DePIN -Decentralized Physical Infrastructure Networks.
In a nutshell.
Decentralized Physical Infrastructure Networks (DePIN) is the name for blockchain networks that use tokens to incentivise communities (not corporations) to build physical infrastructure networks (think mobility, electric vehicle charging, telecoms etc.) from the ground up. The sector has been around for years, but the consensus around a name has ignited a unified understanding that this is Web3’s time to shine — in the real-world.
DePin vs. PRNs vs DRNs
A DePIN is a decentralized application that uses tokens to incentivize people to crowdsource and build connected real-world physical infrastructure.
Physical Resource Networks (PRNs) incentivize people to direct or deploy location-dependent
hardware to offer real-world, non-fungible goods and services. Think mobility, energy or connectivity.
Digital Resource Networks (DRNs) incentivize people to direct or deploy hardware to offer fungible, digital resources. Think storage, bandwidth or compute networks.
Decentralized Physical Infrastructure Networks (DePIN):
Decentralized Physical Infrastructure Networks, abbreviated as DePIN, signify a groundbreaking approach to constructing and upkeeping physical world infrastructure. These encompass a wide range of elements, such as WiFi hotspots in wireless networks and solar-powered home batteries in energy networks. The distinctive feature of DePIN lies in its decentralized construction, involving contributions from individuals and companies worldwide. Contributors receive financial compensation and ownership stakes in the built network and the provided services, facilitated through token incentives. The realization of DePINs is made possible by widespread internet connectivity and advancements in blockchain infrastructure and cryptography.
IoTeX, a firm dedicated to open, permissionless infrastructure built by a multitude of network participants, has been a proponent of this ideology since 2017. Their belief in reshaping the stagnant landscape of infrastructure deployment has led to the development of DePINs. With tools like DePINscan, builders can access map explorers and dashboards, providing essential data-driven insights to the broader DePIN community.
The Intersection of Crypto and Physical Infrastructure
While blockchain technology has transformed various industries, physical infrastructure deployment has remained largely untouched. Traditionally, large corporations dominated this space due to capital requirements and logistical challenges. The resulting centralized control led to limited competition, innovation, and subpar customer experiences. DePIN emerges as an evolution of the sharing economy, aiming to create fairer and more inclusive systems.
Companies like Uber and Airbnb demonstrated the potential of the sharing economy model, but they remained centralized, holding control over their networks. DePIN takes this concept further, introducing token incentives and distributed governance. An example is Drife, a decentralized alternative to Uber. Drife operates similarly but rewards drivers with $DRF tokens, enabling them to suggest and vote on protocol changes. This decentralized model removes intermediaries, providing cheaper rides, higher revenue for drivers, and empowering them to influence the network.
Key Advantages of DePINs
DePIN introduces several advantages over traditional infrastructure networks:
Collective Ownership: Token rewards encourage contributors to deploy and maintain infrastructure, ensuring collective ownership by participants rather than a small group of shareholders.
Distributed Infrastructure Cost: Leveraging collective resources reduces overhead and expenses associated with network participants.
Decentralization: A decentralized network offers a more resilient and secure infrastructure compared to centralized networks, reducing susceptibility to corruption, hijacking, and hacks.
Open Competition and Innovation: DePIN promotes innovation by removing barriers to entry, encouraging new entrants to compete in markets dominated by established players.
DePIN in Everyday Life
DePIN projects unlock the untapped value of everyday assets and actions. For instance, installing a DIMO device in a car collects and monetizes car data, contributing to a decentralized network. Similar opportunities exist for smart meters, solar panels, or batteries at home, participating in various DePIN projects and earning tokens.
DePIN's Future within the Crypto Landscape
While DePIN is an emerging sector in crypto, its growth potential is significant. The total addressable market for DePIN is projected to reach $3.5 trillion by 2028, indicating substantial growth beyond the current $2.2 trillion market cap. Despite challenges, the decentralized nature of DePINs allows for innovation in industries such as telecom, energy, mobility, and storage.
The Evolution of the Term "DePIN"
The term "DePIN" emerged as the industry standard, uniting the space under one acronym. Previously, terms like MachineFi, Proof of Physical Work (PoPW), Token Incentivized Physical Networks (TIPIN), and EdgeFi were used. The defining characteristic of decentralization led to the adoption of "DePIN."
The DePIN Flywheel
DePIN projects benefit from a positive flywheel effect, where increased usage boosts token prices, incentivizing contributors to expand the network. This flywheel, demonstrated by projects like Helium, catalyzes growth and attracts investors, developers, and users, creating a self-reinforcing cycle.