Written by: Leo Lin, Jesse Zheng, David Lee
A vision beyond blackouts and disasters
As the clock struck midnight, a bustling metropolis was suddenly plunged into darkness. The familiar hum of electricity faded, leaving millions of residents groping in the dark for candles and flashlights. But the blackout was more than an inconvenience; it was a stark reminder of our reliance on centralized systems for power and communications, and our vulnerability to disaster.
Imagine a natural disaster strikes, cutting off power lines and disrupting traditional communication networks. In times of crisis like these, access to power and communications becomes more than just a convenience — it becomes a matter of survival. This is where the concept of Web3 comes in, with its emphasis on decentralized power supply and distributed communications, as a ray of hope. Power outages and communication disruptions are a disaster for the digital economy as it affects every aspect of our lives, from communicating, making payments, and even assessing basic needs.
In the world of Web3, power is no longer monopolized by a single entity or grid. Instead, it is generated and distributed through decentralized systems like solar panels and microgrids. Imagine a neighborhood where every rooftop is adorned with solar panels, feeding excess energy back into a shared grid that powers homes, businesses, and essential services. In the event of a power outage, these decentralized energy sources ensure that the lights stay on and critical systems continue to operate.
But electricity is only part of the solution. In a world where communication is synonymous with connectivity, disruptions to traditional networks can be devastating. Enter distributed communication networks, built on the principles of Web3. Often based on mesh technology, these networks allow devices to communicate directly with each other, bypassing the need for centralized infrastructure.
Imagine a city where smartphones, laptops, and IoT devices form a resilient mesh network that enables seamless communication even when traditional networks fail. Whether coordinating rescue efforts, sharing critical information, or simply reassuring loved ones that they are safe, these decentralized communication networks are a lifeline in times of crisis.
The recent widespread adoption of Web3 technologies has triggered a paradigm shift in how we perceive and interact with the digital world. Beyond applications in finance and governance, Web3 carries the promise of a more resilient and equitable future, especially in times of adversity.
As we navigate an increasingly uncertain world, it’s critical to examine the benefits of Web3 DePIN and its potential to increase our resilience in the face of disaster. By embracing decentralized power supply and distributed communications, we can build a future where power outages are no longer synonymous with darkness, but rather a catalyst for innovation and community empowerment.
So the next time you flip a light switch or send a message on your smartphone, take a moment to think about the possibilities of Web3 — a vision beyond power outages and disasters, lighting the path to a more connected and resilient world (this section on Vision Beyond Power Outages and Disasters was produced by ChatGPT).
1. The concept of Decentralized Physical Infrastructure Network (DePIN)
In recent years, the rise of blockchain technology and cryptocurrency has changed the way people interact in real life. The decentralized nature of blockchain has profoundly affected all aspects of digital life, covering metaverse scenarios such as blockchain games, social networks, and online conferences. It should be noted that this change is not limited to the virtual field. Some industry practitioners and policymakers have begun to pay attention to DePIN (Decentralized Physical Infrastructure Network), trying to promote the growth of the real economy through cryptocurrency.
If decentralized finance (DeFi) is the first application of Web3 to land in the real world, promoting the flow of global capital. Then DePIN is the next application example that is about to explode. DePIN refers to a decentralized physical infrastructure network that uses cryptocurrency to incentivize and coordinate the launch and continued operation of decentralized infrastructure. As an important connection between the virtual crypto circle and the real world, DePIN helps promote data security and effectively coordinate idle resources. While improving our quality of life, it also shows the practical value and charm of cryptocurrency to more people. Messari conducted a voting on naming on Twitter, and then proposed the concept of "DePIN" for the first time in its 2022 report based on the voting results. According to Connor's report in 2023, the total addressable market of the DePIN industry is about 2.2 trillion US dollars, and it may reach 3.5 trillion US dollars by 2024, which is three times the market value of all cryptocurrencies today.
DePIN aims to solve the problems caused by centralized physical infrastructure dominated by large enterprises due to high capital requirements and logistical challenges. These centralized entities have a near monopoly on the power to set prices and provide services to end users. DePIN aims to democratize the deployment and governance of infrastructure networks by providing fair access and participation opportunities to individuals and smaller entities. In other words, it is built on the principles of decentralization and collective ownership. In addition, the services or products provided by DePIN are more transparent and trustworthy because the blockchain stores verifiable data. In addition, DePIN offers the potential to fully utilize idle resources, such as computing power and storage space, in a cost-effective manner. The table below contrasts the differences between DePIN and centralized infrastructure.
2. How DePIN works
Traditional giants use large subsidies to attract users when promoting their products and services. This practice may cause some companies to go bankrupt after exhausting their budgets, while others may charge high fees after gaining a dominant position in the market. This is common in the Internet industry.
DePIN addresses the pain points of new project launches by coordinating the following key components:
Product or Service: As of 2023, there are more than 650 decentralized physical infrastructure projects across six sub-sectors: computing (250), artificial intelligence (200), wireless (100), sensors (50), energy (50), and services (25) (Salvador and Sami, 2024).
Supplier: A company or individual that provides a more cost-effective service or underutilized resource and expects to be rewarded with tokens.
Consumer: A company or individual who buys or uses products and services.
Token economics: Using token rewards to attract suppliers to contribute to the system and subsidize consumers.
Physical infrastructure: The equipment that providers use to deliver services.
In the early stage of the project, DePIN used tokens or airdrop expectations to motivate users to participate in ecological construction and attract strong developers to provide more cost-effective products. As more and more users use products or services, the project's income increases, which can be used for market value management and further marketing, giving rewards to product demanders and suppliers, motivating more participants and attracting the attention of market funds to create a prosperous ecosystem. Tokens have a flywheel effect on the DePIN project during the bull market.
DePIN can be seen as an innovative way to raise funds without permission and without borders using cryptocurrencies. Blockchain acts as the settlement layer of DePIN. By leveraging blockchain technology, smart contracts and tokens, these networks enable trustless transactions and incentivize individuals to contribute to the infrastructure industry in a permissionless, trustless and programmatic manner.
3. Feasibility analysis of DePIN based on LASIC principles
The LASIC principles outline five key success factors for fintech companies to create sustainable financial inclusion businesses, including low gross margins, asset light, scalable, innovative, and easy compliance (Lee and Teo, 2015). The table below explains each factor separately.
DePIN is a class of fintech companies, so we will use LASIC principles to study their feasibility. Compared with centralized infrastructure, DePIN provides services or products at a much lower price. This is because they do not need to invest a lot of money to start the project. Most DePIN projects aim to match the supply and demand of existing infrastructure to make full use of idle resources. Therefore, DePIN projects are asset-light, giving them an advantage in cost. In order to attract users, DePIN has very low profit margins and even provides token incentives or subsidies. Due to better economic benefits, consumers are encouraged to try new alternatives. Take Akash as an example, it is a decentralized cloud computing platform that allows users to effectively trade idle computing power. The cost of using Akash is only about one-third of Amazon AWS, Google Cloud Platform, and Microsoft Azure.
DePIN's network can scale because the decentralized structure lowers the barrier to entry, and the products they offer are popular with consumers. The DePIN project brings innovation to many important existing industries, some of which are not possible with centralized infrastructure. We will cover some interesting use cases in Section 4.
Decentralized finance is considered the first successful real-world application of blockchain technology and cryptocurrencies. The next important direction that builders are focusing on is the DePIN project. These regions allow DePIN projects to conduct trials to determine whether it can help economic development and bring practical benefits to individuals and society in daily life. However, in regions where cryptocurrencies are banned, DePIN projects may face challenges in meeting compliance requirements. In such cases, they may have to suspend or terminate business development activities.
The DePIN project meets most of the factors of the LASIC principles, except for compliance difficulties in certain regions. The use of blockchain and cryptocurrency to develop virtual and real-world economies is a trend that cannot be ignored or stopped. Blockchain technology will improve the lives of ordinary people through DePIN, just as it has successfully brought value storage through Bitcoin and decentralized applications through Ethereum. DePIN expands the application of blockchain technology to many other different industries beyond inclusive finance, which are seeking more resilient, transparent and cost-effective solutions. Therefore, it is foreseeable that DePIN will be accepted by more countries and regions, and relevant regulations will be introduced. Compliance does not mean hindering the development of the industry. Appropriate regulation can guide builders with long-term vision to take the right actions and curb speculators. Therefore, according to the evaluation of the LASIC principles, DePIN has the potential to succeed like other fintech-based companies.
4. DePIN Use Cases
The categories of DePIN can be divided into virtual resources and physical resources, including wireless networks, sensors, computing resources, bandwidth, artificial intelligence, storage, and other daily usage scenarios. We cover some real-world cases in this section.
4.1 Decentralized Storage
Centralized storage usually relies on one or a few key servers that centralize all data in one place. If these servers fail or are attacked, the availability of the entire system will be affected. DePIN eliminates the risk of single point failure in centralized storage systems by distributing data across multiple nodes (i.e. contributors), providing a safer, more resilient and more cost-effective solution in the field of data storage.
In addition to security, decentralized storage is also more cost-effective. According to Lim (2023), the monthly cost of storing 1TB of data in a decentralized storage protocol averages $2.11, while large centralized storage companies charge as much as $9.88. On average, decentralized storage is 78.6% cheaper than centralized storage. This significant difference is because decentralized storage takes advantage of idle resources.
An example of decentralized storage is Filecoin. Filecoin's mainnet was launched in 2020. It provides cloud storage services similar to Web2 giants Google Cloud and Amazon Web Services. Built on the InterPlanetary File System (IPFS), Filecoin introduces content-addressed storage, which is location-independent and allows for greater resilience, easier data portability, and lower latency when computing is involved.
Using blockchain's crypto-economic design principles, Filecoin connects people who need to store data with providers of free space on their hard drives. Contributors who provide storage space will receive FIL tokens as compensation. The rapid growth of Filecoin's storage capacity (reaching 14EiB in 2 years) proves the effectiveness of crypto-economic incentives in coordinating global resources. Messari's DePIN sector map shows that Filecoin is currently the largest storage network.
In addition to Filecoin, there are some strong competitors providing decentralized storage solutions, including Arweave, BNB Greenfield, EthStorage, and Storj.
4.2 Decentralized Wireless Network
Decentralized wireless networks can make internet access more universal, especially in underserved areas that traditional telecom companies have neglected due to the high costs and logistical hurdles of infrastructure deployment.
Building a wireless network requires a lot of capital investment, so it is usually monopolized by a few large companies with strong financial resources. In the early stages of development, revenue from subscribers may not be enough to maintain operations. To solve this problem, the DePIN protocol uses token rewards to encourage and support providers to purchase and deploy equipment and maintain operations. As more providers and consumers join, economies of scale will lead to lower costs, increased provider revenue, and expanded network service coverage, ultimately forming a sustainable economic system.
Helium launched a decentralized wireless network (DeWi) in 2019, powered by interconnected hardware devices run by individuals around the world. Helium was founded in 2013 to simplify the process of building decentralized wireless networks. The Helium Network Token (HNT) is the protocol token of the Helium network. HNT can be redeemed when hotspot hosts and operators deploy network coverage. Enterprises and developers pay HNT to connect devices and build applications on the Helium network.
In the telecommunications industry, there are two main models: Mobile Virtual Network Operators and Mobile Network Operators. Mobile Virtual Network Operators manage customer relationships but lack the necessary physical infrastructure such as mobile communication towers. They pay fees to mobile network operators to use the latter's infrastructure. Helium's sub-project Helium Mobile has become a decentralized 5G operator, introducing a new category called mobile hybrid network operators. The $Mobile token incentivizes network participants to deploy and operate 5G mobile network hardware, enabling customers to use cellular and Wi-Fi hotspots within the Helium network.
Contributors who set up and maintain hotspots are compensated with $HNT, a portion of which is burned. In areas not covered by the Helium network, Helium Mobile pays T-Mobile higher fees so that users can roam to T-Mobile's mobile communication towers, ensuring high-quality coverage across the country. Helium Mobile users can improve the signal in poorly covered areas by contributing hotspots, or they can purchase Helium Mobile hotspot devices to become providers. Providers can use the network and get rewards when others use it.
The main cost of building a 5G network is to build base stations. Helium Mobile uses token-based economic incentives to encourage individuals to purchase hotspot facilities and deploy them indoors and outdoors. This approach mobilizes the collective power of the masses to replace large-scale base stations with many dispersed small hotspots. This leads to lower construction costs, wider network coverage, and more affordable telecommunications plans. According to J.D. Power (2023), the average monthly expenditure on wireless plans for US users in 2023 is $157, and Helium Mobile provides unlimited calls, data, and text messages nationwide for only $20 per month. In Miami, they even offer plans for $5 per month.
Deploying DePIN to gain internet access is critical in many ways. In sparsely populated areas, traditional methods of establishing connectivity are expensive and challenging due to the high cost of infrastructure development, such as building radio towers in geographically complex areas. These costs are often passed on to end users, increasing the financial burden. In addition, traditional connectivity methods often rely on centralized systems that are prone to single points of failure that can affect service for many users. In contrast, DePIN provides a more resilient and cost-effective solution that decentralizes internet access and reduces the risk of widespread downtime.
4.3 Renewable Energy
As we move towards a sustainable and green future, it is increasingly important to record carbon credits securely and reliably on an immutable blockchain. The Arkreen Network is an example of such a solution. Arkreen can economically collect trusted distributed renewable energy generation data and convert the data into renewable energy certificates (RECs) to sell to anyone who wants to achieve carbon neutrality. The Arkreen Network leverages IoT and blockchain connectivity for easy access and focuses on solar photovoltaics (PV) for large-scale adoption. It provides embedded and integrated IoT connectivity options for scalability. With these, a distributed renewable energy infrastructure can be built. Similar to all DePIN solutions, Arkreen deeply applies a global coordination method through token incentives in a bottom-up approach.
Starpower is a platform that plays a key role in the virtual power plant workflow, acting as a hub for information transfer between global distributed energy resources (DERs) and local VPP service providers. By collecting and carefully analyzing DER data from all over the world, Starpower improves the efficiency of virtual power plant service providers. Analysis guides service providers to trade and manage electricity on their local power grids, optimize resource allocation, reduce energy costs, and help promote broader renewable energy adoption. Starpower's role helps the power market operate at a more granular level, achieving a win-win situation for economic and environmental benefits. Using decentralized blockchain technology, Starpower greatly enhances the security, stability and transparency of the power network, thereby providing users with safer and more reliable services.
4.4 Decentralized Computing Network
The recent boom in artificial intelligence development has greatly increased the demand for chips, resulting in chips often being in short supply.
Decentralized computing networks provide an alternative. Decentralized computing networks use token incentives to attract computing power providers to provide idle computing resources to help users perform complex computing tasks, such as running artificial intelligence algorithms and analyzing large data sets. By eliminating the need for suppliers to invest additional funds to purchase GPUs, the barriers to entry for suppliers are reduced, and the inclusiveness and resilience of the system are improved. Decentralized computing networks match efficient computing resources through an open and competitive supplier market, reducing users' access costs and weakening the monopoly of centralized cloud providers.
HPChain provides accessible and cost-effective high-performance GPU computing services by using a decentralized, peer-to-peer "cloud + chain" protocol. Its modular blockchain infrastructure is designed to reduce user costs and achieve flexible scalability to meet growing demand without sacrificing security or transparency in resource allocation.
The HPChain ecosystem currently includes an AI cloud computing platform for GPU leasing, image creation, and algorithm sharing, as well as a cloud gaming platform that leverages HPChain's GPU network to enable gaming on low-configuration devices. HPChain combines edge computing with competitive, transparent pricing to reduce latency.
Other DePIN projects such as io.net, Akash Network, Render Network, and Aethir are also leading decentralized computing infrastructures. Due to the huge growth of artificial intelligence, the demand for computing is increasing. However, with the emergence of many decentralized GPU protocols and the continued shortage of high-performance GPUs such as A100 and H100, providers are moving GPUs to computing networks that can get the most lucrative token incentives. Inflationary pressure from token incentives may harm token holders. How to create differentiated services and retain consumers is what these GPU protocols need to consider. In addition, high-performance GPUs are in high demand and rarely have idle time. Therefore, the assumption of utilizing idle resources may not be feasible. Computing power is only available during idle time, which makes the performance of decentralized computing unstable (Sami et al., 2024). In addition to cost, stable performance is also a key factor for users to consider.
4.5 Decentralized Artificial Intelligence
After the emergence of large language models, the high costs involved in algorithms, computing power and data have led to excessive concentration and monopoly in the market. In the process of training data, although the training of large models relies on public data, the public data will soon be exhausted due to the growth of large model parameters, so the continued growth of large models depends on private data. Although a large number of small businesses have a huge amount of data in absolute terms, it is difficult to use them in isolation, so large companies still have a monopoly advantage in data, which stifles potential innovation. The exhaustion of private data and the shortage of computing power are the main problems. At the same time, the lack of low-resource language corpora restricts the effective application of large language models in developing countries and affects the process of corporate globalization. Large language models also face challenges in professional fields, specific languages and cultural adaptation. Existing closed-source models are overly centralized, which brings risks of personal data leakage and abuse.
In the face of the above problems, LingoPod launched by LingoAI is a practical cross-language translator. It is also a decentralized AI agent that can protect user data privacy, truly serve users themselves, and can mine with corpus. The DePINs industry uses tokens to incentivize people to share real, real-time data from the physical world according to sensors for various model training. LingoPod can collect various global voice corpora required for large language model training and fine-tuning, including endangered languages and language corpora without text, through a token incentive mechanism while protecting personal privacy. LingoAI is an AI x DePIN foundation project for the democratization and sustainable development of AI.
LingoPod is a smart headset hardware characterized by a natural language operating system that can be connected to the user's mobile phone via Bluetooth or WIFI to form a distributed AI network. Every user holding a LingoPod can constitute a node. Users can contribute their native language, including dialect corpus, and upload them to the ReviewDAO node in the form of voice or text and their translated content for review and verification. After verification, rewards will be issued through the blockchain. At the same time, each node can receive default task information, and users can earn more income by completing more tasks. The low-resource language corpus built by LingoPod through AI and DePIN can greatly improve the application effect of LLM. The native accents and dialects of LingoPod users and their translated content are entered into the corpus after proofreading, which not only helps to improve the richness and quality of low-resource language corpus, but also provides broader possibilities for the adaptability of AI in professional fields, specific languages and cultures.
The large-scale adoption of LingoPod will build a distributed model training network and a decentralized computing power and data storage network, realize the decentralization of data and models through federated learning and distributed computing, realize data management and training in a distributed data parallel mode, and assist in the reasoning, fine-tuning, and training of large language models in a distributed model parallel mode. With the development of artificial intelligence, artificial intelligence must serve individual users instead of being induced and manipulated by businesses. Therefore, when it comes to private data, data and calculation results can be used for large model training and reasoning without leaving the device. The small parameter large model running offline locally is combined with the super large model to build a hybrid artificial intelligence, so that the artificial intelligence only serves the user himself, rather than becoming a spy planted by the business, while ensuring the privacy and security of user data.
LingoPod is just the tip of the iceberg of LingoAI. LingoAI pioneered the integration of Web3.0 and AI's MetaGraph technology protocol stack from the root. MetaGraph enables the combination of AI large language model LLM and knowledge graph RAG to realize the value Internet through the data and application separation, point-to-point communication and blockchain ledger technology of SOLID and MetaLife at the lower semantic web level, completely solving the bottleneck problems of artificial intelligence data shortage and data rights confirmation, realizing the concept of A Web of Data, and making AI sustainable.
5. Conclusion
DePIN uses blockchain technology to provide transparency and uses cryptocurrency to expand its network. DePIN represents the fusion of the virtual and real economies. It is an important channel to introduce the benefits of cryptocurrency to the general public and improve society by providing cost-effective services. By leveraging the financing function of cryptocurrency, DePIN lowers the threshold for project launch and is expected to change various industries by improving existing products and services. DePIN may compete with existing industry giants, or form complementary or partnerships. The intelligent design of the token economy and the quality of service will be critical to the success of the DePIN project. We expect DePIN projects to emerge and flourish in 2024 and 2025.
Of course, DePIN also has its drawbacks and risks that are not covered here because we focus on its capabilities. These issues are beyond the scope of this article, but they should not be ignored.
