CEO of IoTeX Network, Raullen Chai, joins the podcast this week to discuss MachineFi and how Web3 and blockchain fit into the future of IoT. Raullen believes that economic incentives and IoTeX’s MachineFi could be the missing link for IoT to take off. The podcast begins with Ryan and Raullen discussing what MachineFi is and the need and viability of decentralized IoT. They then talk about blockchains and what to do with people cheating the system and what data to store on or off-chain. The podcast concludes with three things we can expect to see from IoTeX in the next six to twelve months.
Raullen Chai received his Ph.D. in Electrical and Computer Engineering from the University of Waterloo in 2012, where his research focused on cryptography, privacy, and authentication protocols for IoT devices. In 2013, Raullen joined Google as a Sr. Software Engineer and led high-profile security initiatives for Google’s technical infrastructure, including the Google Cloud Load Balancer (GCLB), of which he was a founding engineer. In 2016, Raullen joined Uber as the Head of Cryptography R&D, leading the development of several projects, including credential management, authentication, and in-house cryptographic tools. In 2017, Raullen co-founded IoTeX to create a trusted blockchain infrastructure optimized for the Internet of Things (IoT) to ensure humans and machines can interact with full trust and transparency.
Interested in connecting with Raullen? Reach out to him on Linkedin!
About IoTeX Network
IoTeX was founded as an open-source platform in 2017 with a vision for the Internet of Trusted Things. In this decentralized ecosystem, humans and machines can interact with guaranteed security and trust. IoTex is on a mission to ensure everyday people and businesses can own and control their devices and the data/value they generate. IoTeX will democratize access to machine-backed DApps, assets, and services by connecting the physical and digital worlds to deliver value to users and fuel the new machine economy. The IoTeX platform was built 100% from scratch (no forks!) to support large-scale, decentralized IoT Applications. IoTeX is more than just a blockchain — it is a full-stack platform to enable trusted data from trusted devices for use in trusted DApps.
Key Questions and Topics from this Episode:
(01:34) Introduction to Raullen
(03:03) Background of IoTeX
(06:37) How does building out the hardware fit into decentralization?
(08:24) How MachineFi fits in with IoT
(09:44) Applications of the IoTeX Network
(12:33) How to handle spoofing
(14:12) How to decide what data to store on versus off chain
(16:20) Why hardware manufacturers should integrate with IoTeX
(17:33) What do hardware manufacturers need to do to integrate?
(18:44) What to expect from IoTeX in the next 6-12 months
Transcript:
– [Voice Over] You are listening to the IoT For All Media Network.
– [Ryan] Hello everyone, and welcome to another episode of the IoT For All Podcast. I’m your host, Ryan Chacon, and on today’s episode, we have Raullen Chai, the CEO and Co-Founder of IoTeX. If you’ve pretty much been paying attention to anything that has to do with Web3, blockchain, IoT, you’ve probably heard of IoTeX. They’re a very fascinating and interesting company focused on leading decentralized network that they’ve built to power the future of Web3 and machine economies, they call MachineFi. So we talk about what MachineFi is, talk about Web3, kinda how it all fits together, the role it plays in IoT. We also talk about a lot of the kind the intricate details of how it works, what proof of anything kind of means, security implications of it all, the hardware side of things. And just kind of what the future, not just for IoTeX itself, but also for the future of IoT and how this decentralized kind of machine economy can work and what it would actually enable. So a very, very fascinating episode. I promise you’ll find a lot of value and hopefully it excites you at the same time, because the potential here is very interesting to kind of dive into and explore. But before we do that, if any of you out there are looking to enter the fast-growing and profitable IoT market but don’t know where to start, check out our sponsor, Leverege. Leverege’s IoT solutions development platform provides everything you need to create turnkey IoT products that you can white-label and resell under your own brand. To learn more, go to iotchangeseverything.com. That’s iotchangeseverything.com. And without further ado, please enjoy this episode of the IoT For All Podcast. Welcome, Raullen to the IoT For All Show, thanks for being here this week.
– [Raullen] Yeah, thanks for having me.
– [Ryan] Yeah, it’s fantastic. I’ve spoken to Larry before on the podcast, and we’ve had some really good conversations, and you guys have a lot of exciting stuff going on in the industry, so I’m excited to have this chat.
– [Raullen] Yeah, sure, same wise. We have lots of things to share.
– [Ryan] Awesome. So let’s start off by having you give a quick introduction about yourself, background, experience, anything you think would be relevant for our audience.
– [Raullen] Of course. So my name is Raullen Chai. I’m the CEO and Co-Founder of IoTeX. So we started back in 2017, actually it has been four whole years, you know how time flies. Before that, I was actually leading a team at Uber, basically doing things around security and privacy. Because at that time, Uber was like growing like crazy, lots of privacy and security challenges over there. And even before that, I spent almost five years at Google, basically leading teams for Google-wide security initiatives, as well as cloud products. Some of the cloud products my team did still earns Google like $10 million a year. Pretty impressive. And even before that, I was doing my PhD in Uni of Waterloo, in Canada focus on cryptography. That’s where I got into blockchain like really early, because Bitcoin white paper is like a natural thing for anyone who’s very interested in crypto, cryptography, I mean. So that’s why like I got into a Bitcoin community very early at those days.
– [Ryan] That’s awesome.
– [Raullen] Yeah.
– [Ryan] Well that’ll definitely tie into kind of IoTeX in a second here. So dive in a little bit to what the company is, what your focus is on and kind of how you’re helping and working with the industry.
– [Raullen] Yeah, I think that’s a perfect question. So, definitely for IoTeX, we started in 2017. Two other co-founders, very small team, just a white paper, just illustrate our vision for the future. So, basically you see like as machine grows, as AI, 5G and every technology grows, the machine becomes more intelligent and definitely they will be the future workforce for the world. According to McKinsey report, I think there is a recent report, so they say by 2030, there will be 100 billion machines producing like 12 trillion kind of values for the economics growth and replacing 30% of human jobs. Definitely the machines are the future. And if you think about it so machines cannot work individually. So they have to work with each other to exchange information or utility in a way. So kind of forming different layers of machine network trying to help the human in all needs. So, of course, there are communication technologies, there are some other kind of AI technologies that helps the machine to get there. But I think the most important thing that is lacking or missing here is this economic layer, basically like a human being. So if you want to get to be part of the society, you have to do exchange something with other human being. You produce like a bread in exchange for like a milk type of thing. The same thing applies to the machine. But we don’t see kind of economic layer there yet. So that’s why IoTeX was born with this kind of vision and mission. We want to build this economic layer for machines so they can work together. And also this economic layer cannot be a centralized company. If you think about if Tesla, so they have a huge machine network, basically it’s a current machine network. And if this network is actually controlled by Tesla, then it’s kind of very scary to think about even. So maybe the Elon Musk want to have someone disappear so he can just push button and they’re gone. So that’s why this layer has to be decentralized and also have the machine owners to own that piece of functionality or utility within that network.
– [Ryan] So when you say decentralized talk about what that exactly means and kind of how that compares to the way things are done now.
– [Raullen] Yeah, so like I said, current situation is kind of big companies, they have a lot of machines, they kind of formulate machine networks by using the centralized company. I think Tesla is the example, Apple is another example, and Google I think, you name it. But in the future, I feel like there should be some democratization of the machines in the future. Those big guys can do a giant machine network. There should be some kind of button up type of machine network, like all the Raspberry Pi, for example, in this world, if they can connect it all together to form some sort of, I don’t know, like a maybe web quality network, that should be the way for it. Or another example should be like Arduino Sensors, like weather stations. Like those things can actually be distributed or maybe each household has a weather station outside of their house and all the weather stations should be able to connect it in a way so they can exchange information also trying to earn some credits in a way.
– [Ryan] Gotcha, okay. And just outta curiosity, so in order for that to exist, you would need someone to build the hardware and kind of put money in towards that part of the process. How would that work with a decentralized kind of network for machines?
– [Raullen] Oh, so this is totally like a game changer, right? I talk with a lot of IoT companies. I think like a very big pain point for this company is hardware is hard. There will be like a huge upfront, like a capital cost basically to set up a machine network. For example, if you would wanna do like bike sharing, like a scooter sharing type of machine network, it’s a huge, huge upfront cost, which definitely stop lots of those machine networks from happening actually. But by having Web3 primitives I think that the story will be totally different because it’s not like the company who’s managing all the bikes for this machine network. It’s actually the people like you and me who’s invest in maybe some tokens, I’m sorry, they’re actually investing their money to buy a bike or like build a bike and put into use trying to earn some sort of like a token incentives. And this token of course will be able to governance the entire scooter network or bike network once it’s just big enough. So, this paradigm has been shifted from one company spending ton of money to build a one machine network to many, many people like billions of people work together to build a one machine network.
– [Ryan] Gotcha, okay. So this plays into all the stuff I’ve been reading on when we’re hearing MachineFi and things like that, correct? Kind of this is all having compassing that.
– [Raullen] Exactly, that’s an instance of MachineFi.
– [Ryan] So what I’m curious to hear about then is how MachineFi kind of fits in with how you all view IoT now and kinda like the status quo of the industry and how that when then you start thinking about Web3 plays into where IoT potentially can go or what this kind of unlocks for the industry as a whole?
– [Raullen] Yeah, I do think this economic layer, like the MachineFi basically where built is the last missing piece for IoT to fly. So in the past few years we have lots of progress in sensor technology, in chips, in hardware manufacturing, in 5G, you name it. But I think still the economic layer is missing here. Who’s putting in the incentives for people, for developers, for IoT hackers to just launch your stuff and grow their stuff? I think that’s kind of a big missing piece right now. I think what we are doing is trying to connecting those IoT company, developers and community to the entire crypto world, like the Web3 even token developers, who’s very specialized in designing those incentives. And if they can do this in the Web3 space, definitely they can give like a 10X, 100X to those device companies in IoT.
– [Ryan] And so I guess what I’d like to hear a little bit about is if you could we’ve talked about the scooter kind of idea, talk about some other examples. On your end, what have you rolled out? Where do things stand as far as what are some applications that people could maybe connect this all together to understand at a basic level how it works?
– [Raullen] Yeah, yeah, yeah. So let me give you like a few kind of success stories we have. So I think one thing is we have this GPS tracker, we do in house it’s just to try to prove and value the market. Is a GPS tracker plus other 16 sensors basically track the movement and location everything for an object. So we put this one on Cross Supply, which is a kick starter for like hardware, like a few months ago. And we did a test. So if we go with the MachineFi, with the token, with the incentives, we can still like 10X compared to a traditional GPS tracker just put on there. So that means the incentive theory does work. And then, so we actually finished this device a few weeks back and launched this one recently. So there are already two teams working on a very interesting token trying to even will promote like sales office, GPS tracker further. So one is this thing called like a Health Blocks. It’s basically like a kind of fitness to earn. So if you walk 10 steps every day, you earn some sort of token. And if you maybe play basketball with your friends for a certain amount of time, you’re also earning token. It’s a very interesting project. Why this can happen on IoTeX because we have the full stack from a tracking device to the layer two protocol, which we call true stream processing all the data without compromising privacy. And to the layer one blockchain smart contract basically to earn the token back to the owner of the device.
– [Ryan] What is the value of the token for the individual?
– [Raullen] Yeah, the value of the token for the individual is of course like the value carries some sort of a speculative value as well as a real value. In the short term, I think maybe speculator value comes for like a 80% because everyone expects this thing to work, machine network will grow. So they’re actually holding token. And in the long run, once we have like enough data points from people who stood in fitness, those kind of thing become very valuable by itself. For example, you can have this data kind of rent out to research institutions, of course, without compromising user’s privacy, you can have the data actually even share with other people, for example, like a Michael Jordan. So his fitness data would be very interesting to people who wants to collect, to his fans, for example. And I think lots of design space over there.
– [Ryan] So when it comes to kind of this being able to prove that the person who’s receiving the incentive is actually the one utilizing the device, how is that kind of handled? And I’m curious what kind of problems that could caused. And what I’m kind of getting at is there’s obviously the risk of kind of spoofing by let’s say, you have a fitness tracker and your insurance is going to bring down the cost if you walk X number of steps. So your tracker is tracking the steps, but you’re not gonna go walk. So you give it to a friend of yours who is very active and goes for runs every day and they give it back to you. How is that kind of situation handled, protected against, or just what is your view on the kind of that spoofing side when you get to proof of anything type atmosphere?
– [Raullen] Very good question. I think there are usually like two ways to basically fight against ways that spoofing. So I think one is, of course you do some very hard tech on the sensor. For example, for the sensor we have, we have like a secure chip over there. Meaning like the moment the sensor collects all the information, our data, the data gets signed by this security. Like no one can taper in the middle. So that’s kind like a hardcore approach to make it happen, which we use for it. Another one is more a game theoretical approach. So basically says, if you’re cheating, someone else will try to find the signal, like the proof you’re cheating and trying to basically tell the protocol you’re cheating and trying to bring the reward back. And if the protocol finds you’re cheating, you are getting a slash in a way. I think this is a more long term go. So there are some games theoretical thing which is designed over time.
– [Ryan] Makes sense, okay, great. And now the one other question I was thinking about was on the data privacy or data security side of things. When you’re getting involved with the blockchain, obviously when you think about the blockchain being effectively a shared database that has the advantages of decentralization and trust, but also as disadvantages when it comes to performance and cost. How do you kind of decide and determine what data is stored on and off and on or off chain? and what are your thoughts on kind of how blockchain technology in general will improve so that everything can be stored on chain?
– [Raullen] When we are talking about IoT device, there is just huge amount of data not going to store on our layer one blockchain. So now we have this layer two protocol, it’s more like a computation Oracle that holds other data for a period of time, like 30 days or 60 days and up to the user. And all the proof that gets generated by this data, for example, Raullen has maybe down 10K steps every day. This is a proof. This proof actually goes to the smart contract. So it’s smart contract understands, oh, he has been down this, get him token. That’s our knowledge behind the tech.
– [Ryan] And do you feel like this will evolve to where everything will be kind of on chain or will the Oracle piece kind of still play in? Like, is it more of a hybrid approach kind of as things grow where the more secure stuff is being stored on chain or certain things are being stored on chain and then other stuff is stored off chain just depending on kind of the security needed and the cost side, the performance requirements and things like that?
– [Raullen] Yeah, I think like a 99% of data should just cash on layer two, which our true stream, computational Oracle. While like just little bit of data, which is the proof itself can go to the layer one blockchain that’s different, like the top of rule.
– [Ryan] And the question I have about hardware. So hardware has always been an interesting topic to talk about because it’s not always been the easiest thing to build, it’s expensive at times, it can be expensive. Design, there’s testing involved, getting the different components that you need, manufacture, you just name it. It seems like for whatever reason, hardware brings a lot of hiccups and potential headaches to IT solutions. So for all the hardware manufacturers that are kind of listening to this or that you communicate with, what would you say is the reason for them to explore working with, integrating into IoTeX and kind of what does that look like? How do they do that?
– [Raullen] I really this question. I think we talk with lots of IoT developers, right? So one of the pain points or complaints they have is they have a great idea, they even can do some POC, but they cannot grow their products from zero to one later on like one on 100. I think like of our value prop here or how we can help them is we can help you guys in having this kind of gross hack or like a gross strategy, basically having your way to incentivize people, to use the thing you build. Yeah, then that story would be very different.
– [Ryan] And what do hardware companies and manufacturers need to do to be able to integrate in with what you’re doing at IoTeX? Is that something that’s easy to do? Is there a certain stage at which they need to be engaging with you? Is that something they don’t even need to engage with you to do? What does that process look like? How’s that projected to be handled kinda as you grow?
– [Raullen] That’s a hard question because the IoTeX devices have a very different form factors. But we try our best to make the entire onboarding process as smooth as possible. So for like, usually devices like a Raspberry Pi Dino, so we do provide ADK so they can just like have IoTeX SDK over there, so their device can talk with our chain and layer two seamlessly. So this is one way to go. Another thing is this model range is for very small and tiny devices, they cannot. Because it’s almost impossible to stuff another software within that very embedded device. So yeah, we provide API definitely for those devices to talk to.
– [Ryan] Gotcha, okay, great. One of the last questions I wanted ask before we kind of wrap up is just about the company as a whole. It’s a very, very interesting kind of approach and strategy. You’re just looking at this from a whole different way, which is super interesting to kind of follow. I’ve watched a lot of the live streams you’ve had. I’ve read a lot of the documentation you put out, and it’s very captivating stuff to be honest. Even if you’re not familiar with blockchain or Web3, but just understanding what the vision is, is super interesting. So take me through kind of what the next six to 12 months looks like for you all and what the audience can kind of expect and be on the lookout for.
– [Raullen] Yeah, I think there are three concrete things we are working on. So first of course, we are still polishing infrastructure to make it as explicit as possible as simple as possible for the developers to actually onboard. So that’s kind of like a tech work we’re still building. I personally spend a lot of time on the BD side, basically trying to talk with companies, IoT companies, and developers and understand what do they need and how can we help. So, in this year, we are going to onboard quite a few IoT companies onto IoTeX to use our platform to try to practice our theory. And the third one, I think that’s on the product side, something we call the MachineFi marketplace. We hopefully in Q2, I think we will launch this one in Q2. So what does it do is so we will have kind of devices here and we will have a token projects and Web3 developer on the other side, then just trying to launch a new kind of project. The analogy here is if you have NFTs, so you have NFTs marketplace open see it. But if you have a MachineFi project, so you can come into the MachineFi marketplace to actually launch your project. It’s a kick starter but definitely a fully embraced website.
– [Ryan] And what’s the best way for people out there who are interested in learning a little bit more about kinda how this all works, how it may affect their business, what they can do to get involved. What’s the best way to kind of stay up to date, digest information now and just kind of learn more?
– [Raullen] Sure, please go to IoTex.io and machinefi.com for these two website to learn more about what we’re doing. If you’re interested in talking with us, just shoot me an email. It’s Raullen R-A-U-L-L-E-N @IoTex.io.
– [Ryan] Fantastic. Well, I’ll tell you, this is one of a conversation I’ve been looking to have, or looking forward to have for a while now, after I kind of been learning a lot about what you all do. So thank you so much for taking the time. I’m excited to kind of see how things progress and hopefully maybe later this year, as things continue to roll out, you have more companies working with you and more applications, we can have you back on to talk more about some real life things that can just kind of paint even more of a clear picture on how this is kind of leading into the future.
– [Raullen] Okay, that’s perfect, Ryan. Thanks for having me.
– [Ryan] Thank you. All right everyone, thanks again for watching that episode of the IoT For All Podcast. If you enjoyed the episode, please click the thumbs up button, subscribe to our channel and be sure to hit the bell notification so you get the latest episodes as soon as it become available. Other than that, thanks again for watching and we’ll see you next time.
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