Beginning
DePINs are quietly leading a revolution. This movement is based on a simple logic: moving from traditional, centralized approaches to a more open, collaborative and innovative model; it leverages the appeal of cryptocurrency incentives to bring people together to build and manage the things we all rely on infrastructure.
This research explores the DePINs track. Against the background of fluctuations in the entire encryption market, DePINs has shown stable and lasting development performance. It is worth mentioning that DePINs’ revenue model has proven to be based on practicality rather than speculation. While the overall crypto market has experienced a steep decline of 70-90% over the past few years, DePINs’ revenue has only dropped 20-60% from its peak.
The concept of DePINs is very broad, spanning 6 different sub-industries (computing, artificial intelligence, wireless, sensors, energy and services). This decentralized model redefines our expectations for physical infrastructure development and the future.
Specifically, DePIN covers more than 650 projects with a total market capitalization of over $20 billion in liquid tokens, plus annualized on-chain revenue of approximately $15 million, which speaks volumes about the viability of the industry and the benefits it brings. Tangible value.
At present, the future of DePINs is constantly integrating with ZK technology, on-chain artificial intelligence, on-chain games and other broad prospects. These developments highlight the industry’s adaptability and its interest in using new technologies to create more efficient, collaborative infrastructure solutions.
Through this study, we aim to conduct a comprehensive analysis of the DePIN ecosystem, exploring its current landscape, growth dynamics, and potential trajectory.
DePIN Overview
DePIN stands for Decentralized Physical Infrastructure Networks, a revolutionary approach that leverages blockchain technology and cryptoeconomics to incentivize people to invest resources in creating transparent, decentralized and verifiable infrastructure. The projects cover a range of areas, unified by a model. Compared with traditional infrastructure, this model values community ownership and decentralized distributed systems rather than centralized management and control.
Source: Binance Research
The technology behind the DePIN project uses a layered, modular architecture designed to simplify development and encourage innovation by connecting the real world to the blockchain. This setup allows parts of the project to be developed or updated independently, making it easier for developers to contribute without having to master the entire system.
DePIN plans start by defining the resources they will provide, from storage and compute to bandwidth and hotspots. They rely on financial means to regulate behavior in the system, use reward mechanisms to encourage good behavior and punish bad behavior, and use tokens to encourage everyone to become rule followers.
Here, the supplier must pay a deposit to guarantee their services. If they underperform or behave inappropriately, they risk losing their deposit, token rewards, and network access. Meanwhile, in this decentralized system, customers use the project’s tokens to access services, such as AR for Arweave storage. These projects rely on vendors who provide basic services or hardware for network functionality, such as Filecoin or Helium.
ecosystem
Over time, the DePIN project has experienced significant growth, developing into a diverse field with approximately 160 projects identified by DePINscan. The classification of these projects varies based on the specific definition of the DePIN project. As shown in the image provided by Binance, the scope of this field includes Hivemapper (decentralized sensor network), Akash and Render (computing and digital resources), Bittensor (artificial intelligence project), Helium (wireless network), and Arweave and Filecoin ( decentralized storage solution).
Additionally, over time, the largest DePINs are transforming into platforms with various applications. A good example is Bittensor, which hosts a growing number of subnets, each dedicated to a different region.
The DePIN ecosystem is expanding rapidly, and investors are increasingly interested. They have made multiple bets on DePIN, and the top 10 projects in DePIN have raised a total of approximately US$1 billion. As the field matures, we expect some of these projects will begin to gain widespread adoption.
In today’s study, we will look at some case studies to analyze their unique value propositions and understand how their economic models work.
Case study 1: Exploring decentralized storage with Arweave
value proposition
Web3 is based on a decentralized network and is the future of the Internet. In fact, many problems remain, such as storing large data files such as images on blockchains such as Bitcoin or Ethereum is expensive and inefficient. Blockchain is optimized for transactions, not for storing data, which makes something as simple as storing a Bored Ape Yacht Club image very costly.
To avoid blockchain congestion and high costs, decentralized storage networks offer a solution with blockchain-like security and accessibility, but more cost-effectively. We have seen that some NFT projects resort to centralized networks for storage, which carries the risk of data tampering or loss, and there may be risks of censorship. Data storage and decentralization of NFTs are critical because the value and context of an NFT is defined by metadata. If metadata is stored on a centralized server, it is at risk of being altered, possibly changing the appearance or value of the NFT.
Known for its early development, Crypto Punks set security standards by storing all metadata and images directly on the blockchain, ensuring immutability and permanent access for as long as Ethereum exists.
In contrast, MAYC stores NFT metadata on centralized servers and images on IPFS, which makes the metadata susceptible to changes and affects the authenticity of the NFTs in the collection.
dApps face similar challenges and are generally considered to be fully decentralized. However, while some (such as Uniswap and Aave) provide access via centralized and decentralized networks, others rely entirely on centralized servers. Nonetheless, their interaction with smart contracts on decentralized blockchains still maintains the status of dApps.
Arweave Overview
Arweave is an open source platform for storing data permanently and charging only once. It consists of blockweave (a blockchain-like layer for data storage) and permaweb (a readable layer for permanent web content).
Smart contracts are supported via SmartWeave, allowing contract state to be calculated locally.
Transactions are conducted using its native token AR, which includes paying miners for storage and network bandwidth.
Utilize a unique consensus mechanism - Proof of Access (PoA-Proof of Access) to promote long-term storage and efficiency of data. PoA ensures data durability by requiring miners to access previous blocks, creating a graph-like structure rather than a linear blockchain.
Provides content moderation tools that allow node operators to filter out unwanted data.
There is a one-time fee for permanent storage, and the cost is expected to decrease over time due to technological advancements.
Miners are rewarded through transaction fees, inflationary token emissions, and donations.
There will be 55 million AR tokens at the start, with another 11 million coming from inflationary emissions, with a goal of a total of 66 million AR tokens without a burning mechanism.
Arweave is designed to ensure data is stored permanently and at a predictable cost, leveraging decentralized technology for security and accessibility.
competitors
Filecoin ($FIL), Crust ($CRU), Sia ($SC), Storj ($STORJ), and Swarm ($BZZ) represent a range of decentralized storage projects, although this list is not exhaustive. With Filecoin emerging as a serious competitor in the space, Greythorn's research team has put together a comprehensive table comparing Arweave and Filecoin, highlighting their differences and features.
Another competitor that has caught our attention recently is GenesysGo, which leverages Solana's blockchain to innovate cloud storage by combining speed with decentralization. Unlike Filecoin and similar decentralized storage projects, GenesysGo launches DAGGER, an innovative technology that guarantees data integrity and fast access. This unique positioning in the Web3 ecosystem addresses computing, artificial intelligence, and data storage needs, delivering high-throughput solutions that significantly reduce latency for data upload and retrieval. This makes it the best choice for applications that require quick access. We need further research and validation to fully understand its function and impact.
Case Study 2: Distributed GPU Computing via Render Network
value proposition
Render Network is transforming the GPU market to meet the growing demands of modern media, artificial intelligence and cloud computing. With GPU values approaching those of the world's leading oil companies, it's clear that GPU computing is becoming critical in today's digital world.
As the market rapidly expands, Render Network is leading the way, delivering decentralized GPU computing for uses ranging from media production to scientific research. Render Network integrates artificial intelligence to improve digital creativity and efficiency, catering to the growing artificial intelligence industry.
As a leader in the decentralized computing market, Render Network distinguishes itself with its vast GPU network and strategic partnerships, ensuring a strong competitive position. It has gained support from numerous providers by competing in an open market. At the same time, it also makes cloud computing more accessible and efficient for developers, pushing centralized power away from giants like Amazon Web Services and Google Cloud. This approach not only diversifies the choice of computing resources, but also makes Render Network a key player in the era of digital and artificial intelligence revolution.
Render Network Overview
Render acts as a decentralized marketplace, connecting GPU owners with creators in need of rendering power, with secure transactions facilitated by the RNDR token.
Allows GPU owners to earn money by contributing idle computing power and optimizing the global GPU infrastructure.
Supports a wide range of projects including digital art, motion graphics, architectural visualization, scientific simulations, and more.
Double layer structure:
Off-chain Rendering network: composed of creators, node operators and suppliers, with node operators providing the necessary GPU capabilities.
Blockchain layer: Uses RENDER tokens and escrow contracts to manage transactions, ensuring transparency and integrity.
OctaneRender: Render's flagship product, offering advanced Render technology, including machine learning optimization and significant speed improvements.
Render services are vital to product design, architecture, and scientific research, and will become increasingly important as the Metaverse expands.
Partnering with Io.net to enhance computing capabilities and FedML to advance decentralized machine learning demonstrate Render Network’s commitment to broadening its computing applications.
Token Economics:
Utility token: RNDR token, based on ERC-20, facilitates Render transactions, with a circulating supply of 376 million RNDR and a maximum supply of 536 million RNDR.
Transition to Solana: RNDR was originally on the Ethereum blockchain but has transitioned to the new SPL token based on RNP-006. This enables broader application support by leveraging blockchain’s low-cost, high-throughput capabilities.
Economic Model: Burn Mint Equilibrium (BME) is introduced to achieve economic stability, balancing rendering costs and token supply through fiat-to-RENDER conversion and token burning mechanisms.
competitors
Akash Network is a pioneer in the field of decentralized cloud computing, mainly focusing on artificial intelligence applications. It operates as an open source GPU network that enables developers to deploy containerized applications by providing access to a global pool of spare computing resources. Akash's model, often likened to an "Airbnb for server hosting," creates a market for overcapacity computer rentals and computing resources, including CPUs, GPUs, memory, and storage.
As of early 2024, Akash has significant resources and is experiencing a surge in activity, particularly due to the growth of artificial intelligence and increased demand for high-performance GPUs. Active leasing has more than tripled since the start of 2023.
Akash and Render Network:
Model differences: Unlike Akash’s decentralized cloud infrastructure model, Render runs on a platform-as-a-service (PaaS) model, focusing on the functionality of Render itself. Render provides a managed platform that simplifies infrastructure management for developers.
Strategic Positioning: Akash targets a broad range of computing needs with a focus on artificial intelligence, while Render integrates artificial intelligence and Metaverse applications, giving the project a unique advantage in these areas.
In summary, Akash Network promotes a decentralized approach to cloud computing, providing an alternative to traditional cloud services through its peer-to-peer marketplace. It stands in sharp contrast to Render’s professional services, demonstrating the diverse potential of decentralized networks to meet different market needs and technological advancements.
Case Study 3: Decentralized Wireless Networking with Helium
value proposition
Helium is a pioneering project in the field of decentralized wireless infrastructure focused on enhancing the connectivity of IoT devices and mobile devices around the world. Launched in 2019, Helium first launched its Helium Hotspot product, designed to provide wireless access to IoT devices. This is just the beginning as Helium expands into 5G to meet the growing demand for higher bandwidth and lower latency mobile connections.
Since then, the number of new Helium hotspots joining has continued to increase, especially in recent months.
Helium's primary value proposition comes from its decentralized approach to wireless networking, enabling broad coverage without the substantial site acquisition costs typically associated with traditional telecom infrastructure. Helium democratizes the provision of wireless services by leveraging user-operated nodes, allowing participants to earn tokens in exchange for contributing to the network’s expansion and efficiency. This model not only reduces operational costs but also promotes a community-driven approach to improving wireless accessibility.
Helium Overview
Token Ecosystem:
HNT: Helium’s native token, critical to network operations, including creating “data credits” for data transactions. Hotspot hosts can exchange HNT for network tokens (such as IOT, MOBILE).
IOT: The protocol token of the Helium IoT network, mined by LoRaWAN hotspots through data transfer and proof of coverage.
MOBILE: The protocol token of the Helium 5G network, rewarded to contributors who provide 5G wireless coverage and verify network operation.
Network participants:
Device: Uses WHIP-compliant hardware to send and receive data from the internet, with the data stored on the blockchain.
Miners: Provide network coverage through hotspots, participate in Proof of Coverage, and earn tokens based on network contribution and service quality.
Router: Purchases encrypted data from miners and ensures its correct delivery, acting as the endpoint for data encryption.
Key technologies and protocols:
Proof of Coverage: Cost-effectively verify miners’ wireless network coverage.
Consensus Protocol: Combining asynchronous Byzantine Fault Tolerance with Proof of Coverage for network governance.
WHIP: An open source, low-power wide area network protocol.
Proof-of-Location: Allows devices to use network intelligence to verify their location without satellite hardware.
Migrate to Solana:
Helium migrated to Solana last year to take advantage of its scalability, low transaction costs, and high-performance capabilities, increase network resiliency, and support more complex algorithms.
Token Economics:
The halving cycle is 2 years, the maximum supply of HNT is capped at 223 million, and the number of tokens currently in circulation is approximately 160.88 million (72.14%).
Token Utility: HNT is used for network participation rewards, data transfer, creation of Data Points (DC), and network security staking.
competitors
Although not part of the blockchain space, the Internet of Things (TTN) has emerged as a significant competitor to Helium, especially in dense urban environments. Launched in 2015, TTN distinguishes itself through its open source software foundation, a concept similar to Helium's approach.
Contrary to the Helium model, which includes hardware provision, TTN focuses on providing software solutions along with comprehensive documentation to help individuals build their own LoRaWAN networks. The driving motivation behind the adoption of TTN is less about pursuing financial gains and more about finding practical solutions that benefit users or their customers.
Conclusion
We conclude our exploration of DePIN with a discovery that is full of potential but also presents significant challenges. DePIN's role in enhancing traditional infrastructure by providing "last-mile connectivity" through the sharing economy represents a critical shift in the development of digital infrastructure. Efforts to integrate DePIN with a Web2 interface are expected to significantly improve user accessibility, promoting wider adoption by making blockchain technology easier to use.
The growth of the DePIN token economy, especially when tied to the DeFi ecosystem, points to an interesting future where blockchain’s utility extends beyond simple transactions. However, challenges such as token price volatility, profit-focused user engagement, and weak consensus remain obstacles to its widespread adoption. Solving these problems requires solid economic models and strong community engagement.
As the DePIN industry matures, significant growth is expected, especially in Asia. Messari said Asia is expected to be the main catalyst for this growth, with several top DePIN projects expected to emerge in the region between 2024 and 2025. The success of DePIN initiatives will depend on their ability to deliver tangible benefits and navigate the complexities of the digital infrastructure landscape.
Today’s article only touches on a portion of the emerging projects in the DePIN space. As new opportunities arise, we encourage further exploration. For those who want to familiarize themselves with this area, DePINscan may be a good starting point.
