DePIN, Decentralized Physical Infrastructure Networks, decentralized physical infrastructure network.
DePIN is a paradigm innovation in the deployment and maintenance of physical infrastructure. DePIN is built in a distributed manner by individuals and companies around the world for anyone to use. In return, contributors to these physical infrastructure nodes receive economic compensation and token incentives for the networks they are building. By leveraging Crypto, Internet, IoT, and blockchain technologies, DePIN can achieve a more efficient, decentralized, and fair way of infrastructure deployment.
DePIN is an essential infrastructure for realizing true Web3
Web3 is still very fragile. Although relatively prosperous application scenarios such as DeFi, Games, NFT, Social, RWA, etc. have been developed based on Layer1 and Layer2, these Web3 applications still rely on centralized cloud services, data centers and other Internet infrastructure.
There have been incidents in the industry where some Web3 project data was lost due to the downtime of large cloud computing platforms; there have also been incidents where centralized cloud service providers, node service providers, etc. were not allowed to provide services to certain Web3 projects due to regulatory sanctions; even Github code repositories and front-end official websites were restricted from access.
Therefore, DePIN is an essential infrastructure for realizing the true meaning of Web3. Perhaps these DePIN projects may not occupy a large market share of the total business volume, and perhaps the DePIN protocol may not have an advantage in terms of performance, but the existence of these DePIN protocols may one day ensure the normal operation of Web3 and Crypto projects and enhance their robustness.
Traditionally, due to the high capital requirements and logistical challenges of physical infrastructure projects, the deployment and management of physical infrastructure such as wireless networks, cloud services, mobile networks, and power grids are generally dominated by centralized large companies. In addition to leading to a poor user experience due to a lack of competition and innovation, this phenomenon is also not conducive to the robustness of Web3.
Compared with traditional centralized physical infrastructure networks, DePIN has the following advantages:
1. Low participation cost: Decentralized physical infrastructure networks reduce management costs and expenses by leveraging the collective resources of network participants;
2. Network robustness: Decentralized networks provide a more resilient and secure infrastructure that is less susceptible to single point failures;
3. Open competition and innovation: DePIN eliminates the high capital and large-scale entry barriers of traditional infrastructure networks, which is conducive to the emergence of more small-scale new participants.
Characteristics and classification of DePIN
The industrial logic of DePIN is very simple, mainly including the following key roles:
Device providers: They provide physical device resources (such as GPU, CPU, memory, storage space, RAM, bandwidth, Wifi hotspots, etc.) and receive tokens in return;
DePIN protocol: The DePIN protocol builds a distributed network, designs token incentives for distributed device providers, and allows DePIN network users to pay;
DePIN network users: access the DePIN protocol, use the DePIN protocol services and pay for them, which is cheaper than centralized physical infrastructure.
To maintain the stable development of this cycle, it is necessary to ensure that the value of the token is relatively stable, and the token needs to have a more complete value capture of the DePIN protocol value.
DePIN projects can be roughly divided into the following categories: decentralized storage, decentralized computing, CDN, VPN, WiFi, 5G network, etc.
In common, most DePINs have three basic components:
1. Physical infrastructure: DePIN needs to build and maintain physical infrastructure in the real world, and these distributed physical infrastructures together form a decentralized physical infrastructure network, where each device is a network node;
2. Off-chain computing infrastructure: DePIN relies on middleware that allows real-world data to be captured and analyzed and then used to calculate the user’s contribution;
3. Blockchain and Token: Blockchain acts as a tamper-proof ledger, device registry, task statistics and scheduling platform; Token is one of the incentives for DePIN network contributors, and can also be used as a pricing currency for network services, and sometimes it is also a mortgage asset for contributors to ensure the quality and quantity of services.
The innovations these components offer go far beyond what centralized infrastructure can provide and may bring new energy and innovation to the space.
DePIN Project Case
With its low startup cost and rapid expansion capabilities, DePIN has gained wide attention in the industry. A number of DePIN projects have emerged:
Filecoin: A decentralized storage network
Filecoin is the world's largest distributed storage network, with more than 3,800 storage providers contributing more than 17M TB of storage capacity. Filecoin's vision is to bring open, publicly verifiable features to the three core pillars that support the data economy (storage, computing, and content distribution).
Filecoin Virtual Machine was also launched this year. As of now, more than 1,100 smart contracts have been deployed on the Filecoin network, and more than 80,000 wallet addresses have interacted with these FVM-driven dApps.
In summary, the distributed storage network created by Filecoin has become one of the most important decentralized physical infrastructures in the Web3 industry.
Render Network: Decentralized GPU Rendering Platform
Render Network is a decentralized GPU rendering platform that matches users who perform rendering jobs with users who have idle GPUs for distributed GPU computing in the 3D rendering and AI industries.
In the first half of 2023, Render Network brokered more than 4.6 million frames of rendering jobs at an average cost of $20, which is a slight price advantage compared to many centralized platforms.
In terms of the Token incentive mechanism, Render Network adopts a unit standard based on OctaneBench rendering power, dividing participating GPUs into three levels. The unit price of Token incentives varies according to the rendering speed of GPUs at different levels.
Helium: A decentralized wireless network protocol
Helium is an open source protocol that incentivizes people around the world to build wireless networks together. HNT is the native cryptocurrency of the Helium Network. HNT can be burned to generate Data Credits, which are essential for transmitting device data and have a consistent dollar value. Other subnet tokens, such as IoT and MOBILE, derive their value from HNT, which can be exchanged between them. To use the network, you must Burn HNT.
The first demonstration case built based on the Helium protocol is LongFi, a Helium IoT network built based on the Helium protocol and LoRaWAN technology.
Another demonstration case is Helium Mobile, a Helium 5G network built by the Nova Labs team, which aims to expand the coverage of the Helium 5G network at a lower cost and continuously reward users.
Helium has inspired people around the world to build this crazy decentralized wireless network in just three years. According to official reports from the project, nearly 1 million hotspots have been deployed since its launch, covering more than 77,000 towns in 192 countries. The Helium 5G network is also experiencing rapid growth, with the community deploying more than 8,000 5G Radios in less than a year. About 100,000 devices have been connected to the Helium network.
Livepeer: A decentralized live video broadcasting platform
Livepeer is a video infrastructure network for live and on-demand streaming. It aims to provide developers with the freedom to innovate and creators with platform autonomy. The core is to incentivize nodes to contribute GPU and bandwidth in real-time video encoding and distribution services through crypto-economic protocols.
Orchestrators (coordinators, i.e. nodes) run a node in the Livepeer Network, which can mine tokens while transcoding videos through the GPU.
Theta: A decentralized video streaming network
Theta is a decentralized video streaming platform based on blockchain technology. It uses tokens to incentivize individual users to share surplus computing power and bandwidth resources as cache or relay nodes for video streams, thereby improving video stream quality and video content and reducing video distribution costs.
Theta Network is a dual network consisting of two complementary subsystems, namely Theta Blockchain and Theta Edge Network. The Theta Blockchain provides payment, reward and smart contract functions, while the edge network is responsible for the storage and delivery of media assets such as images and videos.
Summarize
Judging from the actual development of the industry, DePIN is a track that has gradually developed since the very early stages of the industry and has expanded significantly in the past two years.
According to Messari research, the total potential market size of the DePIN industry is approximately US$2.2T and may reach approximately US$3.5T by 2028. However, the FDV of all decentralized physical infrastructure projects in Crypto is only US$5B.
