DePIN: The next big cryptocurrency narrative

The cryptocurrency industry and blockchain as a whole are still in their infancy and looking for true product-market fit. While we’ve seen this in the past with innovations like DeFi, NFTs, and tokenization, there are still many blockchain use cases that have yet to be fully explored. One of them is DePIN, the Decentralized Physical Infrastructure Network. In this article, we’ll take an in-depth look at DePIN, its importance, and some examples of DePIN projects.

Decentralized physical infrastructure network is a network that uses the decentralization of blockchain technology to maintain and operate real-world infrastructure. DePIN projects are diverse, ranging from telecommunications to storage and computing. They typically utilize blockchain-based tokens as an incentive mechanism for individuals to contribute to the network, rather than a centralized network owned and operated by a single entity.

What makes DePIN so exciting is its potential to enhance the way we think about and interact with physical infrastructure. By using tokens to incentivize network participation and interaction, a flywheel effect begins to occur. Similar to how a higher valuation for Bitcoin incentivizes more people to mine, resulting in a stronger network and thus a higher valuation, DePIN enhances this by tying the token value to the strength and adoption of the network cycle. They provide a more democratic, efficient, and scalable approach to building and maintaining physical infrastructure. On a small scale, DePIN may not make much sense; however, if mass adoption is achieved, it could see phenomenal growth and become a stable part of our modern infrastructure.

The best example of a DePIN project is Helium, a mobile network project based on Solana. Contributors can purchase and run hotspots, which allow supported devices to gain Internet connectivity without being connected to a cell tower or WiFi network. The cost of using the network is HNT, which is also allocated to hotspot operators. Helium's network can be used by a variety of devices, and they recently released a plan to create a 5G phone network for a dirt-cheap $20 per month across the United States.

Another prolific example is Filecoin, a network built on the Interstellar File System standard that incentivizes people with extra hard drive storage to archive information in a decentralized manner. People who want to store their data pay FIL to the archiver and have the data spread around the world, while the storage provider receives FIL in return. The network is capable of storing billions of gigabytes of data without the risks that come with keeping data in a centralized entity, such as censorship, hacking, or disruption.

Smaller, exciting but still growing examples are trying to solve problems across a wide range of industries. For example, the Hivemapper Network is a blockchain-based mapping network that incentivizes contributors to build detailed and up-to-date global maps powered by user-contributed dashcam footage. This decentralized approach provides a dynamic, ever-evolving map that is maintained and expanded through community participation, leveraging blockchain for transparency and incentive distribution. Another project, RenderNetwork, is a decentralized platform that democratizes the 3D rendering and graphics computing process, connecting artists and creators with GPU providers. Users on the network can put their GPU power toward rendering tasks and be compensated with tokens, while creators have access to more scalable and cost-effective rendering solutions. One day, amateurs and professionals alike can use Render to render animations, train artificial intelligence models, or perform intensive research calculations. Although both projects are still in relatively early stages of their life cycles, they offer promising solutions to real problems.

DePIN protocols (including Hivemapper and Helium) are often built on Solana to take advantage of fast speeds and low transaction fees. Unlike modular chains like Ethereum or L2, Solana benefits from a single atomic state machine, which makes network and infrastructure management much simpler. Additionally, as the amount of data and interactions occur, even the fastest L2 may not be able to meet the needs of DePIN.

Decentralized physical infrastructure networks are an exciting new way for individuals to collaborate and create greater things than themselves through the use of blockchain and network effects Something bigger to incentivize long-term growth and adoption. Although the large-scale DePIN protocol adopted globally has yet to be created or proven to be a viable product, institutions and consumers alike are excited about this space.