Decentralized Physical Infrastructure Networks is a promising new direction of blockchain development, solving real-world problems and showing how crypto can be valuable beyond digital finance.
This fast-growing area in crypto, DePIN, aims to use blockchain and crypto to manage real-world infrastructure, not unlike RPC node providers democratizing access to vital infrastructure but on a more global scale.
What is DePIN and how it works with crypto? Let’s explore.
How DePIN Changes Crypto Narrative: Highlights
DePIN is a recently established sector of the crypto space that wants to create a community-powered alternative for real-world infrastructure services.
- DePIN networks are made up of many devices (nodes) like phones, computers, or other equipment owned by individual users.
- These networks may reduce the reliance on centralized service providers (like cloud service providers, telecom companies, or energy utilities) by pooling resources from potentially millions of people.
- They are integrating blockchain solutions, e.g. issuing DePIN coins to reward participation.
DePIN networks connect tangible, physical services that people use daily which can help make blockchain’s role practical and visible for the general public.
What is DePIN?
DePIN, meaning Decentralized Physical Infrastructure Networks, is a term describing Web3 projects that use blockchain as a foundational layer to connect real-world infrastructure – such as energy grids, internet and mobile services, or public transportation.
While the term is new, it describes an idea that has been around for a while: community-based networks or systems where people share resources directly.
One example is peer-to-peer networks, file-sharing systems like IPFS and Filecoin that adds blockchain and token incentives to this model.
Another OG player is IoTeX, launched back in 2017, with a vision of connecting real-world IoT devices directly to the blockchain. IoTeX initially branded this idea as MachineFi until late 2022, when Messari noticed the growth in blockchain-based infrastructure projects and gave this movement a formal name.
DePIN: A New Rapidly Growing Crypto Sector
In the first half of 2024, DePIN was one of the top-performing sectors. While it trailed behind memecoins, RWAs (Real World Assets), and AI, DePIN outperformed other key sectors like Layer 1s, GameFi, DeFi, and Layer 2s.
Crypto Sector Performance by Category; Source: Artemis
As of now, DePIN continues to rank among the leading sectors, with overall marklet capitalization exceeding $20 billion, according to DePINscan.
How does DePIN work?
DePIN projects work on creating a global, user-powered network by connecting devices and using their collective resources to perform the work that would otherwise be done by centralized companies.
These networks rely on the following elements:
Decentralized infrastructure providers (Supply side).
These are individuals or organizations that provide the physical or digital resources needed to run the DePIN network. This could include anything from compute resources to telecommunications equipment. Each user shares a small amount adding up to create a powerful network.Consumers (Demand side).
Individuals or companies that access these services directly through the network, essentially buying access to this infrastructure.Blockchain.
Blockchain technology provides a way to record participation and track ownership securely and transparently. Smart contracts automate payments and resource allocations so that the system can operate without the need for intermediaries.Token-based incentives.
DePIN projects and companies use cryptocurrency to reward providers and attract them to join their networks. These tokens can also be traded giving participants a financial interest in the network’s success. Consumers can pay with these tokens for services, though they may not even be aware that crypto powers the system in the background.
To summarize, DePIN makes it easier for people to connect directly with resource providers making it less expensive. Meanwhile, it uses blockchain technology to establish trust and transparency through code instead of relying on legal contracts.
DePIN Project Types
At a high level, DePIN projects can be categorized into three major groups:
- Physical Resource Networks
- Digital Resource Networks or Virtual Infrastructure Networks (DeVIN)
- DePIN-specific blockchains
Source: peaq
Let’s explore the use cases of each.
1. Physical Resource/Infrastructure Networks
These networks utilize user-owned devices like solar panels, batteries, sensors, dashboard cameras, or connectivity hotspots.
Participants earn rewards for using their equipment to offer various services:
| Use case | Description | Project Examples |
|---|---|---|
| Energy | Sharing power generated from virtual power plants/grids | Glow, Starpower |
| Data | Collecting and sharing information about the environment like weather data, street view, etc. | Hivemapper, GEODNET, DIMO, WeatherXM, Silencio |
| Mobile & Internet connectivity | Providing wireless internet and mobile coverage | Helium, DAWN |
The value of these services is often tied to their specific locations. For example, a solar panel's energy output depends on its geographic position and local conditions.
Helium is often considered a pioneer in this sector, introducing a whitepaper for a new model of wireless networks back in 2018.
2. Digital Resource Networks or Virtual Infrastructure Networks (DeVIN).
The next type of projects in DePIN create decentralized networks by connecting digital resources from participants. Users can contribute processing power, storage, or bandwidth from their devices to the network.
These pooled resources can be used for various high-demand applications, for example:
- Cloud computing and decentralized storage services (Akash, Filecoin, Arweave);
- Processing power to train AI and Machine Learning models (IO.NET, Bittensor);
- Collecting data to feed into AI models or other applications that require large datasets (Grass, The Graph);
- Gaming, e.g. pixel streaming where high-end games are processed and streamed from powerful machines to lower-end computers (YOM);
- Rendering tasks (LivePeer, Render).
Contributors can be individual hardware or even mining rig owners and bigger data centers that have the leftover capacity to share.
3. DePIN Blockchains
Decentralized Physical Infrastructure Networks often require high-performance blockchain for smooth operation to process a large volume of small, frequent, and real-time transactions.
With microtransactions involved, the blockchain also needs to be cost-effective. Security is not less important since DePIN projects often provide critical services.
Therefore, some of the leading blockchain platforms for some of the best DePIN crypto projects currently are:
- Solana
- Polygon
- Ethereum
- Base
- Ton
Solana has become a go-to blockchain platform in the DePIN space, particularly after Helium migrated to Solana from its own blockchain in 2023, attracted by its performance and cost-efficiency.
In addition, some blockchains launch specifically designed to support DePIN projects:
- IoTeX
- peaq
These are Layer-1 platforms with features tailored to the new sector including toolkits that simplify creating and managing decentralized physical infrastructure networks, RWA integration, AI integration, and modular infrastructure.
To build and deploy applications across networks with high reliability, it's crucial to have access to the right tools. GetBlock offers time-tested low-latency RPC services for over 50 blockchains, including Solana, Ethereum, and Polygon.
Sign up to GetBlock today and access reliable nodes and ensure your project has the infrastructure it needs for success.
Top DePIN Crypto Projects
According to some rough estimations, there are currently over 1,300 projects falling under the DePIN category.
Below is the list of top projects and cryptocurrencies by market cap:
Source: Messari
Yet, rather than dissecting the best DePIN crypto, let’s take a quick look at some notable players from major subsectors to understand how it works.
Helium (HNT)
Helium is a decentralized wireless network powered by the Solana blockchain. It offers two main products for different kinds of wireless connectivity: IoT (Internet of Things) and 5G mobile hotspots.
Individuals can set up one of these hotspots and earn IOT and MOBILE tokens for their contribution that can be exchanged for HNT, the network's main token.
While the IoT network is the original product, the company launched Helium Mobile in December 2023. It is a cellphone plan for $20/month that offers far more affordable costs for mobile users compared to traditional ISPs.
Helium Hotspot Map; Source: Helium Explorer
Helium's network has grown significantly, with currently over 18,000 mobile and 355,000 IoT hotspots worldwide.
Filecoin (FIL)
Filecoin was created by Protocol Labs in 2017 focused on decentralized storage, where anyone could rent out unused computer storage space and be paid in tokens. While Filecoin didn’t initially call itself DePIN, its model fits perfectly with the concept.
Source: Filecoin
The Filecoin Virtual Machine (FVM) is a new feature that allows developers to create smart contracts that interact with its data storage.
IO.NET (IO)
IO.NET connects and pools together GPUs from different sources, such as unused or underused hardware in data centers or personal machines, allowing participants to rent out and access these resources as needed.
Source: IO.NET
The platform supports aggregating GPUs into Ray and Kubernetes clusters traditionally used to scale machine learning tasks. This makes it suitable for handling the enormous computing demands of modern AI projects.
Its IO is a Solana-based DePIN coin used as a medium of exchange within the system.
In general, the project makes it easier and more affordable for engineers and startups to access powerful computing resources.
Hivemapper (HONEY)
Hivemapper is a decentralized mapping network built on Solana that aims to create a product similar to Google Street View, but in a decentralized way.
Source: Bee Maps
People install a Hivemapper dashcam in their vehicles to capture video footage of the streets they drive through. This data is used to update and build a global map of city streets, buildings, and other geographic data. Participants are rewarded with the project’s underlying HONEY tokens for their effort.
Grass
Grass is another Solana DePIN project on our list, launched in 2023. It develops software collecting data from across the public web, using a network of over 2 million connected devices or nodes.
People share their unused internet bandwidth by installing a browser extension. This networked bandwidth can then be accessed by vetted companies and allows for large-scale web scraping, gathering data for AI models and other applications.
AI: The Top DePIN Use Case
The explosive growth of AI is driving an enormous demand for computational power, especially machine-learning-capable compute hardware (GPU, TPU, CPU). Although used for many other things, AI is the main reason people are talking about this shortage right now.
DePIN’s popularity can also be attributed to the fact that it brings all these resources together to fix the shortage. Additionally, with Decentralized Physical Infrastructure Networks, even small startups can get access to the computer power they need at a fair market price and compete in the AI space.
DePIN Benefits
DePIN is competing with well-established infrastructure that people and businesses already trust and rely on.
Therefore, it comes with advantages that may be key to convincing users that decentralized infrastructure offers real, practical value:
Open access and participation: Anyone with the right equipment can join a DePIN network. This means greater access, especially in underserved areas. People globally can invest in and benefit from infrastructure projects.
Speed and scalability: These networks can expand almost infinitely simply by adding more devices and users in new areas. As it grows, it gets more efficient and redundant – the concept of ‘DePIN Flywheel’.
Resiliency: The redundancy makes the network more stable: if one device goes offline, others can take over, improving reliability as it grows.
Transparency: All transactions are recorded on a public blockchain, making it easy to track funds and how resources are used.
Lower costs: Without big companies acting as middlemen, consumers often get lower costs and can access services even in areas where traditional providers don’t operate.
Source: Messari
The value proposition of the new sector is tangible. Messari’s research from July 2023 shows that decentralized networks offer a massive reduction in costs compared to traditional centralized providers across various industries.
Are There Any Trade-Offs?
Naturally, decentralized networks must balance some challenges to grow sustainably.
One primary challenge is these networks operate internationally, meaning they should meet different regulatory requirements, which could complicate scaling and integration.
Additionally, building and deploying DePIN systems is complex and demands specialized expertise both in blockchain technology and physical infrastructure. Ensuring security is also a part of the challenge.
Finally, these networks are sensitive to the high volatility of cryptocurrencies. Many of DePIN projects rely on cryptocurrencies, meaning fluctuating token values can affect their stability.
Conclusion
Until recently, use cases of blockchain have been limited to crypto payments, memecoins, and DeFi, at least in the understanding of the general public.
DePIN may change the narrative and pull more people into the space. It is yet to prove it can solve real-world problems or do things more efficiently than traditional systems. Yet, the market cap grows, based on innovation and promise.
