, such as 5G technology, energy storage or solar panels, etc.
2. Then, a DePIN project enters, matching demand and supply through some tokens or other means. For example, if you own solar panels, you generate electricity, and I need electricity, like air conditioning needs power supply, then the matching mechanism connects us.
3. Then, third-party suppliers join. This company launches solar panels, it may cooperate with the project or produce, providing us with solar panels.
4. At the same time, there may be a fourth party entering the market, specializing in hardware sales.

This is a common model we see.

TechFlow: At present, we see great challenges on the demand side. For instance, many people have not really been exposed to Crypto, or the current Crypto infrastructure has not kept up, and smart wallets are not very smart.

Raullen: Actually, there's no need to worry too much about this. I use an analogy here, that Crypto is like the lithium in lithium batteries. For example, when you drive a Tesla, you don't really need to understand how the lithium battery works internally. All you need to care about is driving the car. When it runs out of power, you charge it, and when it's charged, you continue to drive. That's it.

I think DePIN may ultimately present itself in this form, where it's buried in some layer of the entire tech stack. And for most ordinary users, there might be several layers in the middle that they don't need to perceive at all.

Just like the example I mentioned earlier about buying electricity, as an ordinary user, I may not understand what Crypto is. But I only need to pay a little electricity bill each month, and what I'll perceive is just that my electricity bill is cheaper.

That's it, I don't need to delve into how tokens operate, nor do I need to care whether it's issued by a certain company. These are irrelevant for ordinary users.
Such a design is actually beneficial for promoting and popularizing the DePIN industry, because it simplifies the level of user perception and interaction, making the whole process more user-friendly and easy to use.

TechFlow: What is the most mature in decentralized IT infrastructure at the moment?

Raullen: I think in the DePIN industry, IoTeX and Helium are fairly advanced representatives, but our positioning is not quite the same. Helium mainly focuses on vertical fields. They have created a LoRaWAN network, which is a type of wireless network with a wide coverage area—a single base station can cover tens of kilometers of communication. But its downside is that it's very slow, and it can't meet the demands of the smartphones we use today.

They do have some uses in certain areas, such as agriculture and industry, but these sensors carry very little data. They've done well on the supply side, deploying around several hundred thousand devices, mainly in the United States, and some in China, but their demand side has not developed well. That is to say, the end-users don't have enough demand to support this network, so they have failed in this aspect.

Later, they began to transition to their second project, which is 5G. Of course, everyone uses mobile phones, so 5G doesn't face too many challenges on the demand side. But there are still some challenges on the supply side, like the construction of 5G base stations. You can't just buy a device and put it in your house because you need to install it on the roof and connect it to a high-speed network, and so on.

Compared to that, our philosophy and Helium's are not quite the same. They place a greater emphasis on deep cultivation in the field of wireless connections.
My personal thought and philosophy is that we should pay more attention to infrastructure construction and try to lower the barriers for developers, so that more developers can participate, try different tracks or ideas, and ultimately, some disruptive new things might emerge.

In the era we live in now, we might not be able to predict what future innovations will look like. This is like smart contracts. Before smart contracts were created, it was hard to imagine they would be used for DeFi, prediction markets, and so on.
I believe innovation emerges, and what we can do is to lower the barriers to innovation. Just like DeFi is a good example. There might be tens of thousands or even hundreds of thousands of DeFi applications in the world, some serious, some very basic. But as long as the base number is large enough, some good projects will emerge.

The problem with the DePIN industry is that the base number is too small, only seventy or eighty projects, less than a hundred, so it's hard for particularly successful projects to emerge. So, our goal is to constantly promote the development of the industry and let more innovations emerge.

TechFlow: What is the best way for IoTeX to collaborate?

Raullen: Our Infra now has its first version, which is basically quite complete. But now we are interacting more with developers, and communicating with builders, founders, and entrepreneurs in the DePIN industry.

We discuss many things with them. For example, we ask them for their opinions or suggestions on our Infra? What features do they need? What are their current pain points? How can we help them? Do we need to add other features, and so on.
This interaction helps us better understand their needs and also helps them make better use of our Infra, enabling their projects to run smoothly.

Through communication with developers, we constantly optimize our Infra to ensure it meets their needs. We also hope that through this interaction, more developers will be inspired to participate, leading to better development of the DePIN industry.

Our goal is to provide developers with an excellent platform so that they can more easily build and advance their projects. In this way, the entire DePIN industry can flourish.

TechFlow: As mentioned above, we need a "Tipping Point" moment to make more people aware of DePIN. So what are the decentralized hardware products that people can currently access that can generate passive income for them?

Raullen: There are quite a few projects now, involving different tracks, including more traditional server storage network and GPU network projects.
There's also a category of projects that are sensor networks, for example, they provide local weather data collection services, allowing users to place devices in their backyard, collect local weather data, and monetize these data.

There are also projects like DIMO, which monetize the data after collecting vehicle data. There are also projects dealing with sensitive data processing, like Dashcam, they draw a street view mode when working, collect view information, and then present address data to users, which is also an application point.

In addition, there are some projects that mainly involve wireless connectivity, like Helium Wifi Maps and a company providing GPS correction services.

GPS correction service is a relatively niche but meaningful market. It solves the problem that GPS signals may be inaccurate after receiving satellite signals, especially when it's cloudy, overcast, or at dusk, there will be signal refraction and reflection. These companies will set up some base stations on the roofs of buildings, correct GPS signals, and then allow mobile phones to receive more accurate positioning information through compensating signals, which is indeed an interesting application field.

TechFlow: From the project's perspective, how can IoTeX help them transform from a Web 2.5-like project to a Web3 project? Some projects may still be using centralized servers to build products, and many Web3 venture capital partners will ask how to decentralize when examining the projects.

Raullen: The point you raised is very interesting. We have noticed similar situations when communicating with many project parties.

This middle layer plays a crucial role in system architecture: it connects many devices or data and then performs calculations. Since data cannot be directly deployed on chain, a middle place is needed for calculations and some results are obtained, such as Helium's Proof of Coverage (POC) or DIMO's vehicle driving route, etc. These calculation results will eventually be chained, triggering some token or NFT actions.

When a blockchain project just starts, building a simple centralized middleware might be okay, because the primary goal is to validate the concept (POC) and build a prototype. However, when the project wants to truly push it to the market, showcase it to investors, token holders, and more users, this middleware will become a bottleneck. Because no one will fully believe the results calculated by middleware.

You're right, why do they think this intermediate calculation result is correct? Is there any bias? At this point, transparency, decentralization, and reliability become very important.

That's why we think W3bstream can play an important role in this field. We can ensure the transparency, reliability, and decentralization of the intermediate calculation process, help the project party solve this problem, and make their calculation logic better applied.

The Importance of ZK in DePIN

TechFlow: DePIN uses some ZK technologies, doesn't it? How do you view the role of ZK?

Raullen: Performing off-chain calculations in projects isn't challenging in itself – you can achieve this by writing a program. However, for such off-chain calculations, the challenge lies in creating a Zero-Knowledge Proof (ZK proof), which you then submit to the smart contract along with the calculation results. The smart contract must verify if your computation result is consistent with the computation you claimed. This is a rather complex process.

The key to this process is ensuring transparency and verifiability of computations because trust in blockchain is built on verifiability. The system's reliability will only be believed by investors, token holders, and users if the smart contract can verify the correctness of computation results and ensure no cheating or tampering has occurred.

Therefore, ensuring the transparency and verifiability of off-chain calculations for this specific use case is a very important task, which is exactly what our W3bStream project aims to solve. Our goal is to establish trustworthy middleware that ensures the process of off-chain calculations is transparent, secure, and reliable. We provide better support for project parties so that their computation logic can find broader applications.

TechFlow: In the foundational DePIN track, what are your thoughts on the application of ZK in privacy?

Raullen:
Vitalik Buterin has recently written an article about three strategic directions for Ethereum, namely Account Abstraction (AA), privacy, and technological evolution.

Each direction has its own intent.

The goal of AA is to better attract users, especially institutions, because the authentication methods institutions use differ greatly from the login methods of ordinary users. Institutions usually have complex authentication systems, and AA aims to oversee these authentications.

The direction of privacy is more about how to protect the privacy of funds on the Ethereum chain. Much like in a large bank, if you have a lot of money deposited, you wouldn't want everyone to be able to see your fund movements.

So, I think the direction of privacy might be difficult in the short term, especially under regulatory pressure. But in the long run, the privacy direction has comprehensive value. However, there are many challenges in implementing privacy, and some projects even need to custom-write smart contract languages to write ZK contracts.

The third direction, Layer 2, mostly focuses on how to use these funds, for instance, conducting DePIN, DeFi, or Gaming on Layer 2. I think Ethereum's logic is to plan development directions according to these funds' TVL (Total Value Locked).

Decentralised AI Limitations

TechFlow: For Web3 and AI founders, they believe that startup efficiency is of utmost importance. However, the current experience with decentralized storage isn't great. How do you think decentralization and centralization can be combined to improve application efficiency?

Raullen:In fact, there's a small branch within DePIN that focuses on decentralized calculations, such as decentralized GPU networks and decentralized storage, and so on.

I think for Artificial Intelligence (AI), especially when you want to conduct model training or inference, inference relatively requires less computation, but model training is actually quite complex.

The stage that truly requires a large amount of GPU computational resources is the model training phase, especially in the pre-training phase. This phase not only requires a large amount of computational power but also high bandwidth and communication between GPUs.

Realizing such a decentralized network is very difficult because you can imagine, if you place a GPU at home and someone else does the same at their place, communication between these two devices would be very slow. However, some applications can be done, such as fine-tuning and deploying small models after a large model has undergone pre-training. That might be feasible.

TechFlow: So, DePIN isn't suitable for applications where you need to build a large model yourself?

Raullen: I think it's currently quite challenging. For example, if you want to build a model like ChatGPT using decentralized GPUs, I believe it would be very difficult. Furthermore, the cost might not necessarily be much lower than AWS.

Data = The Entry Point for DePIN to Serve AI

TechFlow: What role do you think DePIN plays in the integration of AI and Crypto?

Raullen: Data, computational power, and energy are all areas where DePIN can serve AI, and of course, AI can also serve DePIN.

But for DePIN to serve AI, compared to computational power, data might be a very good entry point. The crypto and Web3 fields are good at crowdfunding, such as crowdfunding data, funds, and so on.

If your AI model requires specific data, such as requiring the engine speed of a specific type of car or other very specific data, these needs can actually be given to the DePIN network to complete, and then the results can be fed back to the AI model for training.

Compared to this, the problem of decentralized computational power might be more complicated.

TechFlow: Throughout the interview, are there any important pieces of information about IoTeX that you specifically want the audience to understand?

Raullen: Yes, taking IoTeX as an example, as an older project, we realize that in the cryptocurrency field, people tend to pay more attention to new projects, and valuable older projects might not get enough attention.

But I want everyone to know that IoTeX has been continually empowering our tokens, promoting our project, and constantly exploring new directions on the stable foundation of DePIN.

We have become the leading project in the DePIN field, and more DePIN projects will join IoTeX in the future, especially in terms of implementing infrastructure.
We plan to work closely with all DePIN project parties, including investors and media, to jointly promote the development of this field. Our goal is to enhance the development of the DePIN track and make the world a better place.

Further Reading:

1. https://messari.io/report/the-depin-sector-map
2. https://iotex.io/
3. https://w3bstream.com/