Fostering Economic Development On-Chain with Locale Network

Transcript

GMGM. Welcome to what's going to be another great episode of Devontel. So, if you didn't know, Devontel 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 Tres, who's the founder of Local Network. So if you didn't know, local network is an ecosystem of L3 data networks called city chains focusing on economic development through deepin defi and smart city services. So if you stick around for today's episode, you'll see Tre give us an exciting talk around the history of community cooperatives, parallel currencies, and their vision to bridge web three liquidity to local communities. All right, let's get into

it. But first, a word from our sponsor. Today's episode of Devontel is brought to you by our friends at Arbitum. Arbitum is a technology suite designed to scale Ethereum. You can use Arbitum chains to do all the things you do on Ethereum, but your transactions will be cheaper and faster. With over 3.8 million ETH saved, 1.69 million active wallets, and over 1.7 billion total transactions, why would you want to settle for any less? Get started today by exploring Arbitum's comprehensive docs and tutorials linked in the description below to help you get started launching your next DAP today.

Now on to today's show. [Music] GMGM, welcome to the show to the show, Trez. Uh, ecstatic to have you on. >> Absolutely. Thank you for having me. >> Yeah, my pleasure. My pleasure. Uh, yeah. Uh I know we have a very uh interesting uh topic today on Devantel um centered around um fostering onchain communities um with local network um and we're excited to get into that um but before we get into that uh would you like to give a brief introduction about yourself to the folks who are watching >> yeah lovely lovely um yes so my uh background is mostly um by the way call

me TZ my background is is mostly in um economics and and sociology. Um through all throughout undergrad and and um and my master's program, I've I've been studying crypto. It's just been maybe a 12 13 year journey. I may have gotten into the uh into the field around um 2013 2014 when I really started studying. Uh began as a as a Bitcoin miner um and just began to to grow and and learn with the industry like everyone else. And uh so it really kind of defined any sort of research that I I did for my undergrad. Um and you know it's just it's is lovely to see that the support and resources are available now

to sort of see this u see this vision develop. Um, uh, spent some time in finance. Um, currently in consulting, spent some time, you know, just a bunch of odd jobs bouncing around, proxy voting for for, um, you know, uh, Fortune 500 companies. And and and at this point, you begin to see where all of it begins to to mesh into uh into uh, you know, one industry, one job. and um you start to see how web 3 really mirrors every sector of our economy um in in in all aspects. And so what uh what what I've been able to

learn, you know, growing growing with the space and um you know, connecting it back to um some some of our high priorities is that nothing's under the sun is new. And um you know I'm excited to talk about that today a bit about um Modern Society Labs. We are a think tank that focus specifically on economic development um and using sort of third industrial uh revolution technologies to do so. And so blockchain web 3 of course is is the main focus but you know we we'd like to to expand it to other areas other domains. This is a we see local as an avenue to do that.

Amazing. And sounds like you have quite the uh quite the background and uh yeah, it's it's awesome to see. Um I I've been doing a little reading on uh Local Network through your docs. Um it's a very interesting idea and concept you guys have. I just curious you you mentioned that um you started out with Bitcoin mining. um like was there um was there a particular moment um during your time as a Bitcoin miner that you're like, "Oh, um something about the Ethereum ecosystem or or web 3 in general is really cool and made you expand your horizon, so to speak."

>> Yeah. Um you know, actually we it it it's funny. It was actually for a class project uh around the time I think it may have been in or around um when Mount Gros happened just a couple of uh just a couple of months after that. Um and we were just a a really basic assignment over alternative money form uh forms of money. You know, a lot of things pops into your head that that aren't necessarily um that aren't necessarily considered money. Um and you know government incentives for one like uh the those programs you know things like um GPUs was one thing that really came to mind at the time. Um and so studying

study doing that assignment was just something that that sort of opened my eyes to it. Um, but when I began to sort of dive deep into mining itself, uh, by the way, I'm um, born and raised in in Kansas City, Missouri. That's that's where a lot of our pilot program and a lot of our research is being held. Um, here there is a the mining industry very early on was attracted to Kansas City. um both in Butterfly Labs being one of the first Bitcoin mining uh minor manufacturers um in and around this area. There was also there's also um we have the largest underground commercial space in the

world uh called sub subtropolis um anything it's built into uh old old caves like uh um salt mines and um that's been underdeveloped for the maybe the past 50 60 years. So, uh, once Bitcoin mining came around, you know, this those type, um, environments were perfect for, you know, just placing a bunch of miners and and seeing what seeing where we could go with it. And so seeing that move quickly very early on um, in my hometown is sort of what made me see um, what what made me see what the what the

what the potential is. And um at the time of course my undergraduate studies I'm still doing a focusing really heavy on um you know uh community growth uh uh economic development and and sort of ways to to use that innovative tech to do so. Um, crypto web 3 has always been that avenue to to bank the unbankked, you know, that age-old promise in crypto. um to to sort of foster some sort of economic liberation. And as as as prevalent as the as capable as even the the most blighted areas of this country is uh of having things like

internet access and uh access to different technologies, we still were there were these pockets of there there's still these pockets of poverty p uh pockets of of economic deprivation that are not being reached by by the greater web 3 uh space. And so me making that connection very very early on is is sort of what what um sort of what led me to dive so deep into the industry. >> Awesome. Yeah. Uh I mean it certainly sounds like um there's a lot of motivation there and uh that kind of led to um what you're doing now with Local Network. But um yeah, I I I I'd like uh I'll give it to you to tell the story,

but um perhaps what's your what's your elevator pitch of um what Local Network is before we get into >> Yeah. Yeah. Uh so Local Network is uh an L2 network that is um empowering and building an entire series and an ecosystem of L3 networks that we call city chains. And so what that would what that essentially entails is um localized data networks that sort of um collect anonymize and um privatize data for um local citizens that would um allow them to monetize it in various different services but also provide u provide that

sort of microlevel data to local stakeholders like nonprofits, uh city governments, um in in local small businesses to be able to to um you know inform that inform their their policy decisions, their their marketing decisions. Um what we learned is that data is hard to to come by um for even the even your your local municipal governments. We've also learned that um it's it's a an extreme avenue to get um so to get more transparency within web 3. And so we're looking to actually bridge the gap between a a bunch of in-house services and third party apps. We want to bridge that gap

from web 3 liquidity to real world communities that need it. But then also um inversely we want to be able to um provide web 3 with the transparency they need to to really dive deeper into real world assets and and sort of deepen um that the the space is really lacking at the moment. And so what that looks like practically um we have very basic plans for a mobile wallet that would allow people to monetize their data. um anything from you know your your Uber data to your banking account data to your um the telemetry with your with your uh cars and things like that and

offer services based on the collection of that data. Um micro payments for local governments who need this data to to inform their their policy decisions um and and so on and so forth. But also things like lending services um auto insurance, health insurance. We want to be able to revolutionize um these areas in in creating that funnel from web 3 to these uh to the to these communities. >> Interesting. Interesting. So if I understand correctly um local network is the base um base network and then different cities basically are represented by um different L3 chains

that are spun on top of it. Correct. >> Correct. That's correct. >> Gotcha. Uh yeah. So I guess um you briefly touched on it uh but you guys have this concept of smart cities. Um could you b could you give like a a brief overview of um exactly what you mean by a smart city? Um is it basically exactly what you described where um each city is represented um on a blockchain and you have these different sectors transmitting this data um transparently. >> Yeah, absolutely. Uh and then so on a more and that's precisely right. So, but on a more technical level, I'll say it's um the the chain itself uh and what we refer to as the city chain is uh sort of

the off offchain process co-processor, right? So, we use um we use Cartzi's technology mostly uh doing a lot of research within their community to um create that off offchain um processing and and storage layer for the data. That's that's what allows us to do um really um we what what allows us to to eventually do really sort of innovative um encryption techniques like uh fully homorphic encryption of course leaning very very close to fraud proofs and and ZK proofs as well um while still you know keeping that keeping that data anonymized um privacy compliant uh things like that but still being able to

offer that that transparency and so the the way the architecture looks of course local network being the settlement layer. Uh a layer above that is th those L3 app specific um chains that we call city chains that that are comprised for with the data. Um any sort of uh uh internal uh SQL queries that needs to that need to um transmit data back to or commands back to the smart contract that that uh sort of spun it up. Um and then of course different apps uh built around that data network. And that's and that's uh essentially what we what we mean when we say a data network. It's it's a warehouse that exists on an offchain co-processor and feeds information to

the to the chain to our uh our base layer. And so um I I like to give real practical understandings of of where this could uh of where this could could be uh useful. One of the products that we're working on now and we do work on uh in-house DAPs um as well as thirdparty uh we 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 real uh uh an RWA lending product that focuses specifically on small business loans um and particularly backed by the small uh by the by the SBA by the uh uh by by that organization. And so what we're looking to do is one one thing we noticed around the the space about

around um uncolateralized or or um sort of less collateralized loans is that there is that lack of transparency once funds leave the chain. And that that has a a 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. Um and and making sure, you know, making sure your your investors are are getting the the the level of um loan monitoring, loan health, risk assessment that they that they deserve. And so one of the things that we conceptualized very early early on is you know hey

let's just use their bank accounts um just like any other just any other lending product would do or any other or a bank or or fintech product would do. And so what our first proof of concept was connecting um plaid APIs to this off-chain co-processor and feeding that anonymized transaction data right to our SQLite database which would then um be able to to offer some type of even privatized um or even encrypted data um with with ZK proofs. And so uh 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 we can get as high level as reporting to the smart contracts or reporting to the the front end, a dashboard that says, "Yes, they're meeting this certain threshold of uh debt service, let's say 1.2 or 1.15, whatever the the SBA, whatever their baseline is." Um, simple binary yes or no. Or we can get as granular as um you know giving the number or um it's it's right now it's 1.35. You won't know what the business is. You'll have a a very brief understanding a general understanding of of what you're investing in. And at the same time that

data is real time. So you you have that level of uh monitoring. You don't have to worry about the accuracy of the data. Um it's coming directly from where it needs to come from. And um every everyone's better off for it. But in the current state once funds leave chain you can no longer track it. You know you don't know how well the investments doing. And that's a that's a problem of course you have with with traditional loans as well. But um you know it just becomes more it 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 that's that's a bit of what we're looking to solve.

>> Interesting. Yeah, it seems like um you guys are building up quite the product suite. Um you mentioned the wallet, uh you mentioned this um uh lending application. >> Uh I guess uh are there any um cities that are co-piloting um this program right now? Like uh are any cities represented on local network um at the moment? >> Yeah. Yeah. So, we're still in the dev stage um building out uh building out the the um the L2 the rollup, but then also there's a lot of sort of manual research that we have to do on for the for the L3s themselves. The pilot program um which is also sponsored by uh Arbitum DAO. Shout out to those folks

over there. Um the that pilot program will actually be based in Kansas City. And so, um we'll do that pilot program for maybe about a year is what we're planning. um with expansion with uh you know discussion for expansion into St. Louis uh Chicago but we want to focus more on sort of mid mid to small size cities um where we can provide where we can provide a level of u of um value that isn't sort of dominated by by one of the the the legacy data providers or um legacy smart city um operators. So, um that that's the the focus right now.

Mostly mostly in the Midwest. Um some some discussion uh in or around DC and uh Houston, but at the moment we're just hard hard focused on Kansas City. >> Yeah, it makes sense. I was going to say, oh, like it would make sense to have it uh in Kansas to to start at least. So, it sounds like Yeah, you guys are on it. You guys are on it. uh uh and um I I don't know maybe uh it's too early to to say but um is there any formal process for cities who might be interested um to to um come to you uh or are you mostly uh reaching out to people?

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

at the inception of that it will be specific to our L2 network, but the idea is to have these uh smart cities or these um city chains be uh um be chain agnostic. And so we we want to be able to to use a a decentralized sequential like Espresso or uh one of the one of the players in that area that would bring even an an extra source of uh uh revenue for for city chains that um operate with decentralized sequentiers. And so um very very grassroots things, you know, reach out to us. We we'd love to to hear hear what the community what your communities want. Um we love the challenge of

building those things out as well. So, you know, uh open open door policy over here. >> Amazing. Uh there you go. If any uh city um city planner folks or anyone is watching the show today, uh reach out to Tres. Uh >> um uh and uh just um uh something popped into my mind um uh because you have these um city chains that that are basically their own chains. Um, do you think that um like tokens will will come into play for for these um chains? Like do you see like Kansas coming up with like Kansas Kansas coin? Like each city kind of kind of coming up with their own

utility token to do different things in their city. >> Absolutely. And I'm so sorry that uh I meant to touch on that a bit earlier. That was actually the um inception of the idea um mostly dealing with um parallel currencies. A lot of um that research is is centuries old. You know, um creating a currency that's only spent within a particular region um has been proven time and time again that communal economics to to sort of increase economic activity in any any given area.

This is without um relying on outside funding um relying on on communities sort of the the city growing or or um community re resources coming into the community as well from you know tourism or things like that. It's it's an inherent tool decades old tool to to spur economic development. And so that's a lot of our early research was specifically around bringing um parallel currencies and revolutionizing par parallel currencies uh within um crypto you know so and that that's sort of uh uh bridging again bridging that gap between traditional economic

development and um you know onchain technologies that we have now uh to to create you know to create a more more robust um version of them. And so a lot of what we're a lot of what our research uh began with parallel currencies um worker and community owned cooperatives uh that p mutual um mutual insurance companies as well, mutual aid. A lot of that is the backbone of um of our network. And what we really really would love to see is local civic dows. And we would love to see um you know parallel currencies that that encourage people to to shop with their shop with their their

local small businesses. We we want to see some of these things spring up organically with that data um as as a backbone, but also um building the tool but building the tools to to to allow for um that that uh building the tools that to allow for that that organic growth um that we're focused on. And so I actually um 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 uh 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. I love it. And so this is just a basic wireframe of uh a bit of what our our um smart wallet would look like. And so as you can see it's uh it is very very heavily um focused on that local community currencies. Um but also we're we're uh we're wanting to be very stable coinheavy as a as a chain. Um and so as you can see you can the the idea is to come in uh be able to to provide whatever data you feel comfortable with

with these incentives. Of course having uh recurring revenue based on how much this information is used. Um of course the privac privacy concerns are always there. Um the the our our encryption techniques are are will be publicly ver verifiable. Um they do use fraud proof ZK proofs. All of this information can be um can also be found on our websites uh on our website and our our documentation. Um but the idea is to preserve data privacy but also collect that data to do to to um offer sort of relief um services. So, uh, uh, um, a bit of relief loans for small

businesses or, um, lower much lower rates on car insurance and and health insurance. We really want to be able to, uh, offer affordable services. And so, um, citizens will be able to come in, connect their uh, connect their their data sources, um, find areas where they can spend locally, um, earn earn their local currencies. of course, always always something that you can um pay out just like any other any other crypto platform. Um track your data monetization, transaction history like similar to a to a normal wallet. Um, but also, you know, a local business registry being being able to understand who is connected to web 3, who is

connected in your local community to be able to accept Kansas City dollar um, as an example and um, 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 currency, these local currencies don't necessarily need to be backed by art assets, money market assets. And we start to get into things like um urban farming or uh community owned community centers or um you know other forms of uh affordable housing, community land trust. When we start to

to focus on those more grassroots that grassroot level of of economic development, you have a you you essentially have a pool of funds that's securing interest in multiple different areas backing the local currency, which is another side of which is a separate side of, you know, parallel currencies and and development that we haven't even been able to explore yet. Um, and so that that's essentially the idea, but on the back of that, of course, we want to be able to offer local local services like uh like we mentioned earlier, small business loans, um affordable housing, we uh local voting. We really wanted to want to touch on a number of different

areas and providing tools for these communities to empower themselves. And so essentially we want to empower communities using decentralized finance, using deepen um and and all fueled with with um web 3 liquidity that is starving for deal flow at the moment. So um that's that's essentially the idea. >> Awesome. Yeah, it looks it looks like it's shaping up to be um quite the quite the endeavor here. Uh you you mentioned um the project being open source or eventually being open source. Um for the developers who are watching here today

um are there opportunities for them to pitch in and help you help you guys build out um your vision? >> Absolutely. We we'd love to work with with any developers listening who who want to help out with the help out with the initiative. we have a um pretty extensive documentation on, you know, every every aspect of of how we're building this. Um the the SDK is scheduled for release sometime late August um early September. And so that's that's where we're hoping that our our incentivized test net will go live and we'll be able to implement some of this technology within for our for our pilot project with uh with uh the city of Kansas City. And um you know we we

welcome all welcome all help with this. Um we're we're sort of a part of our sponsorship with the with Arbitum DAO is attracting is attracting uh outside help with uh developers using using the SDK and it we we'd love to um we'd love to to tap any resources that that web3 has to offer. One interesting side of this is that we use um for our smart contract on the base layer, we do have um arbitral stylus capabilities um which allow, you know, which as I'm sure you all know, allows you to to code in a number of different uh legacy um programs. And so you know the the

lift we we wanted to design our um our infrastructure so that lift wouldn't be too heavy for developers to adopt. Uh additionally that co-processor level um also it's a full Linux machine full Linux system um any anything that you can code there um you know you can build apps and products with with Cartezi and so um not not not uh solidity heavy you know you don't have to really worry about all of the specific rules of of um the the specific rules of solidity to be able to to build an effective product. Um but yes, we we would love any sort of uh any sort of help pushing pushing this this

initiative forward. >> Amazing. Amazing. And yeah, uh for the developers watching today, um we do have um those resources uh that Tres mentioned uh in the description below as well as um Tres's um uh ex x account as well if you'd like to reach out to him. Um, and uh, as we're approaching time, uh, I just want to ask you, uh, a final question here's um, >> after after all is said and done, um, at the city level, um, do you envision kind of a north star of also expanding to uh, say like country country level as well?

>> Absolutely. Our >> our whole our entire vision is to get every city on chain and we want to ex expand um >> we want to expand so so grassroots to a to a way that we we can't be ignored on a national level. You know that's that's the uh I think that's the the the general idea. But the the the the plan is these localized data networks will um mesh in a way just like the rest of web 3. You know, we the the overall vision is to have a tapestry of u localized networks that speak to or can can um can offer more granular level of um the more granular level of detail in how

real world communities operate. And so we can begin to to have real data on replicable community services or replicable um um community programs. And so if I could just go on another tangent, one of uh the practical examples for that I'd like to give is um there was a small city in North Carolina that sort of wanted to that very basic um use very basic sensor data uh just to just to solve some of their their local issues. One of those issues was the opioid crisis, you know, and so um one thing that they had done very early on was put um opioid level um detectors, small sensors in their their sewage

system. Um there was a local nonprofit that sort of led that initiative. um of course putting methodone clinics all over the city. Um released that into their sewage system and they were tracking the highest level the the areas with the highest level of um opioids in their in their in their water to determine where they would put their next uh methodone clinic. And I think once they had access to that data, once they were able to to uh see those insights with the microlevel data that's so difficult to get a hold of, they found a next location uh and I believe decreased the city's uh crisis by somewhere around 30%. Um and so that

data is really valuable. It's really helpful um for both local governments and nonprofits 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 to that to that web 3 liquidity. You know, we're we're we're bridging a bunch of gaps here. And so the the the idea is really ambitious, but we're really excited to to see how many lives we could affect with with a product like this.

>> Amazing. And and yeah, it certainly is a very ambitious project, but all the power to you guys um for um even thinking of of of doing it. Um it's amazing and uh yeah, uh I'm I I know I'm really looking forward to seeing it um continue to be built out. And again, devs, if you're watching today and you want to help out this, um, really ambitious project, definitely reach out to Tres. Um, and yeah, uh, and just with that, >> uh, I just want to thank you so much, Tres, for taking the time out of your day to come on the show and, uh, give us that amazing, um, discussion and overview of Local Network.

>> Absolutely, man. I I I definitely appreciate you having me. Um you you all can of course follow the page on Twitter. Um 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. Um we're we're pretty grass or we're pretty uh bootstrapped project at the moment. So, you know, any help is welcome. Um but yeah, we're we're really excited to start getting these products out to the community >> and I appreciate very much. >> Yeah. Yeah, for sure. For sure. My pleasure. And uh yeah, I guess with that, I just want to wish everybody a very happy Wednesday and uh that we'll catch you back here on Friday for another episode of Deontel. Till then, have a good one, folks. Cheers.