XYO Network - DePIN Ecosystem Accelerated With Layer-1 Blockchain

What is XYO Network project?

XYO Network, also known as XY Oracle Network, is a decentralized protocol designed to provide trusted location data across a network of connected devices, using blockchain technology and a unique cryptographic mechanism called Proof of Origin .

Launched in 2018, XYO has evolved from a location data oracle system to a full Layer-1 blockchain called XYO Layer One (launching April 2025). With over 10 million nodes globally, XYO is now one of the world's largest DePIN (Decentralized Physical Infrastructure Network) networks, focused on verifying and providing location data for real-world applications such as e-commerce, logistics, and artificial intelligence (AI).

The project is developed by XY Labs , with the mission of building a decentralized, verifiable location data layer that allows smart contracts to interact with the real world without relying on a centralized third party. XYO is not only a technology platform but also an ecosystem that encourages community participation through applications such as the COIN App and programs such as Learn & Earn .

History of Formation and Development

Establishment Stage (2018)

XYO Network was founded by three main founders: Arie Trouw (CEO), Markus Levin (strategic advisor), and Scott Scheper (marketing strategy). According to the whitepaper published in 2018, XYO was created to solve the problem of location data reliability in centralized systems such as GPS, which are susceptible to manipulation, spoofing, or loss.

The project leveraged infrastructure from XY Findables , a consumer company that provides Bluetooth and GPS tracking devices. At the time, XYO had deployed more than 1 million devices , laying the foundation for a real-world location data network.

Important Milestones

• 2018 : Whitepaper launched and Initial Coin Offering (ICO) was held with the goal of raising $48 million. XYO (ERC20) tokens were issued on the Ethereum blockchain, with a fixed supply and unsold tokens burned.

• 2018-2024 : Expand the network to over 10 million nodes , becoming the largest DePIN network in terms of number of nodes. Develop the COIN App , allowing users to earn rewards by sharing location data.

• April 2025 : Launch of XYO Layer One , a specialized Layer-1 blockchain for DePIN, Real-World Assets (RWA), and AI applications. Introduce a dual token system (XYO and XL1) and burn over 86% of XYO token supply to reduce inflation.

• June 2025 : Co-founder Markus Levin attends the Super Vietnam Conference in Da Nang (June 4-5, 2025), affirming his commitment to expand in Asia, especially Vietnam – a hub of blockchain innovation.

XYO Network Core Technology

The XYO Network operates on four main components, forming a closed system for collecting, transmitting, storing, and analyzing location data:

Sentinels are devices that collect location data (heuristics) from sensors, GPS, Bluetooth, or IoT devices.

• They create temporary ledgers and add Proof of Origin to prove the data comes from a trusted source.

• Sentinels are rewarded with XYO tokens when their data is used to answer a query. For example, an XY Findables Bluetooth tracking device can act as a Sentinel.

Bridges securely transfer data from Sentinels to Archivists , ensuring the data is unaltered.

• They also add Proof of Origin to increase authenticity and earn XYO rewards when the data is used.

Archivists store location data in a decentralized form, often using solutions like IPFS (InterPlanetary File System).

• Storage is free, but Archivists are rewarded when data is retrieved.

• The system still works if some data is lost, but accuracy will be reduced.

Diviners analyze data from Archivists to answer queries from smart contracts, choosing the answer withthe highest Origin Chain Score .

• Use Proof of Work to add the answer to the XYOMainChain blockchain , and other Diviners confirm the validity via digital signature.

• Diviners receive XYO rewards based on accuracy and speed.

Proof of Origin and Bound Witness Mechanism

Proof of Origin : is a core cryptographic mechanism that helps verify the origin of data without the need for unique IDs or fixed private keys (which are susceptible to forgery).

XYO uses Transient Key Chaining , where temporary public/private key pairs are created and deleted immediately after signing data.

Origin Chain Score evaluates trustworthiness based on chain length, difficulty, and the degree of overlap between chains, with the formula:

Bound Witness : A bidirectional heuristic that verifies two nodes are close to each other, similar to two people taking a selfie and signing a confirmation.

This mechanism creates an unforgeable chain of evidence, ensuring the authenticity of location data.

XYO Layer One (Blockchain Layer-1)

Launched in April 2025, XYO Layer One is XYO Network 's independent Layer-1 blockchain , optimized for DePIN (Decentralized Physical Infrastructure Network), real assets (RWA) , and artificial intelligence (AI) .

From a location data oracle system, XYO Layer One has become a platform supporting over 10 million nodes , providing reliable location data for applications such as logistics, e-commerce, and AI, competing with large blockchains such as Ethereum or Solana.

Consensus Mechanism: Proof of Perfect

Proof of Perfect is XYO Layer One's proprietary consensus mechanism, designed to ensure data integrity and security within the network.

Unlike traditional consensus mechanisms such as Proof of Work (PoW) or Proof of Stake (PoS), Proof of Perfect focuses on verifying the accuracy of location data through cryptographic proofs, specifically Proof of Origin and Bound Witness , which have been the foundation of XYO Network since 2018.

Operating Procedure

• Proof of Origin : Uses Transient Key Chaining to verify data origin without the need for unique IDs or permanent private keys that are susceptible to tampering. Each node in the network (Sentinels, Bridges, Archivists, Diviners) adds a Proof of Origin to the data, creating an immutable chain.

• Bound Witness : Is a bidirectional heuristic that verifies that two nodes are close to each other, similar to two devices exchanging and signing location data. This ensures that location data is collected from real and trusted sources.

• Proof of Perfect : Combining Proof of Origin and Bound Witness, this mechanism ensures that transactions and data on XYO Layer One are authenticated with the highest level of confidence, minimizing the risk of tampering or corruption. It prioritizes the accuracy of location data, making it suitable for applications that require high accuracy such as logistics or AI.

Lookback Windowing: Optimizing Performance

Lookback Windowing is a unique technology of XYO Layer One, designed to optimize the performance of processing and storing data on the blockchain. This technology allows the network to store and validate recent transactions efficiently, while storing older data in a way that reduces the load on the hardware.

How It Works

• Recent Transaction Storage : Lookback Windowing retains the latest transactions in a “window” for quick validation. This ensures that the latest location data is always available for queries from smart contracts or dApps.

• Old Data Storage : Older data is moved to decentralized storage solutions like IPFS (InterPlanetary File System), reducing the load on network nodes and maintaining high performance.

• Balancing Performance and Reliability : By prioritizing recent data while maintaining the ability to retrieve historical data, Lookback Windowing helps XYO Layer One handle large volumes of data without sacrificing speed or increasing operational costs.

XYO Network Tokenomics

• Smart Contract: 0x55296f69f40ea6d20e478533c15a6b08b654e758

• Token : XYO

• Type : Originally an ERC20 token on Ethereum, now a governance and staking token on XYO Layer One.

• Supply : Over 86% of the supply has been burned (as of April 2025), reducing inflation and increasing value for long-term holders. Current circulating supply is approximately 13.47 billion XYO .

• Application : Governance, fee payment, and staking to earn XL1 tokens.

XL1 Token:

• Type : Utility token on XYO Layer One.

• How to Get : Can only be obtained by staking XYO, not sold on the open market.

• Applications : Gas fee payment, smart contract execution, and network rewards.

• Objective : Encourage long-term holding of XYO, reduce selling pressure in the market.

Incentive Mechanism

• Rewards : Sentinels, Bridges, Archivists, and Diviners receive XYO rewards when their data is used to answer queries. Rewards are split evenly between all classes, except Diviners (who receive more due to role complexity).

• Stationarity Coefficient : Sentinels that move less are more reliable and are given priority in query processing.

• Economic Balance : XYO incentivizes both users (token holders) and nodes (miners) to maintain liquidity and network balance.

XYO Network Funding Rounds

XYO Network and its parent company XY Labs have raised capital through the following rounds:

XYO Network and its parent company XY Labs have raised capital across multiple phases to develop the DePIN ecosystem and Layer-1 blockchain.

In 2018, the project held an Initial Coin Offering (ICO) with the goal of raising $48 million.

The actual amount raised from the ICO is not fully disclosed, but it is the main source of funding to build the Proof of Origin network and technology.

Between 2017 and 2020, XY Labs raised an additional $1.65 million in seven funding rounds, primarily from the Paycheck Protection Program (PPP) and an undisclosed investor. The most recent round, in April 2020, was a $0.68 million loan, which was used to maintain operations and develop the product.

In 2022, XYO will partner with Outliers Fund to establish a $20 million ecosystem fund, with each party contributing $10 million (shares and tokens). This fund will fund geospatial blockchain projects, expanding the XYO ecosystem.

Additionally, in April 2023, XY Labs invested in NATIX Network in Seed VC - II round, but the amount was not disclosed.

Total Estimate : Fundraising is approximately $69.65 million , assuming the ICO reaches its $48 million target. Compared to DePIN projects like Filecoin (~$1.5 billion market cap), XYO's fundraising is modest, but enough to support a network of over 10 million nodes and launch XYO Layer One.

Development Team

Arie Trouw (CEO) : Strategist with experience in technology and blockchain, leading the development of XYO Layer One.

Markus Levin (Co-Founder) : Strategic advisor, playing an important role in expansion in Asia, such as the Super Vietnam 2025 event.

Scott Scheper (Co-Founder) : Responsible for branding and community outreach.

Future prospects

The system uses Origin Tree to eliminate outliers and selects the Best Answer based on Origin Chain Score. This ensures that even if some nodes provide incorrect data, the system still achieves high accuracy if the majority of nodes are honest.

XYO Network aims to become the leading platform for providing decentralized location data, supporting AI, Web3, and IoT applications. With XYO Layer One , the project aims to:

• Support the development of new dApps that use location data.

• Integrates with major blockchains like Ethereum, EOS, and Stellar.

• Expanding node network through collaboration with IoT and blockchain businesses.

With the DePIN market forecast to reach billions of dollars by 2030, XYO is well positioned thanks to its large network and unique technology. Reliable location data is key for AI applications such as behavioral analytics or automation. A presence in markets such as Asia shows the potential to attract a larger community.

Website : https://xyo.network/

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Compiled and analyzed by HCCVenture

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