Robots are on the chain? RobotFi implementation mechanism and feasibility considerations

Author: Fishmarketacad , APAC BD of Monad

Compiled: Tim, PANews

I have been watching videos of robots walking, and I was thinking during a walk this morning: What if the robots run on the blockchain?

The core of DeFi is to automate financial processes through code, while robots are committed to the automation of physical tasks. The combination of the two is a natural extension of the development of automation. If we believe in the power of programmable currencies, smart contracts and artificial intelligence, then expanding this programmability to robots, the physical programmable AI agent, is the next logical evolution.

One of the strongest leaders in the field of robots today is Yushu Technology.

Although robots like Yushu Technology will take many years to truly enter mainstream applications, and putting robot data on the link sounds more like an out of reach fantasy, it does not prevent us from daydreaming.

How to implement RobotFi today?

Today's robots are not directly connected to blockchain at the hardware level. They do not have built-in blockchain nodes or cryptography processors (this interesting idea is discussed later).

Therefore, to bring existing robots onto the chain, we need a bridge layer or intermediate layer (usually off-chain services or servers) to connect the robots and blockchain. Each robot also needs to be assigned a dedicated wallet address.

Yushu robots use its existing communication capabilities (such as Wi-Fi, Ethernet, and cellular networks that may be supported) to connect to off-chain services through standard network protocols (such as HTTP, WebSocket, etc.). Subsequently, the off-chain service will use standard blockchain libraries and APIs (such as Web3.js, Ethers.js) to interact with the blockchain.

Smart contracts on the blockchain can trigger the Yushu robot to perform operations through off-chain services. For example, when an off-chain service detects that payment is completed to the address associated with the robot, it sends instructions to the robot to perform a specific task.

I also envision future robots that can be programmed like smart contracts, capable of executing various "action scripts or robot strategies". These strategies can be created by independent developers, so that robots can be viewed as physical smart contracts or artificial intelligence agents.

The scripts originally created may be in a "wild west" state where you can write a robot to perform various operations, except for some prohibited operations, at which time there will be an independent security or management system for real-time monitoring and preventing the robot from doing any dangerous behavior. Again, we are still dreaming.

This will allow robot companies to focus on robotics technology itself, rather than robotic services. Robot services will be "outsourced" to developers to implement. On-chain robot services running through off-chain services are called RobotFi.

In other words, RobotFi will be a vertical track where participants can earn on-chain profits by funding or developing robot-related activities.

What application scenarios does RobotFi have?

Excess mortgage housekeeping rental service

One of the most popular application scenarios for humanoid robots is housekeeping services.

The initially running robot service can pose a lot of risks.

The robot may fail, error, damage, or fail to achieve the desired effect. Traditional leasing and service models rely on trust in the platform or service provider.

This is exactly where RobotFi is interesting.

Developers can no longer rely on centralized insurance companies or corporate guarantees, but develop off-chain services to introduce robots into the chain and further develop supporting services for robots (such as housekeeping services). To ensure the safety and reliability of the service, developers can attract LPs on the chain to inject collateral, which will act as insurance and economic security guarantees. In return, LPs will obtain the actual benefits generated by the service.

Mechanism analysis:

• Robot strategy insurance pool: LP deposits collateral assets into the pool to provide risk protection for robot strategies, and in exchange for the benefits generated by the strategy.
• Robot strategy policy insured: The policy creator can purchase risk protection for his robot strategy from the insurance pool. The specific premium depends on factors such as the type of robot and asset size, the risk coefficient of the task execution, and the selected protection amount.
• The compensation mechanism controlled by smart contract: This insurance is managed by smart contracts. These smart contracts define specific conditions for triggering compensation. Possible triggering events include the failure of the robot policy, which will trigger the LP's compensation (similar to the slashing penalty mechanism) to compensate users who have purchased the robot policy service. If the task is completed successfully and no abnormalities occur, the robot diagnosis system will report the task completion status to off-chain service and pay the LP.

In the above example, although I described the robot and robot strategy separately, if the robot and robot strategy are combined into a single rental project, its operating mechanism will be equally effective. In this case, security can be extended to the robot itself. For example, if the robot itself is damaged during the lease period, the compensation will be paid to the robot owner.

The tenant may also need to pass a certain KYC verification (in case he escapes with the robot), and the tenant's credit qualifications may also affect the developer's insurance premium cost. For example, if a tenant has good on-chain reputation and/or has high income (zero-knowledge proof verification), then the developer will have lower premiums and vice versa.

Summary through analogy blockchain:

• Robot (infrastructure/chain): Provides core infrastructure, that is, a robot that is easy to program and has high performance at the physical level.
• Robot Services (on-chain application): A specific task programmed by an expert is like an application built on a robotic infrastructure.
• Robot Insurance (mortgage provided by LP): The LP's mortgage acts as a security and economic guarantee for robotic services. They provide trust, security and operational mechanisms for risk and troubleshooting in the RobotFi ecosystem, just as collateral in the automatic verification system (AVS) is used to provide security for on-chain transactions and network operations.

Strictly speaking, you do not have to buy insurance. Although there are certain advantages to obtaining robot services through on-chain payment, these advantages are not significant. Since robots are in the real physical world, purchasing insurance can effectively enhance consumers' trust and acceptance. In contrast, it is difficult to obtain the same level of user recognition without insurance services.

Economical alignment and incentives for good robot behavior

This insurance/mortgage mechanism system creates strong economic incentives for good robotic behavior and responsible strategies, thus benefiting all participants:

Incentives for LP:

• Premium Benefits: LPs obtain benefits through premiums paid by robot owners. This gain needs to be attractive enough to motivate them to lock their funds into the insurance pool.
• Risk-adjusted returns: Differentiated insurance pools can be set up for different risk levels (robot type/task category). High-risk pools compensate for compensation for compensation risks through higher yields, allowing LPs to independently choose risk-return preferences.

Incentives for Robot Owners/Strategists:

• Reduce financial risks: The insurance mechanism helps avoid major losses caused by robot failure, damage or liability accidents, reduce operational risks, and enhance robot holding willingness.
• Establish competitive advantages: Robot owners who provide insurance services can form market segments and obtain higher rental premiums by establishing user trust.

Incentives for robot manufacturers/developers:

• Reliability demand forces: The insurance system indirectly promotes manufacturers to improve product reliability. Robots with low failure rate and excellent safety records will enjoy a lower premium and enhance market competitiveness.
• Data-driven iteration: Insurance claim data (failure type/cause of damage) provides manufacturers with insights to improve product design and drive technology optimization.

User/tenant incentives:

• Trust establishment and risk mitigation: The insurance mechanism enhances users' confidence in RobotFi services, and when renting a robot, you can obtain financial guarantees for economic losses caused by failures.
• Contact with high-end equipment: The insurance mechanism reduces the economic risks of high-value robot rental and encourages more advanced equipment to enter the rental market.
• Reasonable compensation mechanism: When a robot fails or the task fails, users can obtain compensation through insurance compensation to optimize the service experience.

Challenges facing RobotFi

While the concept of RobotFi is interesting, there are many challenges and we are far from ready for it. The main challenges focus on the two core links of centralized/data verifiability mechanism in the field of robots and the quantitative evaluation system for insurance claims.

• Off-chain service dependency: As we discussed earlier, off-chain service is almost inevitable under current technical conditions. This type of service has become a centralized control node of the system and potential failure risks. Whoever controls the service will have a significant impact on the RobotFi system.
• Reliability and verifiable data for insurance claims: Insurance claims depend on verifiable evidence of robot failure, damage, or failure of task execution. How to transfer this data from the physical world to the on-chain system reliably and without trust is an extremely complex challenge.
• Fair Claim Assessment: In the decentralized RobotFi situation, how to determine whether the claim is valid and whether the compensation amount is reasonable? Traditional centralized insurance companies rely on claims handlers, but how do decentralized systems be implemented?

The final thought

This is not a serious article about RobotFi, it is just a potential vision. While the concept of RobotFi is interesting, its feasibility depends on the ability to overcome many major technological, economic and centralized challenges.

What is unclear at present is whether the concept of RobotFi has sufficient advantages compared to the centralized handover of the entire robot ecosystem to a few key companies that pre-design robots with solidified functions.