The Present and Future of Decentralized Physical Infrastructure Networks

Introduction

The Internet, as a symbol of globalization, actually originated during the Cold War. In 1969, the U.S. military developed the distributed network "ARPANET" to avoid single points of failure in response to nuclear strikes. However, for 55 years, from Web1 to Web2, the waves of commercialization and globalization have spawned centralized architectures, which are contrary to the original intention. Web2 giants control the online world, holding immense influence and rights over value distribution.

In recent years, Web3 has emerged, but decentralized applications alone cannot solve fundamental issues. The key is how to transform the underlying technology stack of the internet to disrupt the efficiency and security problems caused by centralized Web2. DePIN provides a new idea: by combining the financial attributes and incentive mechanisms of Web3, it constructs an efficient P2P physical resource network, creating a "decentralized physical network infrastructure", achieving the "DePIN+" upgrade, and building a new internet architecture.

AI has exploded in Web3, witnessing the expansion of blockchain applications from on-chain to the real world, such as RWA, AI, and DePIN. The DePIN narrative means that the boundaries between physical reality and the blockchain world are becoming blurred. Next, let's explore the current state and future of DePIN.

DePIN Overview

What is DePIN?

DePIN( Decentralization Physical Infrastructure Network) 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 incentives" bilateral market through the combination of hardware and blockchain, which is more flexible, scalable, and robust than traditional resource management.

The complete DePIN network includes project parties, off-chain devices, suppliers, and demanders, and the basic operating model is divided into five steps:

1. Off-chain hardware devices: Provided or required by the project party, including customized dedicated hardware, professional-grade hardware, and smart mobile devices.

2. Proof: Physical device data on-chain, providing transparent and auditable operational records.

3. Identity Verification: Verify the on-chain address of the device owner.

4. Reward Distribution: The token rewards will be distributed to the verification address.

5. Demand Matching: The DePIN market platform allows both supply and demand sides to exchange resources and provides real-time data.

Why is DePIN needed?

Traditional physical infrastructure networks are dominated by large companies, leading to issues such as centralization control, high entry barriers, resource waste, and insufficient incentives. The core values of DePIN include:

• Resource Sharing and Digitalization
• Decentralization governance
• On-chain settlement
• Innovation

Current Status of DePIN Development

Early DePIN projects focused on storage and communication, and have now expanded to areas such as computing power, data, wireless, sensors, and energy. AI is the key word of this cycle, with a number of AI DePIN projects emerging.

Currently, there are 1,561 DePIN projects online, with a total market value of approximately 22 billion USD. Messari predicts that the DePIN market size could reach 3.5 trillion USD by 2028. The projects are mainly deployed on public chains such as Solana, IoTex, and Peaq, with Polygon and Arbitrum being latecomers.

The DePIN project is divided into two directions: middleware and demand-side expansion.

DePIN Middleware

DePIN middleware aims to connect devices and networks, helping to quickly launch application projects. Including:

• DePHY: Provides open-source hardware solutions, SDKs, and tools
• W3bStream: Allows IoTeX DePIN projects to generate logic based on device data
• PINGPONG: DePIN Liquidity and Service Aggregator
• Parasail: A re-staking protocol specifically designed for DePIN services

DePIN application layer

It is mainly divided into four major sectors: cloud network, wireless network, sensors, and energy.

Cloud Network

Including Decentralization storage and computing.

Storage: Filecoin is based on IPFS technology, and Arweave provides permanent storage solutions.

Computing Power: Render Network provides Decentralization GPU rendering, io.net offers efficient collaboration with distributed GPUs, and PinGo addresses the issue of idle computing power.

Wireless Network

Including 5G, WiFi, Bluetooth, LoRaWAN, etc. Representative projects include Pollen Mobile, Wicrypt, Helium, etc.

Sensor

Mainly monitor data such as environment, geographical location, health, etc. For example, WiHi is used for weather forecasting, and HiveMapper collects map data.

Energy

For example, Starpower creates decentralized virtual power plants, Powerpod establishes a network of community charging stations, and Arkreen builds applications for renewable energy data.

Future Trends of DePIN

• Integration with Web2 application scenarios
• Hardware threshold lowered
• Financialization
• Mutual feeding with AI

Challenges faced by DePIN

• The technical implementation is complex.
• Market acceptance is unclear.
• The profit model is uncertain.
• Potential regulatory risks

DePIN Project Evaluation Factors

• Hardware: homemade vs third-party, one-time vs ongoing costs, high density vs low density, scarce vs common
• Tokenomics design: BME and SFA, token empowerment mechanism

Summary

DePIN builds a distributed bilateral market through Web3 and token economics, integrating global idle resources to address issues of resource monopoly and distribution efficiency. Despite facing challenges, with technological maturity and market acceptance, DePIN is expected to usher in large-scale applications, reshaping internet infrastructure.