Fostering Economic Development On-Chain with Locale Network feat. Trxz Jones

GM GM. Welcome to what's going to be another great episode of DevNTell. So, if you didn't know, DevNTell is a 30-minute podcast held every Friday, allowing founders, hackers, and anyone in between the opportunity to come on the podcast and showcase their product. And today, I'm ecstatic to welcome Trxz, who's the founder of Locale Network. So, if you didn't know, Locale Network is an ecosystem of L3 data networks called City Chains, focusing on economic development through DePIN, DeFi, and smart city services. So, if you stick around for today's episode, you'll see Trxz give us an exciting talk around the history of community cooperatives, parallel currencies, and their vision to bridge Web3 liquidity to local communities. All right, let's get into it. But first, a word from our sponsor.

GM GM. Welcome to the show, Trxz. Ecstatic to have you on. My pleasure, my pleasure. Yeah, I know we have a very interesting topic today on DevNTell, centered around fostering on-chain communities with Locale Network. And we're excited to get into that. But before we get into that, would you like to give a brief introduction about yourself to the folks who are watching today?

Absolutely. Yeah, lovely, lovely. My background is mostly, by the way, call me Trxz. My background is mostly in economics and sociology through all throughout undergrad and in my master's program. I've been studying crypto. It's just been maybe a 12, 13-year journey. I may have gotten into the field around 2013, 2014 is when I really started studying. Began as a Bitcoin miner and just began to grow and learn with the industry like everyone else. And so it really kind of defined any sort of research that I did for my undergrad. And, you know, it's just lovely to see the support and resources that are available now to sort of see this vision to develop. Spent some time in finance, currently in consulting, spent some time, you know, just a bunch of odd jobs bouncing around. Proxy voting for Fortune 500 companies and at this point, you begin to see where all of it begins to mesh into one industry, one job. And you start to see how Web3 really mirrors every sector of our economy in all aspects. And so what I've been able to learn, growing with this space and connecting it back to some of our high priorities is that nothing under the sun is new. And I'm excited to talk about that today. A bit about Modern Society Labs. We are a think tank that focuses specifically on economic development and using sort of third industrial revolution technologies to do so. And so blockchain, Web3 of course is the main focus, but you know, we'd like to expand it to other areas other domains. This is a... we see Locale as an avenue to do that.

Amazing and sounds like you have quite the background. And yeah, it's awesome to see. I've been doing a little reading on Locale Network through your docs. It's a very interesting idea and concept you guys have. Just curious, you mentioned that you started out with Bitcoin mining. Was there a particular moment during your time as a Bitcoin miner that you're like, 'Oh, something about the Ethereum ecosystem or Web3 in general is really cool and made you expand your horizon so to speak?'

Yeah, you know, actually it's funny, it was actually for a class project around the time. I think it may have been in or around when Mt. Gox happened, just a couple of months after that. And we were just... a really basic assignment over alternative money forms of money. You know, a lot of things pop into your head that aren't necessarily considered money. And you know, government incentives for one, like those programs, you know, things like GPUs was one thing that really came to mind at the time. So studying doing that assignment was just something that sort of opened my eyes to it. But when I began to sort of dive deep into mining itself, by the way, I'm born and raised in Kansas City, Missouri. That's where a lot of our pilot program and a lot of our research is being held. Here, there is a... the mining industry very early on was attracted to Kansas City, both in Butterfly Labs being one of the first Bitcoin mining miner manufacturers in and around this area. There's also... we have the largest underground commercial space in the world, called SubTropolis. Anything... it's built into old caves, like salt mines. And that's been under development for the past maybe 50, 60 years. So once Bitcoin mining came around, you know, this was... those type of environments were perfect for just placing a bunch of miners and seeing where we could go with it. And so seeing that move quickly very early on in my hometown is sort of what made me see what the potential is. And at the time, of course, my undergraduate studies I'm still doing focusing really heavy on community growth, economic development, and sort of ways to use that innovative tech to do so. Crypto, Web3 has always been that avenue to bank the unbanked, you know, that age-old promise of crypto, to sort of foster some sort of economic liberation and as prevalent as the... as capable as even the most blighted areas of this country is of having things like internet access and access to different technologies, we still were... there were these pockets... there are still these pockets of poverty, pockets of economic deprivation that are not being reached by the greater Web3 space. And so me making that connection very, very early on is sort of what led me to dive so deep into the industry.

Awesome. Yeah, I mean it certainly sounds like there was a lot of motivation there and that kind of led to what you're doing now with Locale Network. But yeah, I'll give it to you to tell the story, but perhaps what's your elevator pitch of what Locale Network is before we get into what's on the show?

Absolutely. Yeah, so Locale Network is an L2 network that is empowering and building an entire series, an ecosystem of L3 networks that we call City Chains. And so what that essentially entails is localized data networks that sort of collect, anonymize, and privatize data for local citizens that would allow them to monetize it in various different services, but also provide that sort of micro-level data to local stakeholders like non-profits, city governments, and local small businesses to be able to inform their policy decisions, their marketing decisions. What we learned is that data is hard to come by for even your local municipal governments. We've also learned that it's an extreme avenue to get more transparency within Web3. And so we're looking to actually bridge the gap between a bunch of in-house services and third-party apps. We want to bridge that gap from Web3 liquidity to real-world communities that need it, but then also inversely we want to be able to provide Web3 with the transparency they need to really dive deeper into real-world assets and sort of DePIN that the space is really lacking at the moment. And so what that looks like practically, we have very basic plans for a mobile wallet that would allow people to monetize their data, anything from, you know, your Uber data to your banking account data to your telemetry with your cars and things like that and offer services based on the collection of that data. Micro-payments for local governments who need this data to inform their policy decisions and so on and so forth. But also things like lending services, auto insurance, health insurance. We want to be able to revolutionize these areas in creating that funnel from Web3 to these communities.

Interesting, interesting. So if I understand correctly, Locale Network is the base network and then different cities basically are represented by different L3 chains that are spun on top of it. Correct?

Correct, that's correct.

Gotcha. Yeah, so I guess you briefly touched on it, but you guys have this concept of smart cities. Could you give a brief overview of exactly what you mean by a smart city? Is it basically exactly what you described where each city is represented on a blockchain and you have these different sectors transmitting this data transparently?

Yeah, absolutely. And then so on a more... that's precisely right. But on a more technical level, I'll say it's the chain itself and what we refer to as the City Chain is sort of the off-chain co-processor, right? So we use Cartesi's technology mostly, doing a lot of research within their community to create that off-chain processing and storage layer for the data. That's what allows us to eventually do really sort of innovative encryption techniques like fully homomorphic encryption, of course leaning very, very close to fraud proofs and ZK proofs as well, while still keeping that data anonymized, privacy-compliant, things like that, but still being able to offer that transparency. And so the way the architecture looks, of course, Locale Network being the settlement layer, a layer above that is those L3 app-specific chains that we call City Chains that are comprised with the data, any sort of internal SQL queries that needs to transmit data back to or commands back to the smart contract that sort of spun it up. And then of course different apps built around that data network. And that's essentially what we mean when we say a data network. It's a warehouse that exists on an off-chain co-processor and feeds information to the chain, to our base layer. And so I like to give real practical understandings of where this could be useful. One of the products that we're working on now, and we do work on in-house dApps as well as third-party, we do build our own, and so one of the products that we've been working on for the past year is a lending product, an RWA lending product that focuses specifically on small business loans, in particularly backed by the SBA, by that organization. And so what we're looking to do is... one thing we noticed around the space about uncollateralized or sort of less collateralized loans is that there was that lack of transparency once funds leave the chain. And that has a large amount of risk with it, especially when you're a global organization that is, you know, that doesn't really have the... as global as you are don't have the resources to be everywhere at once monitoring these loans and making sure your investors are getting the level of loan monitoring, loan health, risk assessment that they deserve.

And so one of the things that we conceptualized very early on is, 'Hey, let's just use their bank accounts,' just like any other lending product would do or any other bank or Fintech product would do. And so our first proof of concept was connecting Plaid APIs to this off-chain co-processor and feeding that anonymized transaction data right to our SQLite database, which would then be able to offer some type of even privatized or even encrypted data with ZK proofs. And so we would primarily be tracking debt service, right? How much are you making a month versus how much is your monthly payment? What is that number? You know, we can get as granular... we can get as high-level as reporting to the smart contracts or reporting to a front-end, a dashboard that says, 'Yes, they're meeting this certain threshold of debt service,' let's say 1.2 or 1.15, whatever the SBA's baseline is, simple binary yes or no, or we can get as granular as giving the number or it's right now it's 1.35. You won't know what the business is, you'll have a very brief understanding, a general understanding of what you're investing in, and at the same time that data is real-time. So you have that level of monitoring, you don't have to worry about the accuracy of the data, it's coming directly from where it needs to come from, and everyone's better off for it. But in the current state, once funds leave chain, you can no longer track it. You don't know how well the investment's doing and that's a problem of course you have with traditional loans as well. But it just becomes more important when you're dealing with these global organizations, decentralized organizations that, you know, sort of need real-world contact. And that's a bit of what we're looking to solve.

Interesting. Yeah, it seems like you guys are building out quite the product suite. You mentioned the wallet, you mentioned this lending application. I guess are there any cities that are co-piloting this program right now? Like are any cities represented on Locale Network at the moment?

Yeah, so we're still in the dev stage, building out the L2 rollup, but then also there's a lot of sort of manual research that we have to do for the L3s themselves. The pilot program, which is also sponsored by Arbitrum DAO - shout out to those folks over there - that pilot program will actually be based in Kansas City. And so we'll do that pilot program for maybe about a year is what we're planning, with expansion discussions for expansion into St. Louis, Chicago. But we want to focus more on sort of mid to small-sized cities where we can provide a level of value that isn't sort of dominated by one of the legacy data providers or legacy smart city operators. So that's the focus right now, mostly in the Midwest, some discussion in around DC and Houston, but at the moment we're just hard focused on Kansas City at the moment.

Makes sense. I was going to say it would make sense to have it in Kansas to start at least, so sounds like you guys are on it. And I don't know, maybe it's too early to say, but is there any formal process for cities who might be interested to come to you? Or are you mostly reaching out to people?

Absolutely. Yeah, so a lot of the work that we do is grassroots and we really prefer it that way. We know that there is a... and I'm sorry to go off on a tangent... but we know when the discussion is around smart cities and IoT devices and sort of connecting a city in a more intricate tech direction, it's mostly dominated by your local municipalities or your non-profit organizations. And we really want to focus on grassroots development of smart cities. We want to focus on what's most important to the community and then getting that data and providing the services that the community needs. And so we're really taking a ground-up approach. And so no particularly formal process at the moment. You know, our door is always open to work with other communities to build out their solutions as well. And of course all of this information, all of the research that we're doing internally will be open source as well. And so communities will have the ability to spin up their own chains. We're developing an IoT SDK which would allow for one-click, two-click generating their own City Chains.

The inception of that, it will be specific to our L2 network, but the idea is to have these smart cities or these City Chains be chain agnostic. And so we want to be able to use a decentralized sequencer like Espresso or one of the players in that area that would bring even an extra source of revenue for City Chains that operate with decentralized sequencers. And so very grassroots things, you know, reach out to us, we'd love to hear hear with the community what your communities want, we'd love the challenge of building those things out as well. So, you know, open door policy over here.

Amazing. There you go. If any city planner folks or anyone is watching the show today, reach out to Trxz. And just something popped into my mind, because you have these City Chains that are basically their own chains, do you think that tokens will come into play for these chains? Like do you see Kansas coming up with like 'Kansas Coin' or like each city kind of coming up with their own utility token to do different things in their city?

Absolutely and I'm so sorry, I meant to touch on that a bit earlier. That was actually the inception of the idea, mostly dealing with parallel currencies. A lot of that research is centuries old. You know, creating a currency that's only spent within a particular region has been proven time and time again that communal economics to sort of increase economic activity in any given area. This is without relying on outside funding, relying on communities... the city growing or community resources coming into the community from, you know, tourism or things like that. It's an inherent... decades-old tool to spur economic development. And so that's a lot of our early research was specifically around bringing parallel currencies and revolutionizing parallel currencies within crypto, you know, so and that's sort of bridging, again, bridging that gap between traditional economic development and on-chain technologies that we have now to create, you know, to create a more more robust version of them.

And so a lot of what we... a lot of what our research began with: parallel currencies, worker and community-owned cooperatives that pull mutual mutual insurance companies as well, mutual aid. A lot of that is the backbone of of our network and what we really, really would love to see is local civic DAOs and we would love to see parallel currencies that encourage people to shop with their shop with their local small businesses. We want to see some of these things spring up organically with that data as a backbone, but also building the tools to allow for that building the tools that allow for that organic growth that we're focused on. And so I actually do have a bit of a demo of our basic wallet just to give people a practical understanding because I know there's a lot of moving parts with the platform. So I'm just going to share my screen here really quickly.

Yeah and you read my mind. I was going to segue into this as well, so lovely, lovely. Yeah.

Okay. All right, lovely. And so this is just a basic wireframe of sort of what our smart wallet would look like. And so as you can see, it is very, very heavily focused on that local community currencies, but also we're wanting to be very stablecoin heavy as a as a chain. And so as you can see, the idea is to come in, be able to provide whatever data you feel comfortable with with these incentives, of course having recurring revenue based on how much this information is used. Of course, the privacy concerns are always there. The our encryption techniques will be publicly verifiable. They do use fraud proofs, ZK proofs. All of this information can be found on our website, in our documentation. But the idea is to preserve data privacy, but also collect that data to to offer sort of relief services. So a bit of relief loans for small businesses, or lower... much lower rates on car insurance and health insurance. We really want to be able to offer affordable services.

And so citizens would be able to come in, connect their data sources, find areas where they can spend locally, earn their local currencies, of course always something that you can pay out just like any other crypto platform. Track your data monetization, transaction history, similar to a a normal wallet. But also, you know, a local business registry. Being able to understand who is connected to Web3, who is connected in your local community to be able to accept Kansas City dollar as an example. And just support the community with that currency. Just holding the currency itself is spurring economic development. And when we get into the idea that these local currencies don't necessarily need to be backed by hard assets, money market assets, and we start to get into things like urban farming or community-owned community centers or other forms of affordable housing, community land trust, when we start to focus on those more grassroots level of economic development, you essentially have a pool of funds that's securing interest in multiple different areas backing the local currency, which is another side of parallel currencies and development that we haven't even been able to explore yet. And so that's essentially the idea.

But on the back of that of course we want to be able to offer local services like small business loans, affordable housing, local voting. We really want to touch on a number of different areas in providing tools for these communities to empower themselves. And so essentially, we want to empower communities using decentralized finance, using DePIN, and off-fueled with Web3 liquidity that is starving for deal flow at the moment. So that's essentially the idea.

Amazing and yeah, it certainly is a very ambitious project, but all the power to you guys for even thinking of doing it. It's amazing and yeah, I know I'm really looking forward to seeing it continue to be built out. And again, devs, if you're watching today and you want to help out this really ambitious project, definitely reach out to Trxz. And as we're approaching time, I just want to ask you a final question here is: after all is said and done at the city level, do you envision kind of a North Star of also expanding to say like country level as well, on-chain?

Absolutely. Our whole our entire vision is to get every city on-chain and we want to expand so grassroots to a way that we can't be ignored on the national level. You know, that's the I think that's the general idea. But the plan is these localized data networks will mesh in a way, just like the rest of Web3. You know, the overall vision is to have a tapestry of localized networks that speak to or can can offer more granular level of the more granular level of detail in how real-world communities operate. And so we can begin to have real data on replicable community services or replicable community programs.

And so if I could just go on another tangent. One of the practical examples for that I'd like to give is: there was a small city in North Carolina that sort of wanted to very basic use very basic sensor data, just to solve some of their local issues. One of those issues was the opioid crisis. And so one thing that they had done very early on was put opioid level detectors, small sensors in their sewer system. There was a local non-profit that sort of led that initiative. Of course, putting methadone clinics all over the city. Released that into their sewer system and they were tracking the highest level the areas with the highest level of opioids in their in their water to determine where they would put their next methadone clinic. And I think once they had access to that data, once they were able to see those insights with the micro-level data that's so difficult to get a hold of, they found their next location and I believe decreased the city's prices by somewhere around 30%.

And so that data is really valuable, it's really helpful for both local governments and non-profits and small businesses and citizens, and we want to be able to democratize that. You know, we want people to be able to have access to this while still keeping it privacy-preserving and still having access to that to that Web3 liquidity. You know, we're bridging a bunch of gaps here. And so the idea is really ambitious, but we're really excited to see how many lives we could affect with a product like this.

Amazing, amazing. And yeah, for the developers watching today, we do have those resources that Trxz mentioned in the description below, as well as Trxz's X account as well if you'd like to reach out to him. And as we're approaching time, just want to thank you so much, Trxz, for taking the time out of your day to come on the show and give us that amazing discussion and overview of Locale Network.

Absolutely man, I definitely appreciate you having me. You all can of course follow the page on Twitter, follow our GitHub, shoot us an email if you want to if you're interested in working with us further, we'd love to have you. We're pretty grassroots or pretty bootstrapped project at the moment, so you know, any help is welcome. But yeah, we're really excited to start getting these products out to the community and I appreciate you having me man.

Yeah, yeah, for sure, for sure. My pleasure. And yeah, I guess with that, I just want to wish everybody a very happy Wednesday and that we'll catch you back here on Friday for another episode of DevNTell. Till then, have a good one folks. Cheers.