Original title: DePIN 2.0: What the Next Generation of DePINs Is Doing Differently

Original author: Connor Lovely

Original source: coindesk

Compiled by: Mars Finance, Eason

DePINs (decentralized physical infrastructure networks) are everywhere. Or, at least for those of us reading CoinDesk in July 2024, they are everywhere. As someone who has been involved in this vertical since its inception in 2019, I realize that I am probably more of an early adopter and more enthusiastic about DePINs than most. But as I sat down to write this article and took a quick inventory of the DePINs I participate in on a daily basis, even I was surprised by the number and variety of projects now available.

First, I wear a Cudis ring on my hand, which provides me with health data and pays me credits for future airdrops. I have Helium and XNET WiFi hotspots at home, which provide wireless connectivity for my devices (and other people's devices) and pay me tokens when used. Helium Mobile (which is my only mobile carrier, by the way) has an app on my phone that pays me cryptocurrency for opting in to sharing location information, which is used to better triangulate data usage and network needs. I have the Grass browser extension running on my computer, which allows AI labs and web crawlers to view the internet through my residential IP and earns me credits for airdrops. Finally, I have the DIMO device in my car, which provides me with real-time data about my vehicle, provides this anonymized data to third-party developers, and (again) pays me tokens.

If you think this list is exhaustive, you’re thinking too small. Today, the DePIN industry has over 1,300 projects and its growth is accelerating in the bull market. While the popularity of the DePIN model is exciting, what’s more interesting to me is how exactly the next generation of DePINs are building their networks… and how they differ from their predecessors. Here’s what I’ve seen. After learning and iterating over the past five years, this generation of DePINs is making progress by:

Everything is demand-oriented

The most common, but fair, criticism of the first generation of DePINs, like Helium’s IoT network, is that they did a great job building supply but didn’t have enough demand. This generation of DePINs is securing demand early, in many cases before the TGE. They are also building supply in a more targeted, measured way, letting demand dictate where in the country or world they incentivize supply-side builds. For example, Spexi is a drone aerial imagery DePIN. They signed seven-figure demand contracts before the TGE and paid six-figure cash to drone operators, who salivated at the simple, gamified opportunity to make money on their existing drone assets.

Lowering the barrier to entry for contributors

During this cycle, we’ve seen the rise of DePINs that use generic hardware instead of custom hardware that already exists on their supply side. Another way to accelerate supply-side growth is to leverage everyday activities that people already do. Natix is ​​an example of both of these strategies, using smartphones in cars as dashcams to capture street-level imagery. Rather than trying to incentivize net new behavior with tokens (a more “expensive” proposition from a token incentive perspective), the company wants to leverage a behavior that already happens on a daily basis (driving). The contrasting example here is wireless DePINs, like Helium, which wants to incentivize contributors to climb onto rooftops and install CBRS radios. This is a net new behavior. During this cycle, we’ve seen the rise of DePINs that use generic hardware instead of custom hardware that already exists on their supply side. Another way to accelerate supply-side growth is to leverage everyday activities that people already do. Natix is ​​an example of both of these strategies, using smartphones in cars as dashcams to capture street-level imagery. Rather than trying to incentivize net new behavior with tokens (a more “expensive” proposition from a token incentive perspective), the company wants to leverage a behavior that already happens on a daily basis (driving). The contrasting example here is wireless DePIN, such as Helium, which wants to incentivize contributors to climb onto rooftops and install CBRS radios. This is a net new behavior.

Tend to guess

Incentives make the world go round. DePINs have always known this, but in this cycle we see things get even more intense. The emergence of points as a mechanism to record contributors’ contributions prior to the TGE has been a huge success and has given this generation of DePINs more flexibility and time to gather data before finalizing their token economics. Referral programs have changed the game, where contributors may receive a fixed number of points or tokens, or even a percentage of their referrer’s points or tokens in perpetuity. Grass is the best example of a successful points program driven by referral incentives.

Staying centralized longer

No project, idea or concept can be realized without a dedicated person or team to make quick decisions, iterate and push forward. Ideas are most fragile (but also most flexible) in the early stages. In this cycle, we all hope to see DePIN quickly find product-market fit (PMF), effectively expand supply and demand, and generate revenue on the chain; we don’t care much about decentralization until there are some early signs of PMF. Only things that work are worth decentralizing.

Take 3DOS, a DePIN for manufacturing. The founder created a popular 3D printer operating system that allows devices to be networked and have their print jobs automated and remotely controlled. He sees huge developments in the Web2 world, and counts NASA, Google, and 40% of US universities as his customers. He sees 3D printers as a shared resource and is creating a global manufacturing network where businesses can submit jobs, find a printer in the area closest to the end customer (reducing shipping costs and time), and then contract with the printer owner or shop to fulfill the contract. 3D printer owners can monetize existing assets, businesses can save money and time printing goods, and everyone benefits. Advertisement Advertisement I mention 3DOS because it is an exciting use case, but also because it is early in the life cycle and John Dogru (the founder) is taking full, centralized control of the idea, the software, the network, the demand side, etc., as he should. Without him in power at this early stage, nothing would get done, and there would be nothing worth decentralizing anyway! DePIN (as an industry) is still in its infancy, but there has been plenty of time to learn from and improve upon the first generation of DePIN. This generation of DePIN prioritizes demand in the early stages, expands the supply side faster by lowering barriers to entry and speculation, and stays centralized longer to speed up shipments. New DePINs are being launched at an incredible pace, and there will be more iterations and learnings to come. DePIN remains one of the most influential ideas in the crypto industry and a powerful positive force in the real world. I look forward to the success of the DePIN 2.0 team, and to writing an update for the DePIN 3.0 team in just a few years!