Decoding DePINs: The Next Web3 Narrative?
By Anju B Nair, Sr. Technical Content Writer, Kerala Blockchain Academy
It looks like the year 2024 ponders growing interest in blockchain’s real-world applications beyond established sectors of payments, DeFi, gaming, and NFTs. It has been witnessed that Google Searches for DePINs (Decentralised Physical Infrastructure Networks) have doubled since August 2023.
Companies specialising in DePINs apply blockchain technology to existing market opportunities and introduce innovative and improved methods for managing marketplaces, physical and digital services, real-world assets, IoT, and data.
DePINs utilise token incentives, smart contracts, decentralisation properties, and other participatory governance mechanisms of blockchains to deploy networks of real devices such as sensors, storage, or wireless networks globally.
So what are DePINS?
DePINs (Decentralised Physical Infrastructure Networks) encompass two main categories:
Physical Resource Networks (PRNs):These are location-based networks where providers contribute hardware resources like connectivity, mobility, and energy services.
Digital Resource Networks (DRNs): These networks involve the contribution of digital resources such as computing power, bandwidth, or storage facilities.
How do DePINs work?
DePINs function through the decentralised blockchain technology framework, effectively distributing control and responsibility across a network rather than allowing it to pool within a singular entity.
At the heart of the DePIN sector lies a cryptocurrency-based economy that rewards participants for contributing resources such as computing power, internet connectivity, or storage capabilities.
When the concept started, most of these DePIN crypto rewards did not hold tangible value, akin to early speculative investments. Participants essentially functioned as “risk miners”, betting on the potential of nascent DePIN projects and eyeing rewards in future token value hikes and accumulation.
Every DePIN application is built upon four fundamental pillars:
- Physical network infrastructure includes tangible assets needed for network functions, like servers and transportation systems.
- Off-chain computing systems bridge real-world contributions to blockchain incentives and provide smart contract data.
- Blockchain framework is a transparent and immutable ledger that employs smart contracts to manage network transactions.
- Token rewards system encourages infrastructure contributions that feed the early growth of the network until it matures into a self-sustaining ecosystem through transaction fees.
DePINs, using the above pillars, serve as a bridge between the physical world and the blockchain. It combines blockchain technology and crypto incentives to reshape how we build and manage physical infrastructure. By leveraging blockchain and tokenisation technology, DePINs enable corporations to crowdsource the construction and maintenance of physical infrastructure, such as telecommunications networks, while incentivising volunteers with tokens.
Value Offer Of DePINs
DePINs offer several advantages for both corporations and volunteers. For corporations or industries, it is anticipated to reduce the upfront costs and risks associated with building and managing physical infrastructures. Instead, they can rely on a decentralised network of volunteers to contribute their resources and expertise. Volunteers, in return, will be rewarded with tokens that can increase in value over time, giving them a financial incentive to participate.
The concept is similar to the value proposition cloud computing companies offer, which allows businesses to access computing resources on-demand without needing upfront investment in hardware or infrastructure. By applying this model to physical infrastructure, DePINs could democratise access to essential services and stimulate innovation in telecommunications, transportation, and energy sectors.
DePINs offer an approach to combat legacy companies’ capital-intensive method of establishing and operating infrastructure networks. Fitting blockchain, DePINs envisions offering a more efficient way of launching and running such services, encouraging:
1. Scalability: DePINs leverage crowdsourced infrastructure, enabling faster and more cost-effective expansion than traditional frameworks. This scalability allows them to adapt to changes in demand without requiring significant resource increases, maintaining efficiency without major reorganisation.
2. Community Empowerment: Unlike centralised platforms controlled by a select few, DePINs distribute hardware ownership among users, fostering collaboration and community involvement. This democratised approach promotes equal access and participation, empowering users at every level.
3. Transparent Governance: DePINs champion transparent governance, replacing opaque practices with open and democratic decision-making processes. This ensures equal access for all users and encourages community-driven initiatives.
4. Accessible Participation: DePINs prioritise open access and censorship resistance by eliminating centralised gatekeepers. This inclusive model promotes accessible participation for all users, regardless of background or location.
5. Cost Efficiency: DePINs aim to lower costs by leveraging a diverse network of service providers who can competitively offer their services. This competitive environment encourages fair pricing and reduces the inflated expenses often associated with centralised services.
6. Incentivisation: Within the DePIN framework, incentivisation structures drive participation and growth by offering service providers opportunities for passive or active income. These incentives further boost network engagement and expansion.
The term DePIN was coined by Messari in 2022. but projects like Filecoin, Theta Network, and Render Network led the charge before the description of DePIN existed.
Popular DePIN Projects to Watch Out for in 2024
Bitcoin Minetrix- A tokenised and decentralised cloud mining infrastructure.
Through Bitcoin Minetrix, everyday users can quickly start mining cryptocurrency by buying and staking $BTCMTX to earn Mining Credits, which can be burnt in exchange for cloud mining time on the Bitcoin Minetrix decentralised infrastructure. The project eliminates the potential of third-party scams through tokenisation and ensures users retain complete control of their funds. It also removes the need for everyday users to buy and maintain expensive mining hardware.
eTuk Tuk- An EV sustainability project with decentralised charging infrastructure.
eTukTuk is an innovative new DePIN project leveraging blockchain technology to speed up the green energy revolution. The project aims to build a network of EV charging stations in developing Southeast Asian nations. The project uses token incentives to encourage individuals to build and maintain the network.
EV drivers can charge their vehicles at these stations and pay with the TUK token. In addition, TUK token holders can take part in power staking, allowing them to share in profits earned from the charging network.
Helium Network — DePIN Project Building Global Hotspot Network
Helium Network is an exciting DePIN crypto project building a global decentralised network of WiFi hotspots. It already has more than 980,000 hotspots around the world.
The idea behind Helium Network is that anyone can join and become a hotspot provider. You can use a wide range of hotspot devices to join; all you need to do is place it in your home or office window.
Helium Network incentivizes users to join and grow the coverage network by rewarding hotspot providers with HNT tokens. The more data is transferred through a user’s hotspot, the more HNT they earn.
Filecoin — Decentralized Cloud Storage Solution
Filecoin is the largest of several DePIN projects deploying dedicated cloud storage solutions. The idea behind Filecoin is that users can store content redundantly on devices worldwide, ensuring that files are fully backed up and fully censorship-resistant.
Filecoin relies on the InterPlanetary File System (IPFS) to store information decentralised. Anyone can contribute computing resources to the Filecoin network to become a storage provider, and they’ll earn FIL tokens according to how much storage they provide.
Users must pay for their storage using FIL, creating long-term demand for the token.
Theta Network — DePIN Video Streaming with Digital Rights Management
Theta Network is a decentralised computing resource network built to deliver streaming video content. The goal is to make high-quality video available to users worldwide with no lag.
Theta Network offers a built-in solution for digital rights management (DRM). DRM enables digital content creators to claim royalties whenever their videos are streamed.
Render — GPU Computing Marketplace for 3D Graphics Rendering
Render is a decentralised computing network focused on aggregating GPU computing power. Anyone can access GPU compute resources through Render, making it possible to render enormous 3D projects without a massive investment in computing infrastructure.
Render has enormous potential because 3D graphics rendering is crucial to future metaverse development. A widely used metaverse will require massive GPU power, and Render is uniquely positioned to deliver it.
Arweave — Permanent Decentralized Data Storage for a Flat Price
Arweave is a decentralised blockchain-based storage solution that looks similar to Filecoin. However, whereas Filecoin users must pay ongoing fees to store their data, Arweave charges users a one-time fee for permanent distributed data storage.
The project’s permanent storage is a solution for storing historical crypto transaction data. Solana, Avalanche, Polkadot, and Cosmos all use Arweave. In addition, Arweave has partnered with the Internet Archive, with over 700,000 torrent files archived.
Hivemapper — Drive-to-Earn Token Mapping the World’s Streets
Hivemapper is a collaborative, distributed mapping program that aims to capture images of all the streets in the world in 4K imagery. It’s an ambitious project that shows the potential power of DePIN to achieve real-world goals.
Hivemapper works by paying drivers in HONEY tokens to place a dash cam on their vehicle and start driving. The more miles of previously un-imaged roads that a driver travels and captures on video, the more HONEY they earn. Over 140 million kilometres have already been mapped.
Peaq — Layer 1 Blockchain Built for DePIN Development
Peaq is a new Layer 1 blockchain explicitly built to encourage the growth of the DePIN token ecosystem. It offers ultra-fast transaction processing — essential for real-world applications — plus severalTheir network has over 100,000 machines and devices unique features tailored to suit the needs of infrastructure projects.
One particular feature that stands out is the ability to assign machine IDs with Peaq. This is crucial for manufacturing processes, where individual machines have different properties and capacities. Machine IDs make it possible to assign an individual ID to, for example, an electric vehicle or robot. They have over 100,000 machines and devices in their network, including 100 tokenized Teslas.
Another unique feature is support for role-based user access. This is a crucial security measure in industrial processes that limits who can control what physical devices.
Challenges facing DePINs
Despite their potential, DePINs face challenges, including:
- Adoption and revenue impact: The success of DePINs relies on attracting sufficient participants to sustain the network and incentivise investment.
- Technological complexity: Understanding and navigating DePINs may be daunting for newcomers, requiring education and support.
- Operational costs: Running private facilities may incur significant expenses, posing challenges for some providers.
- Profitability: DePINs must balance rewards with operational costs to remain attractive to providers and users.
The Future Of DePINs
DePINs hold the potential to transform industries into decentralised infrastructures. In addition to democratising access to essential data and processes, DePINs can also lower costs, increase efficiency, and promote expansion. They also upgrade the existing infrastructure systems to be more resilient to technical problems such as outages and attacks from malicious third parties.
However, it is worth noting that DePINs are a reasonably new concept, and there is still a lot to figure out, such as scalability, interoperability, security, and usability, before expanding out to become mainstream. Regardless, considering the rapidly changing nature of the blockchain, it is only a matter of time before DePINs apply tangible solutions to such challenges. Soon, we will witness if the DePIN scene will capture momentum for exponential growth or fail to meet expectations.
What do you think? Will DePINs be the next big native of Web3 that extends beyond digital assets and decentralised finance, seeking to decentralise control of resources like computing power, wireless networks, and energy grids? Will this shift create more resilient, cost-effective, and community-driven alternatives to the centralised systems we depend on?
Do comment.
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