DePIN Will Be A Crucial Crypto Investment This Decade
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The emergence of blockchain technology has brought about significant transformations across various sectors, including finance (DeFi), gaming (GameFi), and Web2 brands like Nike in digital fashion and Starbucks in Web3 customer loyalty. Despite these advancements, the physical infrastructure sector has largely remained unaffected.
Conventionally, the implementation and administration of physical infrastructure, including telecommunications networks, cloud services, mobility networks, and power grids, have been primarily controlled by major corporations, as they possess the necessary financial resources and are equipped to handle the associated logistical hurdles.Until the emergence of blockchain and Web3, these corporations had a dominant market position that enabled them to control pricing, terms, and services available to customers, stifling competition and innovation.DeFi, GameFi, SocialFi, and DAOs are well-known concepts to many. However, there is a rising use case called DePIN (Decentralized Physical Infrastructure Networks) that has gained real-world exposure. DePIN employs tokens to facilitate the deployment of physical infrastructure and generates a network effect that unleashes the potential for innovative real-world-based DApps.DePINs represent a new crypto trend that utilizes blockchain technology to construct and manage physical infrastructure and hardware networks in the real world without the need for permission, trust, or manual intervention.DePINs are considered by some as the next iteration of the Internet of Things (IoT) within the Web3 ecosystem, representing a decentralized IoT in which device users, businesses, and individual users collectively own and monetize. They empower individuals worldwide to create, maintain and operate decentralized physical infrastructure networks that are not controlled by a single central authority.DePINs motivate suppliers to construct the network by utilizing crypto-economic protocols that provide end-users with more affordable and inventive services compared to traditional models.In November 2021, IoTeX was the first Web3 project to coin the term "MachineFi" for this emerging economy, while in July 2022, Messari became the first to refer to it as "DePIN."
In the same month, the term "Token Incentivized Physical Infrastructure Networks" or TIPINs also emerged. TIPIN refers to a network that leverages token incentives to encourage individuals to participate in the construction and management of physical infrastructure and hardware networks, resulting in a more efficient and fair system for deploying infrastructure.In August 2022, "Proof of Physical Work" or PoPW emerged, which pertains to incentive systems that enable anyone to contribute to a shared goal without the need for permission. For instance, Helium enables its users to participate in constructing decentralized wireless networks by deploying hotspots that provide a secure, low-cost, and energy-efficient method for people to connect smart devices.Figure 01. The DePIN network's flywheel. Source: IoTeX
Another instance is Hivemapper, which claims to be a decentralized map constructed by individuals utilizing the world's initial crypto-enabled dashcam. Additionally, DIMO is a DePIN platform owned by users that enables them to optimize the worth of their interconnected devices, beginning with automobiles.
Moreover, HealthBlocks utilizes blockchain and token incentives to create a more effective and patient-focused healthcare system by providing a secure platform for health data sharing and coordination.Furthermore, there are DePIN infrastructure providers like IoTeX that provide centralized infrastructure, such as W3bstream, along with developer tools and assistance in launching projects to facilitate decentralized infrastructure networks.Figure 02. The array of DePIN projects that cater to consumers. Source: IoTeX
EdgeFi emerged in September 2022 as a type of decentralized infrastructure network that emphasizes the deployment of hardware resources nearer to end-users at the network's edge, making it a decentralized infrastructure network that gives priority to edge computing.
In November 2022, Messari felt the need to name Web3 physical infrastructure and conducted a Twitter poll where participants had to pick from PoPW, TIPIN, EdgeFi, and DePIN, excluding MachineFi. DePIN won with 31.6% of the votes, which amounted to 136 votes.***1588938954807869440***
In December 2022, Messari mentioned DePIN in their research for the first time, declaring that it would "be one of the most important areas of crypto investment for the next decade."
Figure 03: DePIN’s Mechanism of Action
DePINs leverage blockchain technology and crypto-economic protocols to allow individuals worldwide to collaboratively construct, maintain, and manage physical networks in a trustless, permissionless, and programmatic way. The four primary elements of DePINs are:
Considering that there are presently over 40 billion smart devices and machines, along with trillions of sensors deployed globally, the prospects for DePIN are promising. With the increasing demand for decentralized infrastructure, more and more individuals and businesses will turn to DePIN to construct their networks.
By using blockchain technology and token incentives, DePIN provides a more effective, economical, and collaborative ownership approach to redefine how we create physical infrastructure networks in the future.DePINs embody a thrilling new realm in the realm of blockchain technology. They provide a novel means of constructing and managing real-world infrastructure that is more fair, effective, and consistent with the interests of network participants. With the evolution of technology and the emergence of new use cases, we can anticipate DePINs to play a more and more critical role in shaping our physical world.DePIN represents a transformation in the implementation and management of physical infrastructure, enabling a more efficient, decentralized, and fair approach to infrastructure deployment.
With the capacity to expand quickly and transform traditional industries, DePIN has the potential to become a significant participant in the infrastructure sector. As more DePIN projects are established and put into operation, we anticipate considerable disruption and innovation in the manner in which we create and uphold physical infrastructure networks.