Abu Dhabi and Dubai Plan to Establish the First Complete “Machine Economy Free Zone” (MEFZ) – with Support from German Blockchain Platform peaq. The Planned „Machine DeFi“ Seeks to Harness One of Humanity’s Greatest Opportunities—And Avert a Dystopian Future.

With a Special Economic Zone for a Machine Economy, Abu Dhabi and Dubai aim to explore how an increasingly automated value creation process can function in a world driven by AI and robots.

This initiative may be the first major breakthrough—or an attempt to force one—in the “DePIN” sector. DePIN stands for “Decentralized Physical Infrastructure” and refers to a segment of the crypto market in which physical devices—primarily computers, but also energy generators, sensors, or network connections—are interconnected via blockchains and tokens.

The MEFZ is designed to:

• establish a regulatory framework that enables the tokenization of autonomous robots and machines,
• create a sandbox environment where founders can test and scale up new machine-based business models,
• invite experimental-minded institutional investors from the Gulf region to invest in these tokens, and
• establish a regional hub to drive the global DePIN ecosystem forward.

One of the first projects will be to build a “Machine Tokenization Framework”—that is, a framework within which machines can be tokenized so that individuals may jointly own expensive robots. This is a key element of the “Machine DeFi” vision.

The MEFZ will also launch the world’s first project for “Universal Basic Ownership”: Profits generated by machines will be distributed to individuals affected by automation. Speculatively, this could mean that people whose jobs have been displaced by machines would be compensated with tokens that grant them rights to the profits generated by those machines.

According to Till Wendler, co-founder of peaq, the Machine Economy is unfolding before our eyes. “peaq is helping to make this transformation accessible for everyone. And the Emirates—one of the world’s most innovative nations—are the perfect place to pilot this vision.”

German LLC with Blockchain

Those quick to complain that Germany is falling behind as a location while the progressive Gulf states surge ahead should pause for a moment. peaq is a German LLC based in Berlin.

peaq is even part of the Industrie 4.0 network, a platform developed by the Federal Ministry of Education and Research in which key German industry associations such as Bitkom, VDMA, and ZVEI are involved. In principle, this is a German-Arab cooperation under the umbrella of the German federal government.

Technically, peaq is a layer-1 blockchain that’s compatible with the Ethereum EVM (Ethereum Virtual Machine), but claims to scale up to 10,000 transactions per second thanks to parallel block production and other innovations. peaq uses a dual consensus mechanism: Delegated Proof of Stake (DPoS) and Nominated Proof of Stake (NPoS).

Already, more than six million devices valued at over three billion dollars are connected to the blockchain; more than 50 DePIN projects across 22 industries are already working with peaq—a blockchain whose token only went live in November 2024. The product appears to be gaining traction.

„If We Get It Right, We Stand at the Threshold of an Age of Abundance“

In May, peaq published a sort of manifesto for Machine DeFi. It explains why it’s so important to tokenize machines and trade them on decentralized markets.

“For centuries, machines have taken on more and more tasks in value creation and production. With the rise of AI and robots, this will accelerate enormously.” This presents a major challenge: “How can we, as humans, remain necessary in a world where AI and machines are taking over more and more work?”

As with any technological breakthrough, there are also tremendous opportunities: “Machines can create value many times over compared to humans, much faster and at much higher quality—and without taking a break. If we—humanity—do it right, we’re at the threshold of an age of abundance.”

We are on the verge of a land of milk and honey—but how do we ensure that people do not simply become obsolete? What keeps wealthy, centralized actors and corporations from controlling all the machines while the rest of the world descends into misery?

For peaq, the answer lies in “Machine DeFi”—a decentralized financial system for machines. This represents machines as liquid assets that people can own and invest in.

One can describe the optimistic vision for the future as follows: people become investors, and ownership of machine tokens becomes a fundamental right. The future harkens back to feudalism, in which nobility lived off land and labor—only now, everyone becomes nobility, and machines are the new serfs.

Still Rudimentary

Still, peaq is rudimentary in many respects. For starters, the documentation is mainly targeted at companies interested in using peaq and is rather sparing with information about the general system or instructions for simple users.

Furthermore, while the token is necessary to use peaq, it is currently traded only on a handful of more exotic, centralized exchanges. Launching on decentralized exchanges has so far been delayed for regulatory reasons.

The Machine DeFi ecosystem currently consists of a single „Machine DEX„, a decentralized exchange for machine tokens, but as of now it’s mainly possible to trade stablecoins and peaq tokens there—with very thin liquidity for the most part.

All of this could change if the cooperation with the Emirates bears fruit. peaq could become one of the most exciting German blockchain startups—it could finally become what IOTA ($0.14) has always aspired to be.