作宇：Yilan, Lisa

1. Breaking the circle on the DePin track on the eve of old money entering the market

DePin is the abbreviation of Decentralized Physical Infrastructure Networks. At the end of 2021, IOTEX called this track MachineFi. At the end of 2022, Messari first introduced the new concept of DePIN and said it is one of the most critical crypto investment tracks in the next decade. In the next decade, we can expect traditional institutions to inject incremental funds. The intervention of traditional funds will subvert the previous preference for full on-chain economic speculation around crypto-native applications and turn to investment opportunities with more off-chain logic and real impact. The importance and investment potential of DePin in the development of cryptocurrencies fits the need to find new narrative funds in the crypto world.

The core concept of DePin is to use tokens to motivate users to deploy hardware devices to provide real-world goods and services or digital resources. DePIN can be understood as two parts: physical resource networks and digital resource networks. Physical Resource Networks (PRN) means that users provide WiFi, 5G, VPN, geospatial data, information sharing and other services through hardware distributed in various places; Digital Resource Networks (DRN) means the physical infrastructure network that provides digital resources through hardware facilities, including broadband networks, storage networks and computing power networks.

Simply put, DEPIN uses hardware to provide resources that may involve software, bandwidth, computing power, etc., to incentivize real-world services that originally require centralized management with tokens, and to make heavy asset services lightweight with more flexible and decentralized node deployment, decentralize and solve the problem of cold start of projects. In the early bootstrap stage, DePIN adopts a spiraling dynamic mechanism, allowing users, providers and platforms to participate with relatively small risks, but the participation of hardware means that the DePIN project needs sufficient upfront capital support to ensure the wide reach of hardware, thereby establishing a strong network coverage. At the same time, off-chain and on-chain marketing strategies need to keep up at the same time, and the full combination of these elements can lay a solid foundation for the success of a DePIN project.

2. DePin on Solana: The strongest ecosystem and the strongest narrative double buff

DePins on SOL are arranged from small to large by market value, namely HONEY (Hivemapper), IOT (Helium IOT), Helium Mobile (Helium Mobile), HNT (Helium Network) and RNDR (Render Network), representing the specific software applications (decentralized maps, IOT services, 5G services) of the DePin sector, IoT infrastructure (decentralized wireless and 5G service platforms), and peer-to-peer rendering computing power matching AI platforms and other sub-tracks. Among the storage (also considered Depin) related projects, Arweave is a project that is deeply bound to the Solana ecosystem, because most of Solana's NFTs are stored in Arweave. The following article focuses on Honey, DIMO and Helium and Mobile of the Helium ecosystem.

2.1 HONEY(Hivemapper)

On Solana, Honey (Hivemapper) is a small-cap DePin track Alpha with strong investment background and project endorsement.

Hivemapper is a blockchain-based mapping network that creates a decentralized global map that rewards contributors. Contributors can collect data by installing Hivemapper's dashcam and earn Native Token HONEY as a reward. In Hivemapper's setting, dashcams are equivalent to "miners". Natively integrate with the Hivemapper network through a seamless mobile application, and put mapping on autopilot and upload automatically. Install the Hivemapper dashcam and you can mine HONEY token rewards while driving, while collecting 4K street-level images and mapping the world.

The behavioral incentive goal designed by the project is to obtain better map data. The quality, timeliness and urban density of uploaded data have become the dimensions for judging incentive rewards. In terms of quality, the Hivemapper project has created a reputation score driven by the quality of uploaded data. When users install cameras outside the car to capture higher-quality images, they can get a higher reputation score. At the same time, the rewards received by users are linked to their reputation scores. The higher the rolling average of their reputation, the higher the rewards.

Timeliness is about making sure that street information is up to date. The project created what is called a freshness score. They essentially created a function that increases with the time interval, assuming that no one has collected data for a whole year, the next person who tries and uploads new data will get a higher multiplier. This promotes the timely update of map data.

In terms of data density, the project team hopes that the map nodes will be more densely distributed in several major cities, so there is a huge bonus reward system in the selected 35 cities, giving these places a higher reward weight.

Source:Hivemapper

In terms of financing and project background, Hivemapper received $18 million in Series A financing last year, which was led by Multicoin Capital, with participation from Craft Ventures, Solana Capital, Shine Capital, Spencer Spencer Rascoffs 75 and Sunny Ventures. The previous round was invested by Spark Capital, Founder Collective and Homebrew. Hivemapper has raised a total of $23 million. Amir Haleem, CEO and founder of Helium, joined the project's board of directors.

In terms of token distribution, Honey's release rules are very similar to Helium. The maximum supply of HONEY tokens is 10 billion, which is a fixed upper limit. The initial distribution is as follows:

The Hivemapper network has begun minting and distributing 4 billion HONEY tokens as rewards for contributors. The exact number of tokens minted each week is determined by the global map progress. The current circulation increases by about 1.6mln Honey in 1 day.

2.1 GOD

DIMO and Hivemapper belong to the same Drive to earn track and is one of Hivemapper's competitors.

Compared with Hivemapper, which also uses the Internet of Vehicles as its application scenario, DIMO is designed to better meet user needs. By incentivizing decentralized access to driving data ownership, it facilitates data collection and use on the C-end (rewarding car owners and meeting needs such as automatic parking/automatic parking space search. The in-vehicle data collected and shared by car owners can be used in more scenarios), while Hivemapper tends to be a B-end product (providing more detailed maps for car companies/related service providers).

The business logic behind this is that the Internet of Vehicles track is backed by a huge market with an overall profit of 450 billion to 700 billion US dollars (by 2023) for the monetization of global automobile data. DIMO connects cars and drivers to tokenize car driving data, cutting into the data production supply chain of 250 million connected cars worldwide, making users the beneficiaries of driving data profits.

In terms of usage data, Hivemapper and DIMO are close in terms of the number of users, but DIMO is smaller in terms of FDV. DIMO is an ERC-20 token on the Polygon and Ethereum blockchains. The project endorsement is slightly inferior and the ecosystem is not in the hot spot, so DIMO started to discover value later than Honey.

Source: LD Capital

In terms of token distribution, the total supply of DIMO is 1 billion, with baseline rewards accounting for 38%. 380 million DIMO will be distributed over 40 years. In the first year, 1,105,000 DIMO will be issued to users every week. The mining rewards obtained by each user are distributed according to the rules in the figure below, and the issuance volume decreases by 15% each year; the Dimo ​​treasury accounts for 22%, and teams and individuals who contribute to the network may receive $DIMO in the form of bounties or grants; the team accounts for 22%, and the token allocation will be locked for two years, and then unlocked linearly every month until all are unlocked after three years; investors account for 8%, and the token allocation will be locked for two years, and then unlocked linearly every month until all are unlocked after three years; airdrops account for 7%;

Source😀IMO

There are currently 194mln in circulation (including 70mln airdropped, 57mln distributed as baseline rewards, and 67mln allocated to the treasury). The initial airdrop is actually a large-scale distribution of baseline rewards (understood as mining income) (70mln), with 382,491,185$DIMO remaining. The pool will be distributed over 40 years, with 1,00,1050$DIMO issued to users every week in the first year, and 15% reduced each year. From the perspective of the chip structure, it is relatively good.

2.1 Helium

Helium is a centralized wireless network project (distributed Internet of Things). Founded in 2013, it is a pioneer in the DePIN track. As the purest DePin project in the Solana ecosystem, Helium's ecological network is the most mature and stronger than other IOT ecosystems. With the support of Helium, its ecological project MOBILE has gained tenfold in seven days.

HNT is the main economic asset in the Helium ecosystem, and the only way to pay for network data transmission is to burn HNT. Helium's revenue has reached 9k USD/day as the price of HNT has increased, but it is still in a state of insufficient demand. This may be one of the reasons why Helium vigorously promotes its sub-DAOs. More sub-DAOs have a driving effect on the price of HNT. The second phase of HIP 51 implements the Helium DAO, which oversees and maintains each sub-DAO, and as more sub-DAOs emerge (currently there are only IOT subDAO and 5G subDAO), there will be more competition between protocols for a fixed amount of HNT generated each day (HNT currently releases a net 1.23 million HNT per month, 40,000 per day).

Helium solves the problem of high capital threshold in the IOT network market (mobile operators such as China Mobile and China Unicom) by combining web3 technology with IoT networks. By expanding 5G services, it aims to improve the pain point that WI-FI and centralized operators cannot efficiently cover the signals in the middle area. Through the participation of everyone, the heavy cost of the initial IoT construction can be shared by each user, thus achieving a lightweight start. At present, some indoor and outdoor positioning devices and smart farms such as Abeeway and Agulus have begun to adopt Helium. T-Mobile began to cooperate with Helium Mobile last year.

The Helium network and its associated tokens are based on a Proof of Coverage (PoC) mechanism, which is fundamentally different from Proof of Work (PoW). Unlike GPU mining, which requires a lot of energy, Helium hotspots only require as much energy as a 12-watt LED bulb to operate. The biggest cost borne by miners is the one-time cost of purchasing hardware.

The specific process of hotspot mining is that miners purchase special LoRaWAN routers, such as Bobcat 300, place them on rooftops or balconies, and then maintain the network. Miners will receive HNT tokens in return. These tokens will automatically appear in the Helium App, which is connected to the mining machine. The PoC constantly checks whether the hotspot is actually located at the location it provides and whether a wireless network is generated to cover the location.

Development Status

The two current sub-DAOs represent a narrowband network for IOT devices (Helium IOT) and a 5G hotspot network compatible with HNT miners (Helium Mobile).

Source:Swissborg

In terms of 5G, although Helium's development is constrained by the dual dilemma of compliance and market ceiling, the cooperation between Helium Mobile and T-mobile is helping Helium Mobile to truly move towards mass adoption. The shift to the high-performance public chain Solana highlights that Solana has become a fertile ground for the development of the DePin project.

In terms of compliance, the allocation and licensing of frequency bands in the United States are strictly regulated by the Federal Communications Commission (FCC). T-Mobile, which has been authorized, uses the 600MHz band to deploy 5G, and Verizon uses the 700MHz band to deploy 5G. As a latecomer, in order to reduce deployment costs and solve compliance problems, Helium chose the unlicensed CBRS GAA band. Compared with the mid-band, the coverage is slightly smaller and does not show a clear advantage over US operators.

In terms of the market ceiling, 5G is a field that is strictly regulated by national policies. Network operators in most countries around the world are state-owned enterprises, and only a few are private enterprises with close ties to the state. Therefore, from the perspective of the international market, it is difficult for Helium to replicate the 5G market experience in the United States overseas.

The strategic layout of migrating to Solana began in March this year, when Helium migrated from its own Layer1 blockchain to Solana. The main reason for choosing Solana is that Solana's latest state compression function can mint a large number of NFTs at a very low cost, allowing Helium to migrate nearly 1 million NFTs to Solana at a casting cost of only $113, saving a lot of costs. These NFTs can serve as Helium's network credentials and verify hotspots. They can also integrate the functions of the entire ecosystem, including token gating and access rights for hotspot owners, which is very efficient and convenient. Second, there is also a lot of room for cooperation with Helium in projects such as Solana Mobile Stack and Saga Mobile Phone that Solana wants to launch. It is a win-win situation for Solana, which wants to make mobile phones, and Helium, which wants to develop into a 5G service provider. Third, the unpopularity of programming languages ​​and the incompatibility with EVM make it difficult for developers to enter the market, resulting in Helium's inability to attract high-quality developers and the lack of excellent applications in the ecosystem. Therefore, the combination with Solana's ecosystem is a way out.

Token Status

HNT is used as Data Credits and is used in various sub-networks when users seek hotspots (revenue side). MOBILE/IOT (supply side) rewards obtained by deploying hotspots or transmitting data in 5G SubDAO or IOT SubDAO can be burned and exchanged for HNT.

In terms of specific release and distribution, 30% of the HNT released each month is used for network data transmission and rewarded to hotspots that transmit IoT device data, distributed according to the data transmission ratio; 35% is used for Hotspots infrastructure rewards, mainly for mining rewards for hotspot owners, and to ensure coverage as the network develops; 35% released each month is distributed to the team and investors.

Source: Helium

The actual total amount of HNT tokens is about 223 million, with 43 million issued in the first year and halved every two years. The price fluctuation of HNT represents the project's income rights and governance rights, while satisfying the speculative needs of token holders. 7⃣️HNT inflation plan is as follows, currently generating 41,000 HNT inflation per day:

Source: Helium

HNT can be obtained by becoming a challenger, challengee, witness, joining a consensus group, participating in network transmission, etc. (witnesses and network transmissions receive the most HNT rewards). HNT meets the needs of two main participants in the Helium ecosystem:

1) Hotspot Hosts and Operators (Supply): Hosts are rewarded with network tokens like IOT or MOBILE when deploying and maintaining network coverage. These network tokens can be exchanged for HNT.

2) Enterprises/Developers/Other Users (Demand): Enterprises and developers use the Helium network to connect devices and build IoT applications. Data credits are a utility token pegged to the US dollar that is obtained through HNT destruction transactions conducted on the network and is used to pay transaction fees for wireless data transmission on the network.

However, the income from burning HNT is not enough for Helium at present. Instead, the equipment providers will receive more token rewards. Therefore, Helium has been criticized for its lack of application (demand side, that is, low income), lack of standards in the early industry, and poor developer and user experience. However, the promotion of Mobile's low-priced esim cards seems to have solved the dilemma of severe shortage on the demand side.

2.3.1 MOBILE

MOBILE is the protocol token of Helium Mobile Network and also the governance token of Helium SubDAO, which realizes governance separation. MOBILE was introduced to Helium Network through the community proposal HIP-53.

Helium developer Nova Labs previously cooperated with T-Mobile to launch commercial mobile smartphone services, first launching a $5 per month package in Miami. Recently, Helium Mobile launched a $20 per month wireless phone package across the United States, combined with the launch of a free SIM card trial event for Solana Labs' new mobile phone.

MOBILE tokens are mined through 5G-CBRS and WiFi hotspots, both for data transfer and proof of coverage. Token Distribution MOBILE follows a similar minting schedule as HNT, but with a maximum supply of 230,000,000,000 (230B). At the launch of the Mobile Network, 50B MOBILE was pre-minted and allocated to the Network Operations Fund managed by the Helium Foundation. A portion of this allocation was distributed to active Mobile Network hotspots during the genesis period. MOBILE's first year begins on August 1, 2022, with the first tokens minted on August 12, 2022.

The issuance plan will be halved every 2 years, consistent with the halving of HNT issuance.

Source: Helium

The value of MOBILE tokens comes from two parts. One is that it can be redeemed for HNT through the programmatic treasury-Subdao token MOBILE can be exchanged for HNT. To achieve this, each subnet in the Helium Network is assigned a certain amount of HNT pool according to the network utility score. The redemption ratio is set by the contract based on this network utility score algorithm; the second is the governance utility in the subDAO. In the future, there may be more utilities, such as using staking to increase hotspot proof of coverage participation.

The redemption price calculation of MOBILE is done by the following rules. All HNT rewards earned by 5G hotspots within a specified time are allocated to a pool, and MOBILE holders can burn their MOBILE to obtain HNT allocated proportionally in the pool. For example, if all 5G hotspots earn a total of 100 HNT, and there are 10,000 MOBILE unused, it means that 100 MOBILE can be burned to obtain 1 HNT. This architecture provides a value floor for MOBILE, and MOBILE can be traded above its floor price based on its utility.

Helium Mobile currently has a payback period of 209 days

Source😀epinscan

2.3.2 IOT

Helium IOT Subdao motivates IoT devices connected via the LoRaWAN network and balances the relationship between users and device providers. It can be understood as inheriting the use cases of the original Helium IoT part.

Currently, the number of IOT in circulation is 24 billion (inflation is based on the table below), and it is in the early stages of chip distribution. MC 68mln, FDV566mln, Compared with the strong expansion of Mobile, IOT use cases have not yet been fully explored.

Source: Helium

Subdao derived from the Helium ecosystem is actually a continuation of the situation that HNT is gradually approaching the end of the distribution and may face no mines to mine. It is conducive to the continued development of the entire Helium ecosystem. After all, the main value capture is still on HNT. At the same time, two sub-DAO tokens with significant developments have been expanded for narrative, which is a win-win situation for HNT, Mobile and IOT.

Helium is the IOT+5G network with the most financing, the most complete product and economic model. Coupled with the strategic layout of migrating to Solana, the current MC/price is relatively high. As a large-cap leading project, it will still enjoy the track beta. The recent increase has proved that the leader of the DePin track will fall to the Helium ecosystem. Because Mobile's chip structure is slightly better than Helium and it is at the forefront of mass adoption, its status is also being priced.

3. What other DePin projects in the secondary market are worth paying attention to?

In addition to DePin in the Solana ecosystem, there are also projects with relatively mature ecosystems and projects in other ecosystems, including Dimo, IOTX (IOTEX), Streamr (DATA), WIFI Map (WIFI), etc., which are compared with Honey (Hivemapper) above. From the hotspot distribution map provided by Depinscan, it can be seen that the Helium ecosystem (IOT, 5G) has the most extensive hotspot distribution, with 363k devices deployed in Helium IOT and 38k in Helium 5, followed by Streamr with 83k devices deployed.

Source: DePinscan

Compared with the Helium ecosystem, the applications in the IOTEX ecosystem have not been very dynamic, but they have been onboarding various depin applications in an extended manner, while Helium's sub-DAO is more of an endogenous improvement of the ecosystem. And with the migration of Helium to Solana, IOTEX, as an L1 with a unique layered architecture, is considered to be a more authentic DePin infrastructure, and its tokens also have more scenarios and use cases. At present, IOTX's MC 520mln, FDV 523mln, has an advantage over Helium's market value. However, IOTX is an old project that has been fully distributed, and its incentives and ecological vitality cannot be compared with the Helium ecosystem.

In September, Drop Wireless (formerly Nesten) made its transition to IoTeX’s DePIN infrastructure. Drop Wireless operates a global LoRaWAN network with 1,000 nodes across 17 countries. The company’s focus extends as far as telemedicine services provided in India, with plans to continue to expand into Africa to meet significant healthcare needs. IoTeX supports Drop Wireless’ native token, launched as XRC20 on the IoTeX chain, and facilitates decentralized data storage and transfer through W3bstream. This transition highlights IoTeX’s role as the DePIN hub.

IV. Conclusion

In the medium term, the leader of this track must reach a market value of at least 3 billion to enter the top 30. Currently, RNDR ranks 48th with 1.6 billion, Helium 1.3 billion, Theta 1.1 billion, IOTA 860 million, and Mobile 550 million. The entire track has a valuation discount.

As the leading Depin on Solana, HNT has a strong ecosystem. Although its chip structure is not as good as Mobile, it captures more value and will also benefit from the prosperity of sub-DAOs. As an Ethereum Compatible DePin infrastructure target, IOTX has not touched the market hotspot (Solana), but it has an advantage in the subsequent Ethereum rebound after the approval of BTC spot ETF. And the current price is relatively cheap (MC 500mln); DIMO MC still has room for growth, and the Internet of Vehicles track also has a grand narrative space; Mobile's cooperation with T-Mobile may bring real external income and is expected to lead the entire track.

As a Mass Adoption channel, the Depin track is also linked to the AI ​​sector. It is a breakthrough track that can have a grand narrative and can be selected by capital. In the next ten years, we can expect traditional institutions to inject incremental funds. The intervention of traditional funds will subvert the previous preference for full on-chain economic speculation around crypto-native applications and turn to investment opportunities with more off-chain logic and real impact. The importance and investment potential of DePin in the development of cryptocurrencies fits the need to find new narrative funds in the crypto world.