As one of the important drivers of cryptocurrencies going mainstream, the DePIN ecosystem has shown strong development momentum and has become one of the main investment lines that capital has flocked to so far. However, at this stage, the expansion of the DePIN market scale is mainly due to the "big strides" of the leading projects, and the overall profitability is limited, and it also faces risks such as supervision and network security.
Written by: Nancy, PANews
As one of the important drivers of cryptocurrencies going mainstream, the DePIN ecosystem has shown strong development momentum and has become one of the main investment lines that capital has flocked to so far. However, at this stage, the expansion of the DePIN market scale is mainly due to the "strides" of the head projects, and the overall profitability is limited, and it also faces risks such as supervision and network security.
The overall scale has exceeded 20 billion US dollars, with Ethereum and Solana ecosystems as the main
DePINscan data shows that as of September 19, there are about 276 DePIN projects, mainly divided into categories such as AI, wireless, energy, services, sensors, data and computing. At present, the overall market value of DePIN is close to US$21.23 billion, an increase of 17.1% from the beginning of the year, of which the top ten projects account for about 80.5% of the market value, reaching US$17.08 billion.
DePIN Ecosystem Map Source: Messari
Judging from the distribution of DePIN projects on various chains, they mainly come from Ethereum, Solana, IoTeX and Polygon. Among them, the number of DePIN projects on Ethereum and Solana is 54 and 36 respectively. At the same time, DePINscan data shows that the total number of DePIN devices has exceeded 18 million, and the nodes are distributed in 195 countries and regions around the world, mainly concentrated in Asia, the United States, North America, India, Southeast Asia, Africa, and Europe.
In addition, the scale of DePIN financing has also increased significantly. According to the August DePIN industry report released by Messari, the scale of financing in the DePIN field increased by 296% year-on-year, of which the largest single financing was the $50 million financing completed by IoTeX in April. Among the other top five projects, io.net, DIMO, and Daylight all have in-depth cooperation with IoTeX in data verification, off-chain computing, or capital.
However, the overall revenue situation in the current DeFi field is not optimistic. According to Depin.Ninjia data, as of September 19, the cumulative revenue of the top 10 DePIN projects was only 1.023 million US dollars.
As capital rushes into the market, the competition landscape may change dramatically
Right now, the DePIN market is experiencing more competitive variables and room for growth.
On the one hand, some institutions have launched DePIN investment funds with larger funds. For example, Borderless Capital recently launched a $100 million DePIN fund, whose LPs include DePIN-focused blockchain Peaq, Solana Foundation and Jump Crypto; UAE-based investment companies Hodler Investments and Gewan Holding plan to launch a $500 million fund to invest in DePIN and other fields; Bitrue Ventures launched a $40 million investment fund focusing on DePIN, RWA and other fields; the SOLLONG Foundation announced a new $30 million funding plan to promote the development of DePIN and AI; investment company Lemniscap announced that it has raised a $70 million fund to focus on investments in early Web3 projects such as DePIN, etc.
On the other hand, in recent times, a large number of new DePIN projects backed by capital have also entered the market. For example, not long ago, Fuse, the parent company of the renewable energy DePIN project Project Zero, announced the completion of a $12 million strategic financing led by Multicoin Capital; the DePIN flight tracking network Wingbits protocol completed a $3.5 million seed round of financing led by Borderless Capital and Tribe Capital; the Solana-based DePIN project Andrena completed a $18 million financing led by Dragonfly; the Base-based DePIN project Daylight received a $9 million Series A financing led by A16z Crypto; DePIN network developer Verida completed a $5 million seed round of financing with Simurg Labs, O-DE Capital Partners, ChaiTech Ventures and others participating; the DePIN Layer1 protocol Peaq completed a $20 million fundraising through CoinList; the DePIN project Blockless completed a total of $8 million in pre-seed and seed rounds, including pre-seed financing led by NGC Ventures, M31 Capital and Frachtis Co-leading the seed round of financing, etc. The pursuit of the capital market also confirms the strong development potential and attractiveness of DePIN.
As for the rapid development of DePIN, Helium CEO Abhay Kumar pointed out with his own case when participating in the Token2049 roundtable dialogue that traditional markets that use advanced precision positioning services have to some extent promoted the development of DePIN, which can provide customers with more competitive value propositions, including lower costs, better coverage and easy integration. Application scenarios include civil surveying, high-definition mapping, construction, agriculture and other fields. Today, the attention of the crypto market has expanded from entertainment such as trading or storing value to real-world applications. In the case of Helium alone, billions of consumers and millions of businesses rely on map services. For the crypto field to become more important and popular than it is now in the next 5 or 10 years, crypto products and services need to be successful. GEODNET CEO Mike Horton added in the roundtable dialogue that a healthy and balanced token economy is a powerful tool that can return the actual use and value of the network to users. And as the utility of the network grows, the value of the token will also grow.
Rating agency Moody's also pointed out in its recently released first report on the DePIN field that DePIN can help existing networks expand and innovate. Specifically, existing network operators such as telecommunications companies, utility companies, etc. face growing user demand, which requires capital-intensive infrastructure development. Utilizing a decentralized model can help them alleviate some of the pressure and remain competitive while artificial intelligence and the Internet of Things (IoT) disrupt old business models. And by combining the established parts of the system backbone with the building blocks of distributed ledger technology (DLT), DePIN has the potential to improve the reliability and efficiency of the network while reducing operating costs and optimizing resources and industry collaboration.
However, Moody's also pointed out that the widespread adoption of DePIN faces significant obstacles, including regulatory and interoperability issues, cybersecurity risks and the need for huge investment in infrastructure and skills, and multiple risks such as unclear regulations may inhibit its growth.
