The Rise of Decentralized Physical Infrastructure Networks: Exploring the Current State and Prospects of DePIN

Introduction

The Internet, as a hallmark technology of globalization, actually originated from military needs during the Cold War. In 1969, the U.S. military developed a prototype network called "ARPANET" to counter possible nuclear strikes, which could avoid single points of failure and had self-recovery capabilities. This network adopted a decentralized, fully distributed architecture, embodying the concept of "end-to-end connectivity."

However, over the past 50 years, the development from Web1 to Web2 has driven the internet to gradually evolve into a centralized architecture of "terminal connecting to server" due to the waves of commercialization and globalization. Web2 giants have gained control over the online world and the rights to value distribution through platform monopolies.

In recent years, the Web3 trend has emerged, advocating for Decentralization and de-platforming. However, relying solely on application-level Decentralization is insufficient to resolve fundamental contradictions, as issues such as efficiency bottlenecks and security risks still exist. The key to solving these problems lies in fundamentally restructuring the internet architecture from the underlying technology stack.

In this context, DePIN( decentralized physical infrastructure network) offers a new approach: by combining the financial attributes and incentive mechanisms of Web3, we can build an efficient P2P physical resource network, create a decentralized physical network infrastructure, and endow the network with programmable capabilities, achieving an upgrade of "DePIN+" to construct a brand new internet architecture.

At the same time, the explosion of AI in the Web3 field has witnessed the expansion of blockchain applications from on-chain activities to the real world, such as RWA, AI, and DePIN. The rise of DePIN signifies that the boundaries between the physical world and the blockchain world are gradually blurring. Next, we will delve into the current status and future development of DePIN.

DePIN Overview: Definition and Significance

Definition of DePIN

DePIN( Decentralization Physical Infrastructure Network) is a model that combines physical infrastructure resources with blockchain technology, coordinating global resource collaboration through distributed ledgers, token incentives, and smart contracts.

In short, DePIN creates a "resource sharing + economic incentive" bilateral market by combining hardware with blockchain. This community-driven model is more flexible than traditional centralized resource management, and it also has greater scalability and robustness.

The basic operating model of DePIN

A complete DePIN network usually consists of the following parts:

1. Off-chain physical devices: can be divided into customized dedicated hardware, professional-grade hardware, and smart mobile devices, etc.

2. Proof Mechanism: Verify the device's workload through physical work proof ( PoPW ) and other methods.

3. Identity Verification: Use public and private keys to authenticate the device owner.

4. Reward distribution: Distribute rewards to contributors based on the token economics model.

5. Demand Matching: Achieving the exchange and matching of resources through the market platform.

The significance of DePIN

Compared to traditional centralized physical infrastructure networks, DePIN has the following advantages:

• Resource sharing and digitization: transforming idle physical resources into tradable digital assets
• Decentralization governance: Achieving fair and transparent incentives based on open protocols and cryptoeconomic models
• On-chain settlement: Reducing transaction costs through blockchain
• Innovation: Open and permissionless systems accelerate experimentation and innovation speed

Current Status of DePIN Development

Main Track

The DePIN project mainly focuses on storage, computing power, data collection and sharing, wireless communication, sensors, energy, and other fields. Among them, projects in the storage and computing power sectors rank at the top in market capitalization.

AI is the keyword in the current DePIN field, with a number of projects emerging that are dedicated to providing underlying infrastructure support for AI.

Market Size

According to DePIN Ninja data, there are currently 1,561 DePIN projects launched, with a total market value of approximately $22 billion. Messari predicts that by 2028, the DePIN market size could exceed $35 trillion.

Main Public Chain

The current DePIN projects are mainly deployed on public chains such as Solana, IoTex, and Peaq. Polygon and Arbitrum are also gradually becoming new popular choices.

Development Direction

Currently, DePIN projects are mainly divided into two directions: one focuses on the middleware of DePIN; the other focuses on the expansion of the demand side of DePIN.

DePIN Middle Layer

DePIN Infrastructure

• DePHY: Provides open-source hardware solutions, SDKs, and tools for DePIN projects.
• W3bStream: IoTeX's off-chain computing protocol that supports on-chain operations triggered by smart device data.

Liquidity Plan

• PINGPONG: DePIN Liquidity and Service Aggregator
• Parasail: A re-staking protocol specifically designed for DePIN services

DePIN Application Layer

Cloud Network

Storage

• Filecoin: Decentralization storage network based on IPFS technology
• Arweave: Provides permanent storage solutions

Computing Power

• Render Network: Provides Decentralization GPU rendering services
• io.net: Provides a complete product architecture for efficient collaboration of distributed GPUs.
• PinGo: An AI and DePIN project on the TON network, aimed at solving the problem of idle computing power resources.

Wireless Network

• Cellular 5G: such as Pollen Mobile, building a decentralized 5G network
• WiFi: such as Wicrypt, Metablox(Roam), etc.
• LoRaWAN: such as Helium, provides low-cost communication services for IoT devices.
• Bluetooth: enabling short-range data transmission

Sensor

• Environmental Monitoring: Such as WiHi, providing weather forecast data
• Geographic Information: Such as HiveMapper, collects map data through onboard cameras.

Energy

• Starpower: Create a Decentralization Virtual Power Plant ( VPP )
• Powerpod: Build a Decentralization Community Charging Station Network
• Arkreen: Incentive providers provide renewable energy data

Future Trends of DePIN

1. Deep integration with Web2 application scenarios

2. The hardware threshold is lowered, transitioning to consumer-grade products

3. Financialization: Staking liquidity pools, asset securitization, data asset financialization, etc.

4. The Symbiotic Development of DePIN and AI

Challenges Facing DePIN

1. The complexity of technical implementation

2. The market acceptance needs to be improved.

3. Uncertainty of Profit Model

4. Potential Regulatory Risks

Factors for Assessing the Potential of DePIN Projects

1. Hardware Strategy: In-house vs Third-party, One-time vs Ongoing Costs, High Density vs Low Density, etc.

2. Token Economics Design: BME vs SFA, Token Empowerment, etc.

Summary

DePIN, through the combination of Web3 and token economics, builds a distributed bilateral market that is expected to reshape production relations and unleash productivity. It integrates global idle resources, improves resource allocation efficiency, and enhances infrastructure resilience.

Although DePIN shows great potential, it still faces challenges from various aspects such as technology, market, and regulation. The future development of DePIN requires continuous accumulation and seizing opportunities in order to achieve breakthrough progress.