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Raullen Chai (00:18):

Individually, I love The Graph, I love what you guys do. I'm a big fan of the indexing of the on-chain data and serving for dapps. Recently, we started to do an integration with The Graph. As we're a Layer 1 EVM chain, I think low-hang fruit here is getting The Graph to indexing all the IoTeX EVM data.

Nick (01:07):

Welcome to the GRTiQ Podcast. Today, I'm speaking with Raullen Chai, CEO and Co-Founder at IoTeX and MachineFi. IoTeX is a decentralized blockchain platform tailored for the Internet of Things aiming to enhance the security, privacy, and efficiency of IoT device interactions and data exchange. MachineFi, an innovative concept introduced by IoTeX merges decentralized finance with IoT devices. As per usual, Raullen is another brilliant and insightful web3 founder with deep insight and strong conviction for web3 and blockchain. During our interview, Raullen talks about his background, his university education, and his journey into web3, which included stops along the way at Oracle, Google, and Uber. And then we talk about the origins of IoTeX and MachineFi. During this fun conversation, Raullen will discuss DePIN, including the inside scoop on the origins of the term, the future of web3, and how important The Graph is for IoTeX and MachineFi and how it fits in into DePIN. I started the conversation with Raullen by asking about where he's from.

Raullen Chai (02:17):

Sure, thanks for having me, Nick. Yeah, I was born in China, but I grew up in Canada, then end up here in US right now. As a young person, it's pretty normal kid like anybody else, but I'm just a person, a fool of curiosity. I don't listen to teachers a lot. I just mess up things because I'm just too curious what is going on, what sort of things behind the phenomenon. That's about me.

Nick (02:40):

Where did you develop this curiosity? I mean, was it something you were just born with, or is that something you developed over time?

Raullen Chai (02:46):

No, I think it's part of me when I was born. It's a natural instinct basically. I'm just curious about everything. I don't read textbooks a lot, I want to figure out the things by myself.

Nick (02:58):

Raullen, obviously you ended up working in technology, you're a serial entrepreneur, you've been involved in a lot of very cool projects. What can you tell us about any memories or moments from your childhood that you think shaped your interest in entrepreneurship or technology? Are there any?

Raullen Chai (03:14):

Yeah, I think when I was 10 or 10-ish, I actually got my first computer. Computer at that time was like a luxury gift from the parents, I'm so thankful for that. Then this computer thing leads me into basically open up my eyes for the entire new world. That makes me being like a white hat hacker at the time. I just trying to, not just to mess up my own thing, right, Also was trying to mess up other people's stuff. But of course, I telling them how to fix. I make a couple of some dollars I think in my summer break just trying to hack into some website and telling them how to fix. Yeah, that source of also fun and a good revenue stream for my early life.

Nick (03:58):

That's amazing. One theme that comes up all the time with tech entrepreneurs like yourself is getting early exposure like you described there to tech in the home with a computer or something, but sometimes they say they took it apart. They like to understand exactly how this thing works, so they would disassemble it and try to reassemble it. Were you one of those?

Raullen Chai (04:17):

I'm definitely one of those actually, that's a lot of fun. You poke different parts all together, does it work? Does it work better or worse? You just change a graphic card, purchase a new one to put into a CPU, right? You want to overclock the CPU, you want to destroy something, that's a lot of fun actually.

Nick (04:32):

That white hat hacking is an interesting thing, and clearly in the crypto world, there's a lot of hacking that goes on and it's not always white hat, it's something different. But as a young person, you were working on this. I mean, do you have any fun stories or experiences you had doing that and maybe some big projects that you worked with or hacked on?

Raullen Chai (04:51):

Yeah, I think as a kid actually, I also wrote a malware actually for some other people. At that time, I think those Windows zero-day explorers was very popular. So someone came to me and says, "Oh, I pay you few, some dollars, can you just wrote a malware for me so I can just spread around the world?" Yes, I did that, it looks like it's working. But later, I regret, that could destroy a lot of system actually out there. But that's still a part of the fun memories I have in my early life.

Nick (05:19):

Does working on those types of problems, so this hacking type of problem, does that in some way give you deeper education and understanding on how the tech works and how software works?

Raullen Chai (05:31):

Yeah, that's for sure. Basically, a very good course project helped me to understand a lot of in-depth stuff about the internet, how you propagate software from one computer to another. And also, the software stack, so how do you use some sort of exploit to get into somebody else system? How does Windows works? How does programming language works? That makes me familiar with the entire stack with the computer world.

Nick (05:58):

Well, eventually you grow up and go on to get a PhD in, you work a lot in blockchain and cryptography. What can you tell us about your PhD days, and the types of things that you were studying and researching?

Raullen Chai (06:10):

Yeah, so this one also ties back to my early experience as a white hat hacker, right? As a white hat hacker, you're mostly trying to leverage some bugs that has been identified by other people. Then you just write a malware for example, to basically taking profit or leverage. This sort of thing is just too shallow. I want to go into one level deeper into the entire security world, which is cryptography, which is the foundation for security. That talks about encryption, decryption, privacy, compute, trusted compute, so on and so forth. That's where I decided, okay, so I'm going to, definitely I'm doing my PhD here trying to really understand what should going on here. That's where I did my PhD in Waterloo really focused on cryptography. At that time, our research is mostly about can you design an encryption algorithm and no one else can crack, and at the same time, we're also trying to crack the encryption algorithm that designed by other people. It's like attacker defense game. That was really, really cool. Love it.

Nick (07:11):

When you think about the state of art of cryptography, and clearly this existed before web3 and blockchain and cryptos, but do you see it as the emergence of the web3 industry pushing the frontiers of cryptography and leveraging maybe that discipline in a way that we wouldn't have otherwise? How do you see that?

Raullen Chai (07:33):

Oh man, that's a really, really awesome question indeed. When I was doing my PhD from 2008 to 2012, Bitcoin was just born, was not popular at all. It's just a few people and it was about Bitcoin. We are maybe one of them, but most of people doesn't, right? They're doing cryptography for the purpose of loving the technology. Who will spend a lot of time on your career or life just working on some deep math stuff? Because core of cryptography is mathematics, so you have to basically poke it with a number, simulation, calculation, design. Very complicated number series, try to do a cryptography system. This is purely or maybe authentic passion for math or for cryptography, no one really taking profit from here. But after the blockchain as an industry emerged in the past 10 years or so, more people or more capital actually specifically getting to this area. That makes people really, really profitable when they're talking about zero-knowledge proof, when they're talking about fully homomorphic encryption, those very advanced topics in the cryptography area which was used to be only interested by academic researchers.

Nick (08:42):

One sleight of hand if you will, that I think people like me that are not technical sometimes misunderstand or don't fully comprehend is everything you just said about cryptography and how web3, blockchain, all of this technology leverages cryptography, but yet, there is a going concern about privacy in web3. So how should we non-technical people reconcile the fact that cryptography is reaching new frontiers, but yet there is still this going concern about privacy and protecting privacy?

Raullen Chai (09:18):

Cryptography, it's about being private, so it's always talking about authentication, authorization, encryption stuff. Basically trying to protect yourself as a person to other people, or maybe centralized parties like governments, like companies, like corporations. In its heart, it was a military technology at the very beginning, and then it's civilized after this many years. So yeah, I think privacy is definitely a very big part of the cryptography, but cryptography goes beyond privacy a lot these days. For example, those Ziggy stuff, their knowledge stuff, it's mostly talking about can you do a compute off the chain in the real world about something without being tampered, but you can prove I'm doing the right compute to a smart contract or blockchain. So those things definitely go beyond privacy.

Nick (11:11):

Take us back in time, if you don't mind, Raullen, and tell us about when you first became aware of what was going on in cryptocurrencies, and you mentioned Bitcoin just a moment ago. What were your first impressions and what did you think at the time?

Raullen Chai (11:24):

I thought this was too good to be true because there are so many researchers trying to find this holy grail of digital currency in the past. There are so many research papers in the past and no one succeeded. There are always a flaw in the system here and there, or it's too complicated, not practical, and, oh, no one going to use it. When we saw the idea of Bitcoin, we saw it so simple, it cannot work. Why would it work? But turns out it's working very well, which I'm so glad. Because this design of Bitcoin, so they just taking another dimension of information, which is like a finance, like a lens to see how the system works. All the previous work about digital currencies, mostly about on the tech side, on the cryptography side, while I do this signature, I do this encryption algorithm, I do this authentication, there's always some sort of flaw. But if you look at the problem from a different lens, the problem gets solved, so this is amazing.

Nick (12:21):

If I'm looking at the research I did in preparation for this interview, I clearly see tech, cryptography, entrepreneurship as a major theme that ties the narrative of your life together. But there's this other topic that we must also discuss, which is IoT or Internet of Things. On the heels of what you said about Bitcoin, what can you tell us about what IoT, Internet of Things is and how you got interested in that discipline?

Raullen Chai (12:48):

In my early life, so at that time, internet or mobile internet is not as popular as of now. A lot of people actually, they just like being the tinkerers who know the Arduino stuff per se, right? Raspberry Pi stuff. I'm definitely one. And also in my PhD research, the encryption or cryptography stuff we did is mostly for the IoT devices, so they have to be a very lightweight so those smaller devices can actually leverage. This is the IoT side. Then later, I also, I work for Uber for almost two years. That also makes me a really, really interested to cars, how these things transport people from A to B and making money.

Nick (13:28):

I got a lot of follow-up questions about your time at Uber, and we'll get to those in a minute here. But if we try to explain what IoT is to a non-technical person, what is Internet of Things? How is this relevant? What is it?

Raullen Chai (13:40):

Yeah, it's essentially a small piece of devices, not necessarily to be small, but it's a device that could be smart, that could be connected to the cloud, or connect to each other. Think about your phone, your smart home camera, think about your weather station maybe at home, or maybe your ring on your finger that monitor your heart rate, monitor your sleep. That's all IoT. It's everywhere right now.

Nick (14:03):

Understood. Let's go back to your personal story a little bit here. You get a PhD, you're studying cryptography, you become interested in what's going on in crypto world and things like that, what did you actually do after college though? How did you get started professionally?

Raullen Chai (14:17):

Yeah, I spent a few months in Oracle, but it's definitely a giant, slow, big company, and then I just joined Google right after Oracle. Stayed there for five years leading team for security infrastructure, a few cloud products for Google. That was a very fascinating time. Basically, I got a lot of exposure to all the infrastructure distributed system to work, lookalike. That basically sets me up ready for building the blockchain later.

Nick (14:46):

I mean, if you list all the tech companies to go work for at the time, Oracle's got to be right up at the top, Google, you mentioned a moment ago that you also went to Uber. Can we double click a little bit on your experiences at Oracle and Google? I mean, what did you learn about software, about business by virtue of having exposure at such large companies?

Raullen Chai (15:08):

I was talking this with another friend the other day. Each generation should have their, or define their own industry. For example, if you think of a Google, Oracle, so they were all born around 1990s. That's when Larry Page, those founders are really young. They gathered a crowd of young people, passionate people like themselves to really building something fascinating. That's world changing. That's Google, that's Oracle. I like this one. But of course as time goes by, they're getting old. The entire company is getting old, getting big, getting very hierarchical, then everything slows up. But we are seeing the pattern gets repeated in crypto. So nowadays, maybe like five years back, all the young passionate people like you, like me, are actually getting into crypto. We want to build a new world by our voice. So that's a fascinating, if you try to link crypto back to Google or Oracle.

Nick (16:02):

That idea has come up once before on this podcast. In fact, it was framed a little differently, but somebody was talking about the roots of Bitcoin and this push towards decentralization, and they were raising the flag that in fact, we are trending towards centralization because of the size of some of the participants in the ecosystem, but as well as these centralized exchanges. What's your opinion on that? I mean, you're seeing large web2 type signatures maybe emerging within the web3. Are you also seeing a return or a little bit of a pivot towards centralization?

Raullen Chai (16:36):

Yeah, that's a more ideological question. If you look at the news, the why Ethereum ETF gets approved. Why people are interested in those ideas is there's an old world, so there's a new world. We want this new world to be fully decentralized, even new government at all, right? But the reality is you have to tie this new world back to the old world in our way because we're all the same people living in the same world. I feel like even Vitalik, I feel like when he was young, when Ethereum was just got started, the idea is trying to build this decentralized society basically. But as time goes by, everybody realized that fully decentralization is coming at the cost basically, so some sort of a centralization or maybe some part of the system should be centralized I think is a reality.

Nick (17:28):

So much of the discussion about what web3 is, and a lot of people, they don't even accept that terminology, but for the sake of this question, let's assume that there is a web3 and we both agree that that's the right term. When you contrast it with Web 2, people say, "Well, web3 is a revolution. It's a pivot away from the sins of web2." It's all these other types of things. How do you think about the emergence of web3? Is it an evolutionary step? Is it a revolution? I mean, how do you think about that?

Raullen Chai (18:03):

I think it's a revolutionary step for sure, but usually people overestimate in the short term, but underestimate in the long run. If you think about when Facebook coming out, they're promoting this idea of a network of people. So many people are overhyped by this new idea. Then after this many years, Facebook just become a website plus a few popular social apps so it's not that disruptive, but if you really think about it, it is disruptive because now we are all living on Instagram, we are all living on WhatsApp, so they're part of our life. We feel it's not disruptive enough perhaps because it's become part of life. So I feel like the same for cryptography. It's not going to disrupt the entire world and have new rules for the new world, but it will change our world in a way that we cannot sense basically. For example, tomorrow if you take a Uber, then all the underlying system is actually orchestrated via blockchain, via a bunch of these different systems, that's where crypto is taking over the world.

Nick (19:10):

As part of the argument you just made there that at the end of the day, users don't actually care about what rails this thing is on, they just want the value, and so if it's blockchain that's running Uber or a centralized server, what does the user care?

Raullen Chai (19:24):

No, user doesn't care about the underlying stuff. I really care about the experience. Did I get a Uber that is cheaper than before? Did I get a faster service than before? Those are things they do care.

Nick (19:36):

One last question about your time at places like Oracle, Google, Uber. Do you ever think about how they'll respond either competitively or just existentially to the emergence of something like web3?

Raullen Chai (19:49):

I'm sorry, can you elaborate this question?

Nick (19:51):

Sure. Based on your time at those big web2 companies, do you have a guess or an idea of how they might respond to something like web3 that's growing and might gain greater adoption?

Raullen Chai (20:04):

Yeah, that's really hard, to be honest. I think there's a book talking about the theory. Basically, a company's internal structure or culture organization structure is designed or optimized or maybe evolved into the business's doing. For example, for Google, the major business is search, maybe YouTube as well. So entire mindset, the culture, the org structure people value most is those big businesses. So web3 to them is nothing, no one really cares about. Of course, there are some pioneers within Google I'm sure, so they're promoting web3 a lot, but does the management care? Maybe not too much.

Nick (20:41):

Let's then talk about 2017, a pivotal year for you. It's when you start your first entrepreneurial venture and decide to leave that web2 large company environment and go co-found and launch a project. Take us back in time. What was happening in your life and what were you thinking about at that time?

Raullen Chai (21:00):

Yeah, so personally speaking, I'm a very early Ethereum investor, so I'm always looking at what is going on with Ethereum. Starting from I think 2013 or 2014 when Ethereum was born actually, I feel like it's the time right now. I feel like this is a new world, is a full of energy, full of possibility, full of young, smart people, hungry people here. That's where I belong to. Plus, I have spent too many years within those big companies. We're very small. Google is a big company. I feel like I'm sick of those big corporation culture. It's slow, bureaucratic, everything you have to asking for 10% to prove. I want just getting things done, I want to making a new system, I want to making something that's basically changing the world. I feel like, okay, so this is an opportunity. Plus my cryptography background, this is an opportunity I cannot say no to. So that's why I'm getting a lot of support from the parents, wife, and everybody around me says, "You should do this."

Nick (21:59):

What did you do? You eventually started with a seed of an idea to do what?

Raullen Chai (22:04):

Yeah, then we are gathering together with two other co-founders, Qevan and Jing, we're sitting down saying how we do this? So in crypto space, how we can really making crypto a massive adoption, what's lacking pieces here? If you think blockchain is the system for the new world, then what's an integration process? How do we help other people to promote or understand what is going on here? Then IoT becomes the connector or bridge between the real world and the crypto world. So that's where we think, okay, we really should double down on this one.

Nick (22:40):

What was the original vision of IoT? What was the launch thesis, if you will?

Raullen Chai (22:48):

Yeah, I think a slogan we used to have is connecting the real world to crypto, exactly what I'm talking about, and we do think IoT, the technology is the bridge.

Nick (22:59):

And how then has it evolved since 2017?

Raullen Chai (23:04):

That's a long story. After being here for six years, so I learned a lot, definitely grew a lot with the team. At the very beginning, we focused on the blockchain side. We built this Layer 1 chain from 2017 to 2019. We actually launched, the chain has been running production for already four years, no accident. Process 100 million transactions already once on TPS, not bad at all, 100 more, maybe 120 ish delegates globally. The chain has been a success.

(23:33):

We grow the ecosystem on the chain in the year of 2020. At that time, a DeFi, NFT game was popular, right? Over popular at that time, so we have roughly 200 those projects sprouting on IoTeX Layer 1 chain. That was a huge success. Then starting from the year of 2021, 2022, we started to think about, okay, so how about the IoT part, right? We promised to the world, we're connecting blockchain to the real world. Where's the bridge? Where's the connector? That's what we dive into the IoT perspective of the project. Of course, we can talk about this more later. So then we came up with this is we call MachineFi. Messari guys says, "Oh, let's call it DePIN. Let's just call DePIN altogether." That's where DePIN as a term basically emerged, around the year of 2021 or 2022-ish. All the builders, people we see is actually gathered around, that's where DePIN was born.

Nick (24:29):

Amazing. I want to ask you a lot more about DePIN, it's one of these buzzwords right now in the industry that emerged and a lot of people are talking about it. Before we do that though, talk to us about entrepreneurship. As I said, you were working in big web2 companies. They were slow moving, but working on very monumental things, doing things at scale. So really cool experience. What did you learn about entrepreneurship by virtue of what you started with IoT and all subsequent ventures, including MachineFi?

Raullen Chai (25:01):

I realized I want to do something truly amazing, disruptive, and I would never regret about, so I should not touch on the existing business from the big corporations like a Google, like a Oracle. They already monopolize entire, let's say, search or AI industry. I should find my niche, which is unexplored land per se where I can build some sort of rules or orders or products or systems, then so this is like a new world, basically unlocking a new business opportunity. That's my high level philosophy about where I should be.

Nick (25:41):

If that's a top level philosophical perspective of find your niche, don't go head-to-head with the monopoly, what would you say are the two or three characteristics that make a successful entrepreneur?

Raullen Chai (25:53):

I think most importantly is persistent. You have to be persistent because there are so many frustrations, so many bumpers almost every day that keeps you down. You almost have to have a big heart to be here. Otherwise, you will feel deeply depressed, why things usually don't work. So this is [inaudible 00:26:15] in the book of this hard things about, what's the name?

Nick (26:18):

Hard Things About Hard Things I think, or something like that, from Horowitz I believe?

Raullen Chai (26:22):

Yeah, exactly right. Talking about same thing basically as a founder, maybe one out of 100 days you're happy, and the rest, 99 days, you're just in pain. So persistence is definitely very important. I think that's one. The second one is growth. When we actually as the first time entrepreneur into this space, we don't have enough resources. We don't have deep enough understanding what is going on. That means as a founder, you have to learn really, really fast. You're trying to provide information from different people, from different entities, and then you're trying to digest and think about what does this mean to you? Are we doing the right thing? You should always reflect almost every day, are we on the right track? Something's going wrong. I think this also needs some talent here in terms of a fast learner.

Nick (27:13):

I want to ask you about persistence because it comes up all the time on this podcast in fact, I think the vast majority of entrepreneurs I've interviewed have said something to the effect that persistence is one of the most important characteristics, but it doesn't actually explain what must exist downstream of that. In other words, what drives someone's persistence? In your particular case, why do you persist? Why don't you give up when it's difficult or when it was difficult when you launched, what drives you?

Raullen Chai (27:42):

Yeah, I think it's always some curiosity. Can I build some sort of a new thing? For example, DePIN as a category, right? Because of the things I'm thinking about or the team has been working on, so this is extremely to me. I saw there are two type of guys who are not persistent. One is after one or two times of failure, they just gave up, right? Says, "Oh, this is not my world. I'm just changing to something new and hot," maybe AI right now. So that's one type of guy. This is very normal, and another type of guy is when they have some financial success, right? Because they earn, I don't know, $1 million, whatever, so they start to give up too. They think, oh, I'm good. I have enough money for the rest of my life. I have a big house right now. Then they just gave up. That happens when you don't really have a big picture in you or big vision in you.

Nick (28:35):

Let's talk then a little bit more about 2021, and you said there you co-founded and launched MachineFi Lab. If you've explained what IoT is, help us understand what the vision was and the idea behind MachineFi Lab.

Raullen Chai (28:50):

Yeah, so that's an interesting question. I mentioned about after a year of 2021, 2022, we identified this is how the IoT and blockchain should work together. That's why we come up with this is which is called MachineFi. At that time, we were doing an equity raise. The co-founder says, "How about we call the US entity just MachineFi Labs?" So that's where this name is coming from. For now, it's also the MachineFi Labs for the US entity, for the IoTeX team for sure. But as I mentioned earlier, so Messari, they're a big medium, they are a bunch of great people. They think DePIN is a better name. So we say, okay, we don't mind too much to change MachineFi as a category name to DePIN. That's why everybody sitting together says let's just call DePIN together.

Nick (29:39):

I've had the opportunity to have many members of the Messari team on this podcast so long time listeners will remember a lot of those guests and they'll know that name, Messari. What types of problems or services specifically is MachineFi Lab seeking to address or produce?

Raullen Chai (29:57):

Yeah, so MachineFi Lab is definitely working on the IoTeX stack of products. Well, the mission even goes beyond the IoTeX a little bit. It's trying to really redefine this DePIN as a category because we saw so many things in the DePIN space that's not going right. We want, of course, our best effort trying to redefine the DePIN as a category from the thesis perspective, from the philosophical perspective, from the tech perspective. If we can do this right, I would love to see DePIN flourish everywhere. I'm always joking about with my people as we're living in US, we don't really need DePIN. We have the 5G, we have Uber, everything here is so good. It's setting up and easy to use. But if you think about developing areas like Lat Am, Southeast Asia, even those regions, do they have Wi-Fi? Maybe not. Do they have a Uber? Maybe not. If our work as a DePIN infrastructure provider to help them or local smaller teams to setting up a Wi-Fi for 500 people in a village, that's such a success, making the world a better place.

Nick (31:07):

You've said it two or three times now, but I got to come back to it. The origin of DePIN, which is now a buzzword throughout all of web3, the origins of that was a conversation that you had with a member of the Messari team. Is that right?

Raullen Chai (31:24):

Yeah, exactly.

Nick (31:26):

Who was it?

Raullen Chai (31:27):

Sami.

Nick (31:28):

Amazing.

Raullen Chai (31:29):

Sami was the first Messari guy actually calling the term DePIN, Decentralized Physical Infrastructure networks.

Nick (31:36):

What do you make of what's happened since that time? I mean, I've talked a lot on this podcast about how certain narratives or top level themes emerge with each cycle and they become a little bit of a hype word, a buzzword. Has DePIN become one of those, or is there still something super tangible, mission-driven about the use of that term?

Raullen Chai (31:57):

Yeah, that's interesting. When you define a category, you want to be inclusive enough so existing players like the investors, the VCs, the projects, medias, they want to naturally attach themselves to this category. That's important. If you define something no one really cares about, then it's not going anywhere. Second one, I feel like this is also aligned with the trend that crypto is actually going to the real world. If you saw the Bitcoin ETF gets approved this year, the Ethereum ETF right now, that definitely means crypto is getting into the real world. So that's just from the finance perspective in terms of ETF. But from a real world adoption perspective, there must be something else. So I feel like we're almost trending on this trend.

Nick (32:47):

And for listeners that aren't fully aware of what DePIN is, and I'll put some links in the show notes because you've written about this topic, and of course, many others have as well. But just help us understand, so DePIN is just a category and some projects, protocols within web3 want to be included in there, there's certain criteria, I mean, help us understand what is meant by DePIN and how people relate to it.

Raullen Chai (33:13):

Yeah, I think it's a best way to understand is just by example. I used to use Uber as an example a lot, because DePIN also shares some sort of spirit with sharing economy, which was a hot buzzword a few years back. So definitely like a Uber, Airbnb. If they can be rebuilding a decentralized fashion, so there are definitely a DePIN. There are other services or utilization services such as a 5G wireless network, even a storage network so think about Google Drive or Dropbox. The storage network, compute network, as some of you guys play those cloud games, you don't have a high-end graphic card on your computer to play those 3D games, but you are leveraging some remote servers who's doing the rendering for your game. Then you just have a screen, a very simple kind of computer, so you can just play the game. Those are categories as compute. All of those things I actually categorized as DePIN projects right now.

Nick (34:09):

If we go back to what you said about web3 being an evolutionary revolutionary type of break from web2 where you just explained DePIN and the origins of the term, which I found super interesting, how does decentralization relate to your thinking on this? And maybe I'll ask it this way, does the stack that powers web3 into the future, is it required to be decentralized?

Raullen Chai (34:40):

This is a complicated question. There are a lot of layers in terms of tech, especially in DePIN. We can think about the settlement layer is always the blockchain from smart contract, but adding on top so we have a hardware layer. There are some middleware doing compute storage. There are even some other layers of components in between. That means DePIN has a very complicated tech stack. Entire stack, I don't feel like it has to be fully decentralized. For example, hardware manufacturing. As we all know, Bitcoin, if you think Bitcoin is the biggest DePIN project in the world, then who's manufacturing the Bitcoin mining machines? Just few of manufacturers in the world. So that part is decentralized, but that's fine. Bitcoin as a network is still very decentralized.

Nick (35:32):

Do you have a hard opinion on what part of the stack must be decentralized? Is that something that you have a strong opinion about?

Raullen Chai (35:40):

I feel like the settlement layer, the asset layer, the smart contract layer should be fully decentralized. Even the middle layer should be somehow decentralized. But a hardware layer is, really, if you think about NVIDIA, right? A lot of a DePIN project saying, "Oh, we're doing AI compute," and everybody using NVIDIA cards. Something like that, that cannot be decentralized practically.

Nick (36:04):

When you think back to the early days, you started thinking about the Internet of Things, you launched IoT and now decentralization, DePIN in all these things came a little bit later, but how do you think about the convergence of these things all coming to a head within web3? Is it just in your mind serendipitous, or was this just the direction all these things were ultimately heading?

Raullen Chai (36:29):

Yeah, like I said, so definitely the train is crypto going into the real world, and how, of course financial wise going through an ETF or maybe some sort of NASDAQ listing in the future, every people's life perspective, it is more about how we optimizing the existing utility services in a way so it's faster, cheaper, or maybe leverage some idle devices in the world, or maybe just trying to pay people based on the data they have. For example, we have some ecosystem project. They're doing a ring, they're doing a watch. Those are the ideas basically collecting data from people, but do a UBI style sort of reward to the people.

(37:09):

This is especially true for people who's living in the developing countries for sure, but entirely, what I was thinking about DePIN that is not going all right is because of this tech big stack we were talking about. That means if you want to do a DePIN project, you have to have a lot of people, because they have to work on different layers of the tech. That means you have to raise a lot of money to do that job. At the same time, which team can raise a lot of money? Mostly the very high-end US team, US based team can raise a lot of money. But like we said, US don't really need a lot of DePIN networks. Can we help those builders in the developing countries doing DePIN projects in a very low cost way or no upfront cost way? That's what we're thinking about, okay, so this is the way DePIN should be going.

(37:56):

We're in the middle of launching IoTeX 2.0, by the way. A lot of things about 2.0 is called DePIN for everyone. That means we want to democratizing the entire giant DePIN tech stack into a smaller chunk of modules. Then all the builders in the world can actually come here to co-build in this module. That makes the DePIN application developer's job way easier. For example, if you have a few people coming, maybe three guys, they have a great deal to spin up a Wi-Fi network in Southeast Asia countries. They can just leverage the entire modular stack, do a DePIN project over a weekend. Then it gets launched, serving a few hundred people. To me, that's a huge success.

Nick (38:42):

I agree, and I caught the vision in your answer there. It's remarkable the stuff you're working on there. If you think about what you said about capital, access to capital, what other challenges stand in the way right now in the early days here of DePIN and where it needs to go?

Raullen Chai (38:59):

Yeah, so that's interesting, I just thought about this one. We saw a high end or high profile projects, they maybe raise too much money at the very beginning. That creates problem too. I was talking about this with Robert from 1kx the other day is if there is too much money upfront, it's almost for sure they are going to building, because DePIN has a demand side and supply side. Supply side almost means a device network, and demand side means how people are going to use the utility from the devices. If you raise too much money, it's almost for sure means you're going to build too much on the supply side initially. That creates a huge network of machines, maybe 99% of them are useless. So that's a waste of resources. That's one type of team that raise just too much.

(39:51):

Another type of a smaller young, DePIN projects is they have no way to raise capital. That's another problem they have. If you have no way to raise capital at all, then how you building a network? You have to have a token, rewarding people who's buying your devices and providing utility. If you don't really have a token or upfront capital, then how do you do the token well? That's an imbalance in the DePIN space right now.

Nick (40:17):

If you zoom out and look at all of web3, what grade would you give it in terms of what you've been mentioning there, which is abstracting away the web3 rails and just delivering a good experience for the average everyday person? I mean, how is the industry doing at this stage?

Raullen Chai (40:36):

I think we're definitely doing great. I saw a lot of great people getting to the industry. When we were launching the year of 2017 year-end, we feel like we're rock star team on the market. But now, we saw a lot of very, very strong teams actually building different parts of entire web3 stack, which is fascinating for sure. And in terms of adoption, very much different from 2017, 2018 where most of people are talking about how do we do the consensus? How do we do the sharding? This is mostly thinking from a technology perspective. Now we heard of a lot many people talking about, oh, how do we serving people with Wi-Fi? How do we serving people with this sort of utility or that? Which is a big, big improvement to me.

Nick (41:22):

If we remove DePIN as one of the themes that might be at the top of everybody's mind during the next cycle so if we remove that, what are some other themes or narratives that you think we should keep an eye on as crypto continues to evolve during this cycle?

Raullen Chai (41:40):

That's the things I'm also asking myself every day. I feel like the hype for DeFi is definitely gone. Well, the finance innovations will not stop here in the decentralized land, so there will still be a lot of people experimenting different ideas. Maybe we're just waiting for the next Uniswap moment, just like AMM, right? Entire DeFi summer is because of innovation of AMM. I cannot help myself thinking about what if, right? So there is another AMM moment, the DeFi could be going to the next level so therefore I got my eyes on DeFi.

(42:19):

Another interesting thing I'm also looking at is this prediction market. So this has been mentioned by Vitalik many, many years back, but never taking off. Because we're getting to the real world, serving real people, I find this a combination of finance and real world data or use cases or scenarios will actually become really powerful. People can be, oh, who's getting to elected as the next president in US is Ethereum ETF gets final approval when they start to trade, so those things become tradable or biddable. So this is also very interesting one, but I feel like the product, the form of the product should be improved as well for the prediction market.

Nick (43:05):

I appreciate your take on those two things. I want to just ask you a couple questions about The Graph and then I'm going to ask you the GRTiQ 10. What can you tell us about your perspective on The Graph protocol? It's my understanding that IoTeX and Machine Labs uses or leverages The Graph, is that correct?

Raullen Chai (43:24):

Yes. So individually, I love The Graph, I love what you guys do. I'm a big fan of the indexing of the on-chain data and serving for dapps. Recently, we started to do an integration with The Graph. As we're a Layer 1 EVM chain, I think the low-hang fruit here is getting Graph to indexing all the IoTeX EVM data for now. But as next steps, we can also talk about how The Graph can even help us to indexing more off-chain data coming from the devices coming from the real world. I think this will be a really, really big game changer.

Nick (44:00):

How do you place The Graph in that whole DePIN story and narrative?

Raullen Chai (44:06):

Yeah, it's some sort of an off-chain compute. I think off-chain compute should be really be scenario based. Some of the off-chain compute is about, oh, verification of the devices is actually doing its work. This is one type of off-chain compute. Another one is definitely like what you guys are working on is can you index the data? For example, all the sensor data or maybe weather station data in United States by time, by time series data, off-chain, right? That then you can serve the data to on-chain, a DeFi, on a weather derivative DeFi dapp later. Then people can just developing a weather derivative products in a decentralized way.

Nick (44:49):

There's no question in your mind that The Graph belongs within that DePIN categorization.

Raullen Chai (44:54):

No, I do see The Graph as an important component of the entire DePIN landscape.

Nick (45:01):

The last question I want to ask you before I ask you the GRTiQ 10 then is you said a lot of your drive, a lot of your early interests in life all stem from this curiosity that you have. It's just part of your character. What are you most curious about knowing or seeing in the blockchain industry as a whole 10 years from now? What would be the one question you are most curious to know the answer to?

Raullen Chai (45:25):

I don't know. My thinking is how far or how much freedom we still have in the crypto industry, right? I feel like we have less freedom compared to maybe five years ago, maybe 10 years ago, because we are getting mainstream. That's most like our curse plus our bless as a crypto industry. For example, I don't know the internal news about Ethereum gets approved as an ETF. I could imagine as Ethereum Foundation, so being an ETF commodity maybe gave them a lot of limitations in terms of what they can do on the technical side. That basically limits Ethereum as a protocol to evolve freely into where the market wants it to be. That's why I feel like Ethereum Foundation, maybe Solana Foundation, or maybe IoTeX Foundation one day, right? So if you really embrace ETF, then does that mean the project will stagnate?

Nick (46:24):

Yes. I appreciate that insight. So Raullen, now I've reached a point in the podcast I'm going to ask you the GRTiQ 10. Now these are 10 fun questions, I ask them every week, they're the same questions every time. I do it because first of all, it lets us get to know you a little bit better. But I think listeners will potentially learn something new, try something different, or achieve more in their own life by virtue of the answers that we hear from folks like you each week. So Raullen, are you ready for the GRTiQ 10?

Raullen Chai (46:51):

Not too ready. Okay, let's give it a try.

Nick (47:06):

What book or article has had the most impact on your life?

Raullen Chai (47:11):

There are so many books. I read a lot, actually. Yeah, I always say this, The Hard Thing About Hard Things is definitely eye-opening. Yeah, from Zero to One is also very good.

Nick (47:21):

Is there a movie or a TV show that you would recommend everybody should watch?

Raullen Chai (47:25):

I think Kung Fu Panda, because my kids actually love them. You have to be optimistic, right? No matter where you are, what you do.

Nick (47:33):

If you could only listen to one music album for the rest of your life, which one would you choose?

Raullen Chai (47:40):

Maybe some Mozart music.

Nick (47:42):

What's the best advice someone's ever given to you?

Raullen Chai (47:46):

Follow your heart, Steve Jobs.

Nick (47:49):

What's one thing you've learned in your life that you don't think most other people have learned or know quite yet?

Raullen Chai (47:55):

That we are so blind to our own blind spot.

Nick (47:57):

What's the best life hack you've discovered for yourself?

Raullen Chai (48:01):

Oh, intermittent fasting and run marathons.

Nick (48:05):

Based on your own life experience and observations, Raullen, what's the one habit or characteristic that you think best explains how or why people find success in life?

Raullen Chai (48:15):

Optimistic, big heart.

Nick (48:17):

And then the final three questions are complete the sentence type questions. The first one is, the thing that most excites me about web3 is?

Raullen Chai (48:26):

7/24 full of innovation.

Nick (48:29):

And if you're on X, formerly called Twitter, I still call it Twitter, who you should be following?

Raullen Chai (48:36):

I should be following you, I feel like you have a lot of good questions.

Nick (48:41):

I really appreciate that, I'm humbled by that. And the final question, I'm happiest when?

Raullen Chai (48:46):

DePIN becomes a real thing, actually making the world a better place.

Nick (48:57):

Raullen Chai, thank you so much for joining the GRTiQ Podcast. What a thrill to have you on and to hear your ideas. A lot of great insight today and especially around the origins of DePIN and your vision for how important that is and what will happen into the future. If listeners want to stay in touch with you, follow the things that you're working on, what's the best way for them to stay in touch?

Raullen Chai (49:18):

For IoTeX, please follow IoTeX_IO. Or myself, it's just my name, Raullen, R-A-U-L-L-E-N.