DePIN, acronym for ‘decentralized physical infrastructure networks’, represents a growing trend in the use of blockchain and decentralized technologies. This emerging concept in the blockchain world combines the digital forces of blockchain with tangible infrastructures, aiming to transform sectors traditionally dominated by centralized authorities.
Table of Contents:
What is DePin?
DePin applies decentralized technologies to the management and operation of physical systems and infrastructures. At its core, DePIN operates as a peer-to-peer (P2P) network where participants contribute physical resources such as data storage, wireless connectivity, sensors or energy networks.
In return, they receive rewards based on the network’s incentive structure. DePIN platforms allow the decentralized sharing and management of hardware and software resources between users, improving computing infrastructures such as storage, processing power, artificial intelligence services and multimedia streaming. The benefits include scalability, cost efficiency, and a wide range of services
.
Decentralized Alternative to Conventional Systems
A familiar centralized model is the ride-sharing service like Uber. In this model, drivers provide physical resources (vehicles) and services (driving), earning payments as the platform expands access to these services for a vast number of users. Instead, DePin represents a decentralized alternative to these systems. Pioneering projects such as Power Ledger and OpenBazaar have demonstrated the potential of blockchain to decentralize sectors such as energy distribution and e-commerce. Power Ledger allows individuals to exchange excess energy directly with each other, promoting a more efficient and sustainable energy grid. OpenBazaar allows direct interactions between buyers and sellers, eliminating intermediaries
from online transactions.
DePin in Numbers
DePin’s market capitalization has exceeded 32 billion dollars, surpassing that of Decentralized Exchange (DEX) tokens. The DePIN sector is one of the most profitable and robust in the blockchain industry, with more than 1.5 trillion dollars in annual on-chain revenues. The total market value of the sector is expected to reach at least 3.5 trillion dollars by 2028. In addition, DePin is estimated to add 10 trillion dollars to global GDP over the next decade, with the potential to reach 100 trillion
dollars in the following decade.
How Does DePin Work?
DePIN platforms usually divide users into two main groups: resource providers and resource consumers. Asset providers offer their computing power, storage capacity, or other hardware/software resources to the network and are compensated with cryptocurrency tokens. Resource consumers pay to use these resources, accessing them through the decentralized network with a flexible “pay-as-you-go” model.
The rewards system, which distributes crypto tokens to resource providers, creates strong incentives for individuals and organizations, including companies and startups, to increase their resource capacities and improve their service offerings on the network. This expansion is a crucial growth factor for industries that use DePIN platforms
.
For consumers, DePIN networks provide an affordable, adaptable, and diverse way to access computing resources that would otherwise be expensive or complex to obtain.
DePin’s Categories
DePins are divided into two main categories:
- Physical Resource Networks (PRN): Geographically centered networks where suppliers offer physical resources related to connectivity, mobility and energy. These resources are specific to certain locations and are not fungible.
- Digital Asset Networks (DRN): These include providers that offer fungible digital assets such as computing power, shared bandwidth, or storage capacity. These resources are not tied to a specific location.
DePin examples
Filecoin
Launched in 2014, Filecoin is one of DePin’s first projects. It works as a blockchain-based alternative to traditional centralized cloud storage services such as Google Cloud, offering competitive pricing through its decentralized marketplace and small
independent vendors.
Helium
Helium used blockchain to create a decentralized wireless network that compensates individuals for providing coverage and connectivity. This network includes subnetworks for LoRaWAN and 5G, allowing
for extensive wireless access.
Render Network
Render Network employs a decentralized GPU processing framework to provide near-real-time rendering services, responding to the growing demand for GPU power for 3D rendering tasks.
In summary, Decentralized Physical Infrastructure Networks (DePIN) represent a significant transformation in the way physical infrastructures are distributed and maintained. Using blockchain technology and cryptoeconomic protocols, DEPins offer a more efficient, decentralized, and equitable method for infrastructure development
.
DePins provide an alternative to centralized, subscription-based models, such as cloud storage and computing, dominated by TradFi corporations such as Microsoft and Amazon. In comparison, DePIN’s cryptocurrency-based infrastructure still has ample room for growth
.
DePIN isn’t just a buzzword; it has significant potential to design, build and manage infrastructure in a scalable and efficient way. With many underutilized physical infrastructures that can benefit from this technological integration, the prospects for DePIN look very promising
.
Cryptocurrencies are financial assets with high risk and volatility. Therefore, it is crucial that you conduct your research on financial instruments and make independent decisions. Before taking any action related to cryptocurrencies, you must study, understand, and comply with the laws applicable in your region and country.
