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DRONE ON explores how drones are reshaping the world. Hosted by Bryce Bladon, the podcast documents the tech, economics and people piloting the world's largest standardized drone imagery network.
How crypto can enable the future of drone imagery
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Today's episode: when crypto meets drones
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[00:00:00]
Bryce Bladon: Welcome to Drone On the only podcast in the air and on the airwaves. I am your host, Bryce Bladon. On this show, we explore the tech, economics and people piloting the world's largest drone imagery network. Each episode, we explore how drones are reshaping industries, creating new economic opportunities, and literally changing how we see the world.
On today's episode, we explore what happens when drones touch crypto. We examine how emerging technologies like blockchain and concepts like tokenization and decentralization are creating a lot of buzz for drones and drone based businesses. What is a token based drone service and does it really matter?
Today's guest is the head of crypto for Spexi Geospatial, Inc. Matt Chwierut. Matt, why don't you tell the audience a bit about yourself and your background before we dig into today's talk?
Matt Chwierut: Thanks.
Guest Introduction: Matt Chwierut
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Matt Chwierut: Yeah. Uh, I've been in the Web3 crypto blockchain space for over a decade now. Uh, [00:01:00] actually I was the co-founder of a group called Smith and Crown way back in the era, just as Ethereum was launching and. What fascinated us was the, um, me and my, uh, co-founder is the absence of research in the space. So is there methodical in-depth, data-driven, logical discussion of what these technologies mean, and then what were people using that Bitcoin code base, the ideas, the primitives around tokenized networks for that were not just a replacement for the US dollar, um, which is the big narrative around Bitcoin 10 years ago.
Bryce Bladon: Mm-hmm.
Matt Chwierut: So people were forking that and launching purpose-driven networks even back then. Same ideas that we kinda see today. And that fascinated us as an organizational pattern, as a economic pattern.
And we just kind of followed that. Thread and so I helped grow and scale Smith and Crown. We had a research arm that I oversaw and then a advisory service where we [00:02:00] worked with companies large and small all across the space. Fortune 500s, all the way down to the most crypto native degen and DAOs to help them understand how do you build incentive systems that take advantage of tokens: this economic, financial governance primitive that blockchain has really introduced to. The world with Bitcoin is, is kind of the first example. So that has been my life for the past decade and I started working with Spexi, um, two and a half years ago actually, and worked with the founders on what would it mean to take the Spexi idea, the vision, the business model, and put it on the blockchain.
And that involves a lot of things. Tokens aren't the only one, but, um, involving integrating tokens. The core piece of the business model was a big part of that. We've been through many twists and turns together, but have a model I think everyone's really excited about and we're excited to show the world.
Bryce Bladon: Got it. So you said a few words there that might actually require a little [00:03:00] definition, but the one I think we should be absolutely clear on is what a token actually is. You brought up Bitcoin. Bitcoin's a token. Correct.
Matt Chwierut: And the way that I understand it.
Bryce Bladon: Yes. So what is a token on a blockchain based project?
What is a token?
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Matt Chwierut: Yeah, there, there's a great, um, uh, great clarification. The way that I typically use the term tokens, it is a provably scarce, digital transferable instrument of value. And it's a thing that exists, uh, in a database. And it is in a database that is decentralized. It's a thing that we can swap and it's a thing to which we can ascribe value.
And the most important thing about it, like what makes it very unique from to other kinds of tokens that preceded it, is it is provably scarce. The supply is such that everyone can see it at any point in time. This is very different from things like World of Warcraft Gold or other forms of digital currencies that have been with the internet and been with the digital era [00:04:00] for many, many decades.
What is unique about something like Ether or Bitcoin or Helium, uh, h and t, is that everyone can see what the supply is, um, at any point in time. And that really helps markets form around them and allow them to be function also as financial instruments.
Bryce Bladon: So when it comes down to it functionally, um, that's all correct from my understanding as well, but functionally, a token is a unit of value. And so when it comes down to supply and it needing to be limited to my understanding, that is ultimately what separates it from like your, your counterstrike gun skin from 2007, that a company could just produce at a thin air and might be valued by some folks, but otherwise lacks those economics that, uh, apply a unit of value.
And so just to, to summarize for people who might be learning about this for the first time, if blockchain allows two people to trade value with no one in the middle, a token is a unit of value in that relationship. So what does a token powered network mean? Like, what is the token powering? What does this mean to you?
Or, or what are some examples of this?
What's a token-powered network?
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Matt Chwierut: [00:05:00] Yeah. This, this is, uh, great and it is a topic I've thought about a lot and can speak about a lot. So you'll probably have to cut me off. But the way that I have thought about this and just where, where this instrument kind of fits in recent history is actually looking at the two ways.
Up until Bitcoin and tokens, we humans in the modern era have launched and monetized networks and there have been two big like pathways playbooks, primitives. One is something that is entirely open source. So it is an open, like zero financial limited financial incentive, um, protocol. So a set of rules digitally enforced that everyone ops into, and that is one way of doing it. Um, that's like TCP IP, HTTP, imap... linux is a, it can be thought of as a form of open of an open source protocol. It's not quite in the same way, [00:06:00] but the basic idea is that is a, is a set of rules anyone can maintain, is totally free to participate in. That's one way of developing a network.
The other way of developing a network is something that is more like a platform. So Facebook, Instagram, all the way back to AOL Instant messenger. But you have a layer where a centralized intermediary controls what we see, how we communicate, and has like administrative rights over all of the technological interactions that occur on it.
Open source has, um, been incredibly powerful, huge success. Most of the value that is created is on top of it, and those networks are incredible in being maintained by candidly well-intentioned technical geniuses who volunteer their time and expertise to help maintain them. They typically are financed through grants or donations, and those can be driven by a lot of the companies that are creating privatized value on [00:07:00] top of them. So open source, um, it's a model that works really well. It kind of relies on this expert volunteer mentality that has been such a core piece of the internet, but does potentially limit, I mean, arguably really limits, uh, who can participate. The platform route, a kinda centralized network is, uh, privately held and ultimately everything that occurs on the network is owned.
This is different. I think from how the vision of Web 2.0 back when it was called Web 2.0 was sold in the late aughts, um, in Silicon Valley. That's where I was working at the time. And it was open permissionless people use kind of a lot of these terms. And it took about 10, 15 years to realize, um, actually not all these networks were controlled, whatever the shareholders or the CEO kind of thought would be best for the network, which was actually best for the company that was making money off of the network, would do. They could do. So those are kind of the two routes. Yeah. Tokens allowed a third route where you could have [00:08:00] something that was open source, but that was also financialized as part of the core code base layer.
So it didn't have a central administrator that technically and legally owned everything that occurred on the network, but it also didn't have the, we need to rely on the heroic technical geniuses to maintain it. And so tokens allowed this open source protocol where there's a financial stake in the success of it as a network, not as a company, not as a single product, but as a thing that is collectively co-created by all of its contributors.
The three kinds of networks
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Bryce Bladon: So to sort of summarize what you said, a token powered network effectively just means the system runs on tokens as fuel, uh, like how gasoline runs on a car. And the internet as we knew it a decade or two ago, primarily had two examples of a network, as it were. You have something like, uh, your phone network, Verizon builds a cell tower.
You pay Verizon monthly fees, Verizon profits. You have to assume Verizon as the [00:09:00] owner of that network is gonna make decisions that benefit the network, but you also gotta assume they're probably doing it for Verizon at the end of the day. Also,
Matt Chwierut: now, legally obligated to do that.
Bryce Bladon: True enough. On the other side, we have something like open source networks and network is even a bit of a challenging way of putting it because what makes a network work is in my mind governance, and incentives. And what open source has always lacked, unfortunately, is some degree of effective incentives for maintainers and creators. To put this simply, there are a lot of websites on the internet that are effectively held together by some guy who's probably in his fifties in Eastern Europe, and once he stops maintaining that open source resource, a lot of stuff's gonna break.
Matt Chwierut: Yep.
Bryce Bladon: But it's free for companies to use, so why wouldn't they use it? But now we are seeing a third option arise, the token powered network. And actually there's an example I want to talk about here parallel to the Verizon one, which is something like Helium, um, which is a token powered network that is, uh, doing a lot of stuff we're talking about here.
Um, and whereas Verizon would build cell towers with helium, anyone, an individual buys a helium hotspot. This [00:10:00] hotspot acts like a cell tower and provides internet coverage, and the person who owns it earns tokens. As a result, users on the Helium Network pay with tokens to connect on it, and the network grows organically.
You can build your quote unquote cell tower. You can get paid when people use your cell tower, and you can use that payment either to connect to the network or potentially, uh, exchange it for some other unit of value like perhaps USD. And yeah. My understanding about what makes this work, and it doesn't always work, we should go into that in a moment, but where it works is the token creates a sort of self-sustaining economy.
I know you and I have some mixed feelings about the word tokenomics, but what it comes down to is it creates incentives for more users, which creates more demand for tokens, which creates a higher token price. And a higher token price means more people want to contribute, which means more resources, which means a better network, which means more users such and so forth.
So that's what it is when it works, and that's all extremely exciting. What I'm really curious about is when it works and when it doesn't work, and what is the defining difference. And we don't have a lot of examples. [00:11:00] It's a hard, hard space to make work.
Where tokens benefit users and contributors
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Matt Chwierut: It is a very hard space to make work. Um, the, there is one distinction that I want to draw that I think is very important in the world of token powered networks and, um, incentives and one, and, and this is just from a designer's perspective, is actually drawing a distinction between users and contributors of a network.
Bryce Bladon: Hmm.
Matt Chwierut: And what tokens are very good at is incentivizing third party contribution where what you're contributing is not kind of usage like a Bitcoin user would be someone who sends Bitcoin, but the contributor is the miner who processes all the transactions.
Um, the Bitcoin network can exist without users. It cannot exist without the contributors. And so when we think about, and we're, I kinda think about very successful token economies, they're really using incentives for contributors: people building the network, providing the infrastructure, providing the expertise.
A lot of the experiments that have worked really [00:12:00] well have been focused on hardware and computation, and that is where the incentives kind of lie. If we go take a step back on Bitcoin as a network, the network wouldn't exist without miners. And miners have taken a wide variety of forms ever since its inception.
Some estimates that I've seen from, uh, glass node or that the total cost of production of the Bitcoin network up until 2023, and this is like capital, opex, and electricity. Um, all those things. It's around 33 billion. It was around 33 billion. That is for a program like there is no employer that tells all those miners what to do and to spend all that money that is all like private third party money of people bringing these to, um, contribute to and earn this resource.
Um, that's incredible. Um, just even just as a form of how do you coordinate and accrete private capital and contribution and so that is. [00:13:00] Now let's go to Helium. The incentives that are so powerful are on the helium miners, so the hotspot providers. So how Helium works, um, yeah, you're, you, you're right. Uh, on that, there is a cell tower version where you have centralized operators.
They're building, um, deploying their own infrastructure. There are regulations around sharing that infrastructure with kind of other big providers, but they are still fundamentally financed by entities that. Own them and can monetize based off of them. And Helium people can anywhere plug in hardware that broadcasts a network that people can use if they have, uh, tokens.
So they get anyone with tokens, with the helium tokens can access all the bandwidth that is part of this network. And it is very dense. Interesting fact: there's probably about a hundred thousand. Helium mobile hotspots. In the US there's probably about a hundred thousand cell towers that have been built cumulatively and [00:14:00] those upgrade and stuff all the time.
So in the span of a very short number of years, less than five, um, helium hit that threshold of deploying as much accessible hardware and connection points as all of the cell companies that had proceeded it zero US centric's, kind of a moment in time. There are apples to pears, um, as an example. Um, but it's still a pretty, it, it showcases part of the power of having those open incentives where anyone can come and bring, contribute capital, time, expertise, hardware to a network that it can grow and scale so much more quickly than if it were centrally managed.
Bryce Bladon: Absolutely. Um, Helium's success is pretty wild to me if only because they actually launched almost the exact same year I can of the industry, and they were doing it the hard way, which is to say with physical infrastructure.
Matt Chwierut: Mm-hmm.
Bryce Bladon: They built the largest internet of things network globally, and they did it entirely through community incentives. They're in over [00:15:00] 80 countries since they launched in 2019. They have over a hundred thousand mobile subscribers. Um. But as noted, uh, as often comes with being first, they also showcase a lot of the challenges in the space.
Um, for example, uh, a lot of these things get approached by, I don't know what else to call them other than uh, uh, early adopters. Whereas in August, 2019, you could earn up to 33,000 of the helium token. Now you'd probably earn about two a month by comparison.
And that, that level of difference, there's a lot of things that can affect it because the reality of helium and the reality of a lot of these data decentralized networks is it's not just a question of who's using it and who's contributing it, but also who can try and take advantage of it somehow. And when you open that up on the global scale, there's a lot of hidden problems that you might not have even ever existed.
Nobody's done what's Helium's doing at this scale. Mm-hmm. And so Helium had other things like there were. Probably a few dozen wallets that controlled the majority of tokens. Um, revenue was a little challenging to calculate in many spots. Um, and, [00:16:00] and depending on where you live, uh, your electricity costs might not make the network as viable as it once was for folks.
Um, at the same time, helium does command a $473 million market cap. Um, and they are not the only, uh, crypto project I can think of that's succeeding in tokenization. And they're not even the only, uh, DePIN, decentralized physical infrastructure, just a crypto project, just a harder to succeed at one, uh, because there are physical hardware involved.
They're not even the only one doing that. Uh, Akash also comes to mind. Uh, they are a, uh, I think you get a rent GPU services from them. Basically they have $4.2 million in annual recurring revenue for what is effectively cloud-based GPU resources, um, which follow a similar model of, it's decentralized, it's token based... um, contributors are rewarded with tokens, customers access via tokens. And then you have something like render, which takes the concept of Akash and I think specializes it even further with extremely high scale rendering [00:17:00] capabilities. Um, versus what I think Akash is doing, which is just general GPU.
Um. And, and just for context, uh, access to graphics processing units, GPUs has become more expensive, uh, and more challenging over the past five years. So what was started five years ago is only probably raised in terms of its value. Um, but as noted, there are some real challenges here. Transaction costs this thing called sybil attacks, which is to say when,
Matt Chwierut: mm-hmm.
Bryce Bladon: Um, people fake data. It's almost always easier to fake something than to do it for real, which puts an onus on a project to verify data, which is just another thing to consider. But Matt, um, I think I've, I've started talking over you as my, uh, as my coffee hits me, and we've only got a few minutes left.
Before I let you go on this topic, I gotta ask, when it comes to tokenization and drones, what's exciting you, what's worrying you
Matt Chwierut: specifically for the system that we're, uh, about to launch?
Bryce Bladon: Tell me about the system you're about to launch.
Matt Chwierut: Yeah. It is something that has been the product of a lot of thinking and [00:18:00] deliberation... mind's far greater than mine, and people who were very, very visionary in this and we're excited about a couple things in revealing this to the world. One is using tokens to distribute value to pilots. Tokens are a lot of different things. I think of them as this weird mixture between a product on substitute for compensation, so like a salary.
The vast majority of the world uses dollars, not universally, but uses dollars. Um, and not even just, I don't, I mean like fiat Cash, they cash. Um, and third is equity. Um, so e equity, I just mean as an ownership share as in the success of some collective endeavor. Equity is kind of specific to a corporation, but more broadly, imagined, it's like if there's a collective endeavor in the world, who owns that, who can kind of profit from it?
Tokens have the properties of all three of those things, and [00:19:00] in another network. So now we'll kind of shift to, we talked a little bit about web two digital networks. There are also physical networks in web two. Uber, Airbnb are kind of the two biggest examples. Um, the people who contribute to the network, who kind of make the network possible are paid almost entirely in cash.
And they are at the, uh, I'll, I'll say mercy, but it's a little bit, uh, more complex. Of the operator, Uber, the company, um, Uber, the company owns that platform and all of the drivers who constitute the platform and have work for work at the behest of Uber. Um, and this is genuine trade-offs. I don't wanna say that's like universally a bad model.
Um, but it is one where the network, the core network kind of contributors don't really have that much of a say in what the network does. LayerDrone is different in just paying pilots, um, tokens, they're not just a cash substitute. Again, that's the, that's that middle property of tokens where they [00:20:00] are paying people in them is like paying in cash.
They're also though a product, as I mentioned, and an equity, we are giving pilots, the people who are the lifeblood of this network, a token... and I'm not a lawyer, I'm not talking about kind of legal terms here. It is just a, an advantage, a voice in the network. Um, a share of ownership that they would not or could not get if we were just a cash based like tasking platform, an Uber for drones.
So that's a really big one. Where that goes in the future, I don't know. I think we're on the cutting edge just like helium is. We're gonna be dealing with problems that no one in the world has dealt with because we are trying to eat different from helium. We are coordinating humans who are going out and doing non fungible work.
It requires expertise, it requires licenses in some cases. Um. And requires history. We can't just like plug in hardware or leverage hardware, but I think that massively broadens the spectrum of who is part of this network, who's [00:21:00] making this network, um, and giving them tokens to contribute to that network, we are helping distribute what is the future share of that network really going to be.
It will also have product like features. Using the tokens, um, in the network will give the pilots different benefits. It's kind of like immediate utility. Um, and it lets people like level up in how they're building the network, lets them have a bigger voice, lets them access kind of unique features on the network.
And there's just nothing really like this that has been tried at any scale, and we're really excited to launch that. See where it goes and invite pilots, many of who whom have been with us for years, um, to come along for the journey.
Bryce Bladon: Absolutely. Well said. And yeah, to just sort of perhaps put a bow on that equity, uh, line you were trying to draw.
I see it as if Uber was paying people with something, it was the unit of value in ca uh, that is to say a unit of value in, for lack of better way of putting it, the US government. Uh
Matt Chwierut: Yep.
Bryce Bladon: Whereas when you're paid in a token, you're paid in a unit of value. Uh. [00:22:00] That's supposed to be analogous to your contribution to the network in some way, shape, or form.
And thus, if you were an Uber driver in let's say 2014 and you kept driving in 2014 and Uber paid you in a token from 2014 onwards, I'm not sure how long Uber's been around, it's just 10 years ago from the time of this recording, which is nice and easy for me right now. But conceptually. If you were to treat that like a startup or like any other founding employee at a business, you would expect them to glean some value with the growth of that network, particularly as a contributor to it.
And that functionally sounds like what we're trying to rather what you're trying to do here. Um, but Matt, this has been a fantastic conversation. I have two questions for you. First and foremost, where can people go to learn more about you or what you're doing right now?
Matt Chwierut: Almost everything we're doing for Lone or even I am will be manifest on the LayerDrone website.
Um, we have some basic documentation there and we are really looking forward to increasing that. As, as I mentioned, I think the story of LayerDrone, how it came about is really good. A lot of thought and deliberation has gone [00:23:00] into the designs, the trade-offs, um, the overall architecture, and that's where we're going to be showcasing into what happened behind the scenes, what were all the considerations we really wrestled with.
So people can see the LayerDrone, uh, is really taking a lot of these topics very seriously.
Bryce Bladon: Excellent. All right. Even more important question. Do you have two minutes to play our very special segment? The Bryce is wrong. Looks a little horrified. It.
Matt Chwierut: Yes. It depends. Let's see.
Bryce Bladon: Yeah. Let's see. I'm going to tell you three facts about myself that relate to tokenization, um, and you have to tell me which one of these facts is a lie.
You ready?
Matt Chwierut: Yes.
Bryce Bladon: All right. I'm gonna time box this to 2018, by the way. So first of all, Bryce's work on the blockchain was featured in a 2018 museum piece bar Bryce's work on tokenization led to minting Wireds mascot in 2018. Bryce tokenized, NBA star Steph Curry in 2018. Two truths, one lie, [00:24:00] Matt, which is it.
Matt Chwierut: I'm gonna go with the second one.
I would, uh, bet that your work and early work was featured and WIRED. And I do know that you were around the entity that led, uh, kinda showed the world what tokenizing ideas and celebrities, uh, were really about. So I'm going with the second one.
Bryce Bladon: Unfortunately, we did mint WIRED's mascot. It was a CryptoKitty.
I can't remember his name, but, uh, got him sealed in a magazine on my wall right now. No, the, uh, lie and admittedly bit of a trick question was tokenizing Steph Curry in 2018. For context for the group I was working with Steph's talent agency, which did have the right to license his stuff for this. But, uh, Mr. Curry did not find out about it until about a day before launch. Good news, I think this effectively led to NBA top shot, uh, in 2018.
Matt Chwierut: That's what I was thinking of. Yeah.
Bryce Bladon: But in 2018 it led to a slight aneurysm on my end, so that never technically [00:25:00] happened. Thank you so much for participating. Matt. There are no prizes, but I've sure hope you had fun.
Matt Chwierut: Well, the game was actually, the mat is misinformed. That's. The, that's what we actually played. It appears.
Bryce Bladon: Alright, well I'll tell you what, I will send you, uh, some collateral from the Curry kitties as we call them, um, that I'm sure my former employers would despise ever getting out there.
Matt Chwierut: Love it.
Bryce Bladon: All the best Matt, thank you so much for your time on today's show. Thanks for listening to DRONE ON. Subscribe wherever you get your podcasts. Get a new episode every week and leave us a five star review on your podcast app of choice. You can learn more about our sponsors at Spexi.com. That's SPEXI.com and LayerDrone.org.
Find out how you can contribute to the world's largest drone imagery network too. Thanks again for listening.