IoTeX is the first cryptocurrency blockchain that has a physical product associated with their network. They have a few unique features that we share in this article!
In 2011, Marc Andreessen wrote his now famous article explaining that “software is eating the world.” The venture capitalist and creator of Netscape meant that a lot of traditional business processes would be taken over by the use of software instead of other physical processes.
He has been proven correct over and over again with the success of many startups that do exactly like this. It turns out that not only has the use of software grown tremendously, but it turns out that hardware is just as important, and you can connect a lot more to the internet than just your iPhone. Everything from your car to your fridge to your home security system can be hooked up to the web to provide a ton of cool features.
And in the same way that many people say that the blockchain can change how software works, it can also change how hardware works, and that is exactly the reason IoTeX exists.
In this article we are going to explain what IoTeX is, what products they have created, and of course some tokenomics of their IOTX Token.
At its core, IoTeX lives up to its name. It is primarily a company focused on producing great IoT (internet of things) products. The reason they are different from other IoT companies, and the reason they caught our attention, is that they are using blockchain technology to do this.
Okay great, another company promising to revolutionize an industry using cutting edge smart blockchain technology integrated with IoT, yadda yadda yadda. These kinds of descriptions are easy to glance over as just being tech babble or worse, a scam, but let’s dig in to see exactly what IoTeX does.
What is IoTeX?
While IoTeX has a whole ecosystem of interesting projects and partners, what they are really known for is their unique devices. With so many crypto or DeFi companies limited to basically digital products and services, IoTeX is interesting because it has a physical product you can buy and use for yourself.
The two main devices they sell are called the Ucam and the Pebble. Let’s start with the Ucam. The idea is simple enough without IoT or the blockchain—it’s a security camera. IoTeX itself has a nice simple description of the camera, “The first blockchain-powered home security camera that protects your loved ones and your privacy.”
The lingering question under this is, “Why should we combine IoT with a blockchain?” This is a great question and one that highlights a clear use case of IoTeX’s technology. The advantage of the internet of things is that these devices are connected to the internet. They can communicate with other computers to, for example, have your refrigerator scan your fridge and order more milk, or carrots or whatever you need directly from Amazon Fresh.
Unfortunately, the downside of the internet of things is the same thing—the devices are connected to the internet. Those who use other cryptocurrencies like Bitcoin understand that taking something off the internet makes it more secure. Connecting it to the internet gives it some cool functionality, but makes it less secure. What if somebody hacked into a whole network of smart fridges, or your garage door opener, or a security camera you own?
Imagine somebody hacking into your home security system, giving themselves the power to lock your doors, disable alarms, cut off your phone lines, water, or power? That is exactly why security on IoT is vital and using a blockchain gives users additional security.
A blockchain based solution like Ucam is more secure because, like Bitcoin, only the person who holds the private key can access the data. The data is end to end encrypted before it is sent to the cloud, which means it is only ever decrypted when you choose to access it—especially important for something that has access to your whole home. Now, it’s worth noting, I do a lot of research for these videos but I haven’t looked at their source code to truly see if the video stream is encrypted, so don’t make me liable on that.
Pebble and Proof of Presence
The other popular device sold by IoTeX is called Pebble. The use case for this device is simpler, but less straightforward. At its most basic, Pebble verifies real world data like location, temperature, light, motion, and more using a blockchain.
We’ve had GPS technology and other sensors for years, so why is this so special? Security is a big factor. As we saw with Ucam, this data does not have a central point of failure because it is on a blockchain. And although Pebble is mostly seen as a solution for supply chains, logistics, automation operations, and other business-to-business processes, the implications are far reaching.
What are the future implications?
As many in the crypto space like to point out often, it’s likely that we are in the very early days of blockchain applications. We know how to use the blockchain to run a monetary system, that was the original use case when Satoshi Nakamoto invented Bitcoin and the blockchain simultaneously.
But when we take a step back, a blockchain is really just a decentralized way of verifying information. Because a ledger has to add up, all those credits and debits are easier to verify since they’re numbers, but things like temperature or location data is another step. The introduction of Pebble shows us that just like blockchains have to verify “proof of work” or “proof of stake,” it can also be used to verify “proof of presence,” or the physical location of something.
As Larry Pang, head of business development at IoTeX told Coin Telegraph, “A lot of the use cases of NFTs are about clout — ‘I have this, I’m the owner of it’ — even though anyone can see this JPG on the internet […] The next step for NFTs is not to prove you have reputation that’s transitive from someone else but if you have reputation that says ‘I have a collection of NFTs that were only mintable under verifiable conditions’.”
As you’re watching this you can probably think of the ways in which this might be used. You could have to verify your presence in a particular location in order to vote in that jurisdiction’s election, upload evidence that a street is free of litter to earn some tokens from the city government, or maybe even verify news independently. Theoretically, all of this data could be NFTs in the most literal sense—digital ‘tokens’ that represent things from real life, bridging the gap between bits and atoms.
How does the IoTeX blockchain work?
Up to this point we have shown what IoTeX does as a company and why the union of IoT and blockchain is important. But how does their blockchain actually work on a technical level? Let’s dive into the IoTeX blockchain and their token—IOTX.
The IoTeX blockchain is what is called a Delegated Proof of Stake chain (DPoS). For those who may not be familiar with this process, it is basically a proof of stake protocol with some tweaks. In a normal PoS system, everybody in the network participates in consensus based on how many coins or tokens they have at stake. In this similar version, there are a “limited number of semi-trusted delegates” that achieve consensus.
This doesn’t exclude stakeholders however, as everybody is allowed to vote for the users who then become block producers. Basically, if a normal proof of stake chain is a direct democracy (everybody “votes” and that is the outcome) this DPoS system is more of a republic. Everybody gets to vote, but they’re voting for other users they trust who then do the real work of producing blocks. These “block producers” all have a time slot in which they need to produce a block. If they fail to do this, the block is skipped and the rewards are pushed to the next block. But what’s interesting here is that the average voter who votes for the block producers receives some of the block reward back when the person they voted for successfully produces a block. Because of this, people are incentivized to vote for only the users who they trust to successfully produce a block, because they stand to gain from its production monetarily, while also more securely operating the chain with these trusted delegates. Of course, to do any of this, users have to actually stake their token, called IOTX.
What is IOTX?
Although IoTeX began in 2017, the token IOTX did not launch until 2018, and was not available to stake until 2020. Originally it launched using the Ethereum network and was an ERC20 token until they launched native IOTX in 2020, but it is still compatible with Ethereum.
Now IOTX has their own blockchain, one very similar to Ethereum with much faster block times and lower transaction fees. The IOTX token is essential to using anything on the IoTeX network like Dapps, their new cross chain bridges with chains like Polygon which caused some upward price movement in late 2021, and to simply run the network. I’ll be keeping an eye out for any blue chip dApps moving over to the IOTX ecosystem.
IOTX is a deflationary token, and it uses a unique burn-drop mechanism. $1 billion IOTX (10% of the total supply) will be ‘burn-dropped’ as the first one million iotex-powered devices are onboarded to the network. This means that 90% of that $1 billion IOTX will be burned (and removed from circulation) and 10% will be dropped (which means distributed to voters that meet the requirement of auto-staking for 91+ days). This mechanism is facilitated by a smart contract that is triggered every time a new device is added to the network.
24% of all tokens were sold via private sale and were distributed between 2018 and 2020. 18% of the total supply was given to the Ecosystem fund to help developers, partners, and marketers grow the brand. This also includes the burn-drop mechanism. Another 25% went to the Iotex Foundation, which is used to build the IoTeX platform and protocol. The team received 15% of the tokens, which are vested and given out over a 4 year time frame—the first tokens were given out in February 2019, and the rest given out at 6 month intervals. The last 12% and 6% were given out to mining rewards and a community rewards program.
Overall, I think IoTeX is a very interesting protocol with some truly unique use-cases that I wish other blockchains could follow after.
Thanks for reading, I hope you enjoyed this article, I really hope you learned something, and most of all, I hope to see you in our next article!