DePIN: An Indispensable Infrastructure for Web3

Decentralized Physical Infrastructure Networks (DePIN) are an innovative model for the deployment and maintenance of infrastructure. They are built in a decentralized manner by individuals and businesses from around the world, and anyone can participate. In return, contributors to these infrastructure nodes can receive economic compensation and token incentives. DePIN achieves a more efficient, decentralized, and fair method of infrastructure deployment by combining cryptographic technology, the internet, the Internet of Things, and blockchain.

The Importance of DePIN to Web3

Despite the thriving application scenarios of DeFi, gaming, NFTs, social networks, and physical assets developed on Layer 1 and Layer 2 in Web3, these applications still rely on centralized cloud services and data centers as internet infrastructure. This reliance has led to some issues, such as data loss due to cloud platform outages or certain projects being unable to obtain services due to regulatory restrictions.

The existence of DePIN can enhance the robustness and independence of Web3 projects. Although DePIN projects may not capture a significant market share and may not have performance advantages, their existence can ensure the normal operation of Web3 and crypto projects, strengthening their risk resistance.

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

1. Low participation cost: Utilize the collective resources of network participants to reduce management fees and expenses.
2. Network Robustness: Provide a more resilient and secure infrastructure to reduce the risk of single points of failure.
3. Open competition and innovation: The high capital and large-scale entry barriers of traditional infrastructure networks have been eliminated, benefiting the entry of small-scale new participants.

Features and Classification of DePIN

The industrial logic of DePIN includes the following key roles:

• Device providers: Provide physical device resources (such as GPU, CPU, memory, storage space, bandwidth, WiFi hotspots, etc.) and receive token rewards.
• DePIN Protocol: Build a distributed network, design token incentives for device providers, and charge network users.
• Network users: Access the DePIN protocol, use services and pay, usually cheaper than centralized infrastructure.

To ensure the stable development of this cycle, it is necessary to ensure that the token value is relatively stable and that the value of the DePIN protocol is well captured.

DePIN projects can be roughly divided into the following categories: decentralized storage, decentralized computing, CDN, VPN, WiFi, 5G networks, etc.

Most DePIN projects have three basic components:

1. Physical infrastructure: Built and maintained in the real world, forming a decentralized network.
2. Off-chain computing infrastructure: allows capturing and analyzing real-world data for calculating user contributions.
3. Blockchain and Tokens: As a tamper-proof ledger, device registry, task statistics, and scheduling platform, tokens are used for incentives and service pricing.

DePIN Project Case

decentralized storage network

A globally leading distributed storage network has over 3,800 storage providers, offering more than 17M TB of storage capacity. The vision of the network is to bring open and verifiable characteristics to the three core pillars of the data economy (storage, computing, and content distribution). Currently, the network has deployed over 1,100 smart contracts, with more than 80,000 wallet addresses interacting with dApps driven by these smart contracts.

Decentralized GPU Rendering Platform

A decentralized GPU rendering platform matches users who need to execute rendering jobs with users who have idle GPUs, used for distributed GPU computing in the 3D rendering and AI industries. In the first half of 2023, the platform matched over 4.6 million frames of rendering jobs, with an average cost of 20 dollars, offering a price advantage compared to many centralized platforms.

Decentralized Wireless Network Protocol

An open-source protocol incentivizes global users to collaboratively build wireless networks. The native cryptocurrency of this protocol can be used to generate data credits, which are crucial for transmitting device data. The protocol has deployed nearly 1 million hotspots in over 77,000 towns across 192 countries in just three years. Its 5G network is also rapidly growing, with the community deploying over 8,000 5G devices in less than a year.

Decentralized Live Video Broadcasting Platform

A certain platform provides developers with innovative freedom and offers creators platform autonomy. Through a cryptoeconomic protocol, it incentivizes nodes to contribute GPU and bandwidth in real-time video encoding and distribution services. Node operators can earn token rewards while transcoding videos using GPUs.

decentralized video streaming network

A decentralized video streaming platform based on blockchain technology incentivizes individual users to share excess computing power and bandwidth resources through tokens, serving as cache or relay nodes for video streams, thereby improving video stream quality and reducing video distribution costs. The platform consists of two complementary subsystems: the blockchain network provides payment, rewards, and smart contract functions, while the edge network is responsible for the storage and delivery of media assets.

Summary

DePIN is a sector that has been developing since the early days of the industry, with significant expansion in the past two years. According to research, the total potential market size of the DePIN industry is approximately $2.2 trillion, and it could reach around $3.5 trillion by 2028. Currently, the fully diluted valuation of all decentralized physical infrastructure projects is only $5 billion, indicating tremendous growth potential.