Deep Dive into IoT Blockchain IoTeX in the DePin Track

1. Project Introduction

Founded in 2017, IoTeX Platform is an open source blockchain project built specifically for Internet of Things (IoT) applications. The project’s goal is to create a network where “people and machines can interact in a privacy-preserving, trustless environment”. In addition, the IoTeX ecosystem includes blockchain technology with secure hardware and computing, “making trusted data from trusted devices” available for decentralized applications (dApps).

The team behind IoTeX Platform consists of industry-leading experts who draw on the experience of some of the biggest names in tech. In addition, the platform uses a randomized, scalable variant of the Delegated Proof of Stake (DPoS) consensus mechanism called Roll-DPoS. Representatives maintaining the network include Blockfolio, CoinGecko, and many other industry well-known names.

Additionally, IoTeX is at the forefront of IoT and blockchain technology. The IoTeX platform combines hardware with connectivity and a highly scalable technology architecture that allows trusted devices to connect with trusted data to enable a wide range of real-world applications and use cases. It is worth mentioning that the project was also selected as co-chair of the Industrial Internet Consortium (IIC) Blockchain Group along with Amazon and Huawei.

The IoTeX platform was created from the ground up. In just a few years, the project has created multiple blockchain-based IoT products. Additionally, developers can create IoT and blockchain applications using the trusted data provided by the IoTeX platform. By leveraging the various tools and services provided by the platform, developers can focus on the logic/application layer of their projects. Therefore, IoTeX provides plug-and-play IoT services that allow you to easily create advanced applications using trusted devices and data.

2. Core mechanism

IoTeX works by enabling a decentralized Internet of Things (IoT) ecosystem through its innovative technology architecture and protocols.

The following is a detailed introduction to the main working principles of IoTeX:

(1) Layered architecture

IoTeX adopts a layered blockchain architecture designed to solve scalability and interoperability issues while maintaining a high degree of security and privacy protection.

Root Chain: As the main chain of the entire network, it is responsible for managing and coordinating the operations of all sub-chains (layered chains). The root chain runs the IoTeX consensus mechanism and network governance protocol.

Root chain function

• Network governance: All important governance decisions regarding network protocol updates, consensus mechanism changes, etc. are made on the root chain.
• Security assurance: The root chain provides a basic security framework for the entire network, ensuring that interactions and data transmission between sub-chains are conducted in a trusted and secure environment.
• Interoperability: Through the root chain, different sub-chains can communicate with each other and exchange data, achieving cross-chain interoperability.

Sub-chains: Used to support specific applications or services, such as data markets, smart home systems, etc. Each sub-chain can have its own customized rules and operating environment to best serve specific application scenarios.

Sub-chain function

• Flexible deployment of new applications: Developers can create new sub-chains as needed to tailor solutions for specific applications or services.
• Optimized performance: By allocating different tasks to dedicated sub-chains, large amounts of transactions and data can be processed without sacrificing the overall performance of the network.
• Improve scalability: The layered architecture allows the network to expand on demand by adding more sub-chains to support more devices and applications.

Edge Computing: IoTeX leverages edge computing technology to reduce latency and increase data processing speed and efficiency. This is critical for real-time data processing and fast response IoT applications.

Edge computing features

• Reduce latency: By processing data immediately where it is generated, data transmission time can be greatly reduced to support real-time applications.
• Save bandwidth: Edge computing only uploads necessary information and processing results to the chain, reducing unnecessary data transmission and saving network bandwidth.
• Enhance privacy protection: Processing data locally can reduce the risk of leakage of sensitive information and enhance data privacy protection.

(2) Roll-DPoS consensus mechanism

IoTeX adopts the Roll-Delegated Proof of Stake (Roll-DPoS) consensus mechanism, which is an improved version of the DPoS consensus mechanism. Roll-DPoS rotates elected block producers (Delegates) to increase the security and decentralization of the network. Block producers are responsible for validating transactions and creating new blocks, and IOTX token holders can participate in network governance by voting for block producers.

The following is a detailed introduction to the Roll-DPoS consensus mechanism:

Fundamentals

Roll-DPoS is an improvement of Delegated Proof of Stake (DPoS). In DPoS, token holders vote for a certain number of representatives (often called “witnesses” or “representative nodes”) who are responsible for validating transactions and creating blocks. Roll-DPoS adds dynamic changes and randomness on this basis to enhance the decentralization and security of the network.

Core features

• Rotating representative nodes: Roll-DPoS rotates the elected representative nodes through a random algorithm and time period (called “round” or “epoch”). This rotation mechanism ensures the fairness and dynamics of network governance and prevents excessive concentration of power.
• Fast transaction confirmation: Since the number of representative nodes is relatively small and the elected nodes usually have high performance, consensus can be reached quickly and transactions can be confirmed, greatly improving the throughput of the network.
• Security enhancement: By introducing randomness in selecting representative nodes, Roll-DPoS reduces the possibility of potential malicious attackers electing fixed nodes to attack, thereby increasing the security of the network.

Voting and Incentives

• Voting Weight: In Roll-DPoS, a token holder’s voting weight is proportional to the number of tokens they hold. Token holders can delegate their voting weight to nodes they trust.
• Incentive mechanism: The selected representative node will receive rewards for the generation of new blocks. These rewards are usually distributed to token holders who voted for the node in a certain proportion to encourage more users to participate in network governance.

Implementation Effect

Roll-DPoS enables IoTeX to achieve processing capabilities of thousands of transactions per second while maintaining low latency and low energy consumption. This is critical for networks that need to handle large amounts of data and transactions from thousands of IoT devices.

Randomness and Elections

• Randomness: Randomness in Roll-DPoS is generated algorithmically to ensure that the election of representative nodes is fair and unpredictable.
• Election Process: The election process is usually automated, and token holders can change their votes at any time to reflect their satisfaction with the node’s performance.

(3) Privacy protection

IoTeX takes privacy protection as a core consideration from the beginning of its design, and adopts a number of technologies to protect the privacy of users and devices:

Decentralized Identity (DID): Provides a unique identity for each device while protecting the privacy of the device owner.

Security Hardware: Integrates with compatible security hardware to ensure data is encrypted and protected at the source.

Off-chain computing: Sensitive data can be processed off-chain, and only necessary information and results will be uploaded to the chain. This not only protects data privacy, but also takes advantage of the non-tamperability of the blockchain.

(4) Interoperability and cross-chain communication

IoTeX is committed to achieving interoperability with other blockchain networks, allowing assets and data to flow seamlessly between the IoTeX ecosystem and other mainstream blockchains such as Ethereum, Binance Smart Chain (BSC), Polygon, etc. By establishing cross-chain bridges, IoTeX enables IoT devices to access a wider range of decentralized services and applications.

3. IOTX Token

The IOTX token is the native cryptocurrency of the IoTeX ecosystem and is designed to support various operations and services in the network. As a decentralized platform designed for the Internet of Things (IoT), IoTeX provides secure, efficient, and scalable IoT application solutions through its unique technology stack, and the IOTX token plays a core role in this ecosystem.

Main purpose

• Transaction Fees: All transactions conducted within the IoTeX network, including the execution of smart contracts, require payment of fees using IOTX tokens. These fees are used to incentivize block producers and maintain network security.
• Staking and governance: IOTX token holders can participate in network governance by staking their tokens, including voting for important decisions such as network upgrades and parameter adjustments. In addition, staking is also used to elect block producers, that is, representative nodes under the Roll-DPoS consensus mechanism.
• Services and applications: In the IoTeX ecosystem, IOTX tokens can be used to access or pay for various decentralized applications (DApps) and services, such as data storage, device management, and cross-chain operations.

Economic model

IOTX’s economic model is designed to support the growth and development of the network over the long term. The maximum supply of the token is designed to be 10 billion IOTX. This supply is pre-set in order to keep the token’s value stable and predictable.

Importance of IOTX Token

The IOTX token in the IoTeX ecosystem is not only a medium of exchange but also incentivizes participants to maintain and protect the network, partake in governance decisions, and promote the ecosystem’s continued development. Through this, IoTeX aspires to construct a decentralized, secure, and efficient IoT platform that can address the challenges and requirements of forthcoming IoT applications.

Burn-Drop mechanism

IOTX tokens are subject to a token mechanism called “Burn-Drop”. When the platform onboards the first 1 million IoT devices, the mechanism will remove 1 billion IOTX tokens (equivalent to 10% of the total supply) from circulation. Of these 1 billion tokens, 90% will be used for token destruction.

However, the remaining 10% will be “discarded”. This means that tokens will be distributed via smart contracts to voters who stake for more than 91 days. The Burn-Drop program will destroy 900 million IOTX tokens, equivalent to 9% of the total supply. Additionally, 100 million IOTX tokens, or 1% of the total supply, will be discarded.

Supply and circulation

IOTX has a maximum supply of 10 billion IOTX, and a total supply of 8.8 billion IOTX after the “Burndrop” event. The token distribution is as follows: private placement accounts for 24% of the supply, and private placement tokens have been fully distributed between 2018 and 2020; the ecosystem accounts for 18% of the supply, and the ecosystem fund is allocated to the “Burndrop” event (10%) and the Halo reward program (8%). Ecosystem tokens are unlocked gradually over 3 years after the issue date; Foundation accounts for 25% of the supply, and Foundation tokens are unlocked gradually over 3 years after the issue date; Team accounts for 15% of the supply, and Team tokens are vested within 4 years after the start date, with a 6-month cliff period, and the first distribution was in February 2019; Roll-DPoS mining rewards account for 12% of the supply, which are mining rewards; Community Rewards Program: 6% of the supply, and Rewards Program tokens are unlocked gradually over 3 years after the issue date.

As of April 11, 2024, the price of Binance-Peg IoTeX is $0.077, with trading volume in the past 24 hours reaching $61,689, showing a growth of 7.77%. The price of the IOTX token has fluctuated between $0.007 and $0.008 in the past 24 hours, between $0.006 and $0.009 in 30 days, and between $0.001 and $0.009 in one year. The token has a market cap of $636,900.

4. Team/Financing

The IoTeX team consists of several experienced professionals with deep backgrounds and expertise in cryptocurrency, blockchain technology, Internet of Things (IoT), security, and privacy protection.

Founder Raullen Chai has a Ph.D. and has extensive experience in cryptography and blockchain technology. Before co-founding IoTeX, he worked as an engineer and research scientist at Google and led research in security and privacy at Uber. Co-founder Qevan has experience in data science and growth strategy at tech giants such as Facebook and Google. He has a deep background in artificial intelligence and big data analysis.

In terms of partners, IoTeX has built a broad network of partners including hardware manufacturers, network service providers, blockchain technology companies and other IoT-related companies.

So far, IoTeX has completed four rounds of financing, raising a total of US$10 million. The latest round was the Series A round on February 29, 2024. IoTeX received an undisclosed amount from Borderless Capital in this round of financing. This marks the company’s development to a new stage, which usually means that the company has matured and its products or services have been market-proven.

5. Future Development Analysis

Future development forecasts are always filled with uncertainty, especially in the rapidly changing fields of blockchain and the Internet of Things (IoT). However, based on the technical foundation, ecosystem construction and market trends that IoTeX has demonstrated, we can make some reasonable speculations about its future development:

Technological Development

Expanded Compatibility: IoTeX will likely continue to expand interoperability with other blockchain ecosystems, especially in the DeFi and NFT spaces, which will help it grow its user base and market share.

Enhanced Security: The security issues of IoT devices are receiving more and more attention, and IoTeX needs to continuously strengthen its security, including firmware, communication protocols, and data storage.

Ecosystem and Market Expansion

New Partnerships: Forging new partnerships, especially with hardware manufacturers and service providers, will help IoTeX expand its use cases and user base in the IoT space.

DApp Development: As more developers participate, the number of DApps in the IoTeX ecosystem is likely to increase, covering more vertical markets such as smart cities, health care, smart homes, and supply chain management.

Community and Governance

Strengthen Community Participation: Build a more active developer and user community to support network governance and ecosystem innovation.

Transparent Governance: Improving the transparency of the governance process may attract more investors and users to have more confidence in the IoTeX project.

Tokenomic Model and Token Value

Tokenomic Model Optimization: Adjusting the economic model to ensure a balance between token supply and demand, which may include adjusting circulation through token destruction, staking rewards, and incentives.

Market Positioning: A clear market positioning can increase the awareness and appeal of the IOTX token by clarifying its unique value proposition in the blockchain IoT space.

Comply With Regulations and Standards

Regulatory Compliance: Maintaining adaptability to the global regulatory environment, particularly around privacy and data protection, is critical for both users and partners.

Anticipated Challenges

Technology Challenges: The diversity and complexity of IoT devices can lead to technology integration challenges.

Market Competition: Facing competition from other blockchain projects, especially those focusing on the IoT field, IoTeX needs to continue to innovate to remain competitive.

User Adoption: Although the potential of the technology is huge, the speed of user adoption may be limited by market education and industry acceptance.

Overall, the future development of IoTeX will highly depend on how its team copes with technical challenges, expands its ecosystem, builds a strong community, optimizes token models, and responds to regulatory changes. Considering the combined potential of blockchain and IoT, IoTeX has the opportunity to become a leader in this emerging field.

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