Decentralized Physical Infrastructure Networks (DePINs) are projects that leverage blockchain, decentralized protocols, and physical infrastructure to develop real-world solutions.
Such projects have expanded beyond the Crypto space to areas such as AI development, human mobility, and geology, but the concept is still in its early stages.
DePIN is one of the biggest narratives of 2024 and will achieve even more in 2025. In this article, we will discuss the future development of DePIN.
Web3 media and research company Messari coined the term DePIN (Decentralized Physical Infrastructure Network) to define projects that use decentralized protocols to manage physical facilities. However, before this, several projects in this category have already gained traction.
The term became very popular in the second half of 2023 and throughout 2024. DePIN projects are a response to poor management and unfair compensation of centralized resource networks, which have caused problems such as human errors, failures due to localized architectures, and lack of transparency in finances and management.
DePIN projects also propose safer and more cost-effective alternatives. Due to the viability of the Crypto market, the number of projects in this category has grown exponentially. According to Depinscan, there were approximately 296 active DePIN projects as of December, which is a testament to the rapid growth of the industry.
Apart from AI and memes, DePIN is arguably the most hyped narrative in Crypto in 2024. However, the DePIN project dates back to early 2016, when IOTA, Filecoin, and Render Network were launched. The launch of Helium in 2019 marked an important moment for decentralized connectivity projects.
After the term DePIN was coined, other projects that fit the definition were grouped together. Since then, the DePIN project has successfully created a decentralized alternative to crowdsourced resources.
In the past two years, this has expanded to other areas such as health and mobility, and the DePIN project has also received better coverage on well-known Crypto websites such as Coinhint.com.
The DePIN project uses blockchain technology for two purposes - data management and the allocation of incentives.
Using blockchain technology (such as network nodes), they provide a "plug-and-play" system that supports the interconnection of independent infrastructures and allows them to communicate.
These infrastructures can be Internet of Things (IoT) devices that are connected to cars or personal computers in a decentralized GPU grid. Blockchain is able to classify, process and save data, forming immutable storage.
Data generated on the DePIN network is passed to the blockchain through connected middleware (such as decentralized oracle protocols), where the collated data is processed and the blockchain also assumes a management role. Rewards for contributions to the network inferred from the submitted data are remitted to the corresponding network participants.
In this way, the DePIN project can realize a collaborative system for multiple purposes.
Depending on the type of data and resources generated on the network, the DePIN network can serve as a simple data collection and distribution network or a more advanced use case such as decentralized ride-sharing, decentralized storage network, or computing resource network.
Today, DePIN is a $33 billion industry with several projects in the industry exceeding $1 billion. The largest DePIN project by market capitalization is Internet Computer (ICP), a decentralized network for Internet connectivity and computing resources.
DePIN is a thriving market, with more than $14 billion worth of DePIN-class projects traded on Crypto exchanges every day.
As we head into late 2024 and 2025, some developments to watch for the DePIN project include:
Expansion into AI
Multi-token ecosystem as seen in the Helium network
Expanding DePIN into trade finance
Given the rapid advancements in this space, DePIN could have an interesting future.
Industry leaders see a clear path to adopting the DePIN idea on a larger scale. DePIN itself is very flexible and is applicable to many fields, as a system for managing various facilities, or as a tool for building collaborative solutions through progressive incentives.
One trend that may emerge in the future is the mainstream adoption of this concept to overcome the challenges of crowdsourcing utilities.
As Solana co-founder and CEO Anatoly Yakovenko said: "DePIN is the biggest winner today. Hardware rollout is indeed difficult, and token incentives are one way to overcome this obstacle."
However, the DePIN network faces challenges such as legal uncertainty and factors related to the complexity of blockchain technology. One trend in the future may be that the DePIN project modifies its technology to make it easier to understand and use.
We can also see DePIN projects step up their efforts to comply with legal norms to expand into countries with stricter regulations, which could lead to significant changes in the way they operate.
DePIN projects have expanded the scope of blockchain's utility, from ordinary peer-to-peer transactions to complex applications today, with blockchain technology gaining new applications in some of the most important areas. As the DePIN narrative develops, decentralized physical infrastructure networks may become the platform of choice for several resources that are currently controlled by centralized organizations.
The DePIN network supports the elimination of middlemen and single points of failure and creates a balanced network where participants have the upper hand, helping Crypto assets and blockchain technology to thrive.
Nevertheless, it is recommended to do your own research before investing in any DePIN project or interacting with the DePIN network.
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