DePin, short for Decentralized Physical Infrastructure, is emerging as a revolutionary solution in managing physical infrastructure through blockchain technology. This article will explore DePin's operating model and growth potential.
Overview of DePIN
Different from traditional decentralized applications (dApps), DePin focuses on creating and managing decentralized physical infrastructures. This is a combination of blockchain technology and physical infrastructure such as vehicles, data bandwidth, solar energy, computer CPUs, etc. to connect infrastructure providers. and customers need to create a more transparent, efficient and secure system.
Development of DePIN
DePin began to attract attention in 2020 when the first projects began rolling out. A typical example is Helium Network, a project to create a decentralized wireless network based on blockchain technology. Helium allows IoT (Internet of Things) devices to connect to each other securely and efficiently without going through traditional service providers.
DePin's growth is driven by the increasing demand for flexible and transparent infrastructure. Traditional systems often suffer from problems of reliability, high costs and lack of transparency. With DePin, these problems can be solved by using blockchain technology to create smart contracts and automation systems.
DePIN operating model
DePIN expects to develop a resource-efficient physical infrastructure through an incentive mechanism. First, suppliers are incentivized to contribute their physical facilities to the decentralized network, in return they will be rewarded with Tokens.
DePIN provides these resources to Users and generates revenue through fees paid by users.
Users are also attracted by cheaper service fees compared to traditional business-owned facilities. As the network grows, the value of the token increases, providing more rewards to providers and attracting more investors, as well as more providers.
As this cycle continues and the network expands, DePIN's growth engine will only accelerate.
Main application areas of DePIN
1. Decentralized Storage (Decentralized Storage)
Storing data on blockchain is one of the most important factors for network expansion, Compared with traditional storage, decentralized storage has many advantages and disadvantages.
Advantage:
Lower costs: Data storage prices are cheaper than centralized systems.
More reliable: Data is not dependent on a single point, reducing the risk of loss due to incidents.
Control: Users access and manage their own data without the need for a third party.
Higher security: Data is encrypted and distributed, reducing the risk of attack.
Resource utilization: Use unused community storage without adding new devices.
Notable projects: Filecoin ($FIL), Arweave ($AR), Storj ($STORJ) 2. Decentralized Compute
Decentralized computing shares the computing power of individual computers participating in the network. This creates a more efficient and secure cloud computing environment.
Advantage:
AI support: This segment strongly supports artificial intelligence, providing computing capabilities for machine learning, which consumes a lot of resources.
Efficient and secure: Applications can leverage distributed computing power for fast and secure processing.
Featured projects: Render Network, Akash Network, Bittensor ($TAO) 3. Wireless Networks
This DePin array allows users to use wireless networks in different locations by downloading applications and purchasing usage fee tokens, incentivizing providers with their tokens.
Advantage:
Easy access: Users can connect to a wireless network anywhere the service is available.
Incentivize participation: Service providers are incentivized to participate and expand the network by receiving tokens.
Featured projects: Helium ($HNT), WiFi Coin ($WIFI) 4. Sensors and Geospatial Network
This segment uses DePin hardware to deploy sensors everywhere, collecting data for maps, environmental data, traffic, supply chains, etc.
Advantage:
Rich data: Collect and provide detailed environmental and traffic data.
Wide applications: Applications in many fields such as maps, environment, supply chain.
Outstanding projects: HiveMapper, Honeycomb ($HONEY) 5. Some other areas
Energy: Use DePin to manage and distribute renewable energy, creating a transparent and efficient energy system.
Health Care: Apps like Healthblocks reward users for providing certain health-related information to help healthcare companies and workers make advances. Users can also connect their fitness devices to the app to track their fitness goals.
For example: DIMO (data for cars), Motus, Healthblocks…
Mobile Network: Provides data and services for smart moving vehicles.
DePin Benefits
Adopting DePin brings many benefits, including:
1. Flexible scalability: DePIN allows the network to scale by increasing resources instead of depending on capacity upgrades of each unit. This provides optimal flexibility, allowing the system to easily adapt to fluctuations in demand. In cases of low demand, resources can be “rested” to save costs. When demand increases, the network can activate additional resources, ensuring immediate response without any disruption. This flexible scalability allows DePIN to meet growing market demands.
2. Community control, optimal decentralization: Similar to DeFi, DePIN eliminates the centralized model, giving control to the user community. Instead of depending on corporations, DePIN operates as a DAO (Decentralized Autonomous Organization) in the infrastructure sector, where everyone participates in contributing resources and has voting rights commensurate with the level of their contribution. This decentralized model ensures transparency, fairness and eliminates the risk of monopolistic control.
3. Reasonable, transparent pricing model: DePIN uses a pricing model based on the provider's actual operating costs and network-related factors. Unlike traditional establishments that often charge higher prices due to operating costs and corporate profits, DePIN aims for reasonable prices, reflecting the true value of the service. This brings practical benefits to users, while creating a healthy competitive environment, encouraging suppliers to optimize operational efficiency.
4. Efficient, cost-effective operation: DePIN is designed to optimize operating costs. Thanks to the flexibility in service provision, providers can participate in many different DePIN networks, making the most of their resources. Users also benefit from competitive service rates due to DePIN's lower operating costs compared to the traditional model.
5. Open doors for everyone to participate: DePIN operates on an open-ended basis, allowing anyone with qualifications to become a supplier or user. With no barriers to entry, no complicated due diligence requirements, DePIN creates an equitable environment and encourages community participation.
6. Encourage participation with an effective reward mechanism: DePIN uses tokens as a powerful incentive tool. Vendors receive token rewards proportional to their contribution, creating a passive or active income stream. This mechanism promotes the active participation of suppliers and attracts new users, contributing to the expansion of the DePIN ecosystem.
Challenge and opportunity
Although DePin brings many benefits, it also faces many challenges. First, implementing DePin projects requires a complex and high-tech infrastructure. Second, legal and management issues are also a big barrier, as current regulations have not really caught up with the development of blockchain technology.
However, the opportunities that DePin offers are immense. With the support of investors and governments, DePin can become a vital part of the infrastructure of the future. Countries and businesses are gradually realizing DePin's potential and starting to invest in these projects.
Why will Depin become a trend?
According to CoinGecko, Depin's total capitalization is currently close to $30B USD, led by Filecoin ($4B) and Render Network ($3.2B). This capitalization is even higher than Lending/Borrowing with a capitalization of $6.3B USD and Gaming ($7.1B) USD. Depin is gradually proving its position in the Crypto market.
Conclude
DePin, with its potential to change the way we build and manage infrastructure, is becoming a notable technology trend. The combination of blockchain and physical infrastructure not only brings many benefits but also opens up new opportunities for sustainable development. Although there are many challenges ahead, with support from stakeholders, DePin promises to become an indispensable part of the future.
