The Rise of Decentralized Physical Infrastructure Networks: Current Status and Future Outlook of DePIN

Introduction

The birth of the internet originated from the decentralized needs of the U.S. military during the Cold War. However, with the development of commercialization, the internet gradually moved towards centralization, contrary to its original intention. In recent years, the rise of Web3 aims to reshape the decentralized architecture of the internet. In this context, DePIN( decentralized physical infrastructure network) provides a new solution: by leveraging the financial properties and incentive mechanisms of Web3, it constructs an efficient P2P physical resource network, creating a decentralized physical network infrastructure.

The rise of DePIN signifies that the boundaries between the physical reality and the blockchain world are gradually becoming blurred. This article will explore the current status and future of DePIN.

Overview of DePIN

Definition and Operating Mode 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.

DePIN creates a "resource-sharing + economic incentive" bilateral market, which is more flexible than traditional point-based resource management and has greater scalability and robustness.

A complete DePIN network typically consists of project parties, off-chain physical devices, suppliers, and demanders. The basic operating modes include:

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

2. Proof: Prove the data generated by the verification device through physical work proof (PoPW).

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

4. Reward Distribution: Distribute the token rewards obtained from off-chain physical devices to the on-chain address after verification.

5. Demand Matching: Completing the exchange and matching of resources on the DePIN market platform.

The significance of DePIN

DePIN solves some of the dilemmas faced by traditional physical infrastructure networks through decentralization.

• Reduced the single point of failure risk caused by centralization control
• Lowered the market entry threshold, promoting competition and innovation
• Improved resource utilization rate
• Provided an effective incentive mechanism for user participation.

The core value of DePIN includes:

• Resource Sharing and Digitalization
• Decentralization Governance
• On-chain settlement
• Fast innovation speed

Current Status of DePIN Development

Currently, DePIN projects are primarily focused on storage, computing power, data collection and sharing, wireless communication, sensors, energy, and other fields. Most of the top 10 projects by market capitalization belong to the storage and computing power sectors.

AI is currently the keyword for DePIN, and a number of AI DePIN projects dedicated to providing infrastructure for AI have emerged.

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

The DePIN project is primarily deployed on public chains such as Solana, IoTex, and Peaq, while Polygon and Arbitrum are gradually becoming rising stars.

The current DePIN project is mainly divided into two directions: one focuses on the intermediate layer of DePIN, and the other focuses on the expansion of the demand side.

DePIN Middle Layer

The DePIN middleware aims to assist project parties in quickly launching DePIN applications, providing development frameworks, tools, and overall solutions.

DePIN infrastructure

• DePHY: Provides open-source hardware solutions, SDKs, and tools.
• W3bStream: Allows IoTeX DePIN projects to easily generate logic based on smart device data.

Liquidity Program

• PINGPONG: DePIN liquidity and service aggregator.
• Parasail: A re-staking protocol specifically designed for DePIN services.

DePIN Application Layer

The DePIN application layer is mainly divided into four major sectors: cloud network, wireless network, sensors, and energy.

Cloud Network

Including Decentralization storage and computation.

Storage projects like Filecoin and Arweave address the high costs and privacy risks associated with traditional centralized storage.

Computing power projects like Render Network and io.net provide flexible and low-cost computing power support for AI model training, inference, and other needs.

Wireless Network

Including 5G, WiFi, Bluetooth, LoRaWAN, etc.

Representative projects include Pollen Mobile ( 5G ), Wicrypt ( WiFi ), Helium ( LoRaWAN ), etc.

Sensor

Mainly used for monitoring and capturing data related to environment, geographical location, health, etc.

Such as WiHi( weather forecast), HiveMapper( map drawing), etc.

Energy

Through a decentralized energy network, users can directly utilize surplus energy for production.

Representative projects include Starpower( Virtual Power Plant), Powerpod( Electric Vehicle Charging), Arkreen( Renewable Energy), etc.

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 on-chain, etc.

4. Deep integration with AI, empowering each other

Challenges Faced by DePIN

1. The technical implementation is complex.

2. Market acceptance needs to be improved

3. The profit model is uncertain

4. There is uncertainty in regulatory policies.

Key Points for DePIN Project Evaluation

1. Hardware: homemade vs third-party, one-time vs ongoing costs, high density vs low density, scarce vs common

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

Conclusion

DePIN reconstructs the distributed bilateral market through Web3 and token economics, with the potential to reshape the traditional infrastructure sector. Although it faces many challenges, as blockchain performance improves and token economic models mature, DePIN is expected to achieve large-scale applications in the future, laying the foundation for the popularization of Decentralization networks.