Introduction:

This year, venture capital in all crypto projects has recovered. According to incomplete statistics, as of April 2024, global investment funds have reached 4 billion US dollars, of which 70 DePIN projects have raised 192 million US dollars. Through the data, Golden Finance invited 5 industry veterans to discuss on July 18, 2024: Is now a good time to invest in DePIN projects? During the AMA live broadcast, many different perspectives and sparks collided, and the content is summarized as follows:

Guest introduction:

Lao Bai, ABCDE investment research partner

Asa, APAC Head at io.net

Jewish Director Zhao

Kai Ge, RuiHe Capital partner

Romeo, Uweb co-founder

Golden Finance: In the current market environment, is the DePIN project a good time to layout investment? Which segments and projects are worthy of attention?

Lao Bai:

Viewpoint 1:DePIN can be an extension of web3 from the software level, as more tentacles to reach the possibility of mass adoption.

Viewpoint 2: In the next 5 to 10 years, AI will be the biggest innovation in the investment and application circles in web2.As long as AI innovation continues, we can always find this combination of crypto+AI. This combination is likely to involve DePIN. From the perspective of AI long narrative, everyone can pay more attention to the sub-sectors of DePIN related to AI.

Asa:

Viewpoint 1: Pay attention to Multicoin - it has been firmly supporting the DePIN track for two consecutive cycles, turning this track from the edge into a mainstream track.

Viewpoint 2:The story of web2's potential payment. It has the prospect of unlocking Silicon Valley or unlocking technology funds and web2 funds. There is the potential to take over the currency circle at the peak of the bull market, which is also mass adoption in another dimension.

Viewpoint 3: DePIN is still a meme now, and it really needs to wait until the available products can connect the decentralized infrastructure computing power. It may still have to wait until the next cycle, or at least wait until the bear market to build it for a few more years, before this product can be truly mature.

Kai Ge:

Infrastructure:In the implementation stage, DePIN can be used as an infrastructure for the digital asset transformation or digital transformation of some emerging industries.

RWA perspective:I suggest that you pay a little attention to the applications of DePIN that can generate value and cash flow.For example, green energy, streaming content, AI computing power, medical and health care based on smart wearable devices or smart nursing devices, etc.

Romeo:

AI: In the field of AI data, there are technical barriers, which can solve problems for AI in web2, and use web3 to incentivize,and obtain better data collection effectiveness or data cleaning, data layer establishment, and chaining. If tokens can be used to form a better incentive and feedback, then perhaps this application of AI can be better promoted.

Energy: The world will face a relatively long period of energy shortage in the future. A good DePIN project is one that can obtain continuous service output or continuous income. Perhaps it can cross the cycle and attract more investors to pay attention to the project. When it is truly able to capture value, the opportunity is greater.

Wearable devices: The mobile phone is the best DePIN application because it combines software and hardware together, which can allow users to truly reach it.

Golden Finance: What are the latest breakthroughs in the current DePIN projects? In comparison, what are the obvious advantages and potential disadvantages of these projects in practical applications?

Brother Kai:

Advantages: DePIN has been combined with actual application scenarios and industries at this stage.

Disadvantages: The currently implemented DePIN projects need to be cleverly designed, which can not only be combined with actual application scenarios, payment scenarios and industries from the perspective of to B, but also highlight the advantages of to C in the design of economic models.

Asa:

Viewpoint 1: Combined with AI, the whole nation's attention to AI has provided the soil for the fermentation of this round of narrative, allowing everyone to have a new way to participate in decentralization;

Viewpoint 2: Overcapacity has led to the cheapest domestic production capacity in the world. Packaging all the products we think of, such as mobile phones, into DePIN is regarded as a new way of going overseas. Now I regard it as a new meme, allowing more people who have not been exposed to crypto to have a new medium to contact crypto and bring in new incremental funds.

Lao Bai:

The difference between this round and the previous round: The categories of this round of DePIN have spread to many tracks, including GPU computing power, decentralized websites, decentralized front-end hosting, decentralized VPN, etc.

Advantages: Now it is software + hardware, which is technically feasible; investors like Multicoin will create narratives, which is hot enough.

Disadvantages: No one uses it. What DePIN is doing now is the opposite, which is to let these decentralized nodes collaborate. Collaboration is difficult to be commercially viable, and the experience of centralized collaboration is more than one order of magnitude worse than centralized collaboration; there are still many years to go.

In this round, wearable devices or real world data may be a new opportunity in the future. The real success of DePIN is that I can use the method to solve things that are difficult to do in a centralized world, or even impossible to achieve.

Director Zhao of Jude:

3C is a very important content to lead the market mass adoption.

Industry pain points: DApp customer acquisition costs are high, and the conversion rate of each layer when acquiring customers will lose a lot of people, and the cost of acquiring customers will increase exponentially.

For the same game, if it has a hardware device, and not only does it not give you money, but also asks you to buy it, you will buy it instead. This is a very strange consumption decision, because you do not regard it as an investment behavior, but you regard it as a consumption behavior, and 3C products themselves are very overvalued. Under such a simple cognitive difference, many people are willing to make some consumption payments.

Advantages: Once consumption payment is generated, the project party can accumulate cash flow through this pre-sale form in the early stage and reduce customer acquisition costs. It can break through the original traffic again and spread the product layer by layer. At the user end, after getting the mobile phone, the user can become a public chain user in one step, and a DAPP user in one step, which also helps DAPP stand in front of the user step by step and improve user retention.

Golden Finance: From the perspective of institutions or investments, what are the characteristics of high-quality encrypted DePIN projects?

Romeo:

The first layer, the supply side is smaller than the demand side, use web3 or decentralized methods to increase supply.

The second layer, whether the business model can really solve the rigid demand problem. Viral marketing for customer acquisition also has a sense of incentive model.

The third layer, the product itself has clear advantages in manufacturing and supply chain, and the R&D costs can be covered in another form, with reasonable pricing. Even if there is no token incentive, the product can still compete in the market, plus web3, and the opportunity is great.

Lao Bai:

1. The team or investors are doing something. Create a good narrative that 100% of people can understand and agree with.

2.   Technology Design. The points design and other aspects have improved a lot compared with the previous generation.

3.   New scenarios, new tracks. Scenarios that people think are difficult to achieve with centralization are achieved with decentralized and distributed things.

4.   Someone will really use it. Even if no one uses it now, we must firmly believe that one day in the future. This project has been done to the end, and users will really use it.

Brother Kai:

1. DePIN is combined with AI, and AI Agent is used to do pricing arbitrage for green energy, etc.

2.  High-quality projects are best to have both to C projects and can be further designed into centralized mining scenarios.

3.  The value space of DePIN is considered from the perspective of multi-directional crypto finance.

4.  Realize users, migration and upgrades in industrial scenarios.

5.  Consider the layout of the trading market and diversified market participants. There are not only providers, users, but also liquidity providers.

6.  It promotes our intelligent manufacturing and production capacity. Director Zhao of Jude: 1. Products that reduce the cost of acquiring customers. How to use methods with lower thresholds, events, or explosive things to pull a large number of people into the industry in a short period of time. 3C things may be more attractive to me because no one has played with them, because new users need to engage more with chains, coins, and the crypto world, and engagement itself is more meaningful. 2. Because DeFi has already calculated the financial direction or capital return rate very clearly, but has not achieved general pricing of labor and social production time in the crypto world. DePIN can do how a person should be rewarded for investing time in the blockchain world. Golden Finance: At present, the threshold for users to participate in and understand the DePIN project is high, and the requirements for mining participation and hardware configuration are higher, and the experience is not very good. What do you think are the reasons for this? What methods can help solve the above pain points?

Lao Bai:

Pain points: 1. Users can't understand; 2. Expensive, high threshold.

How to solve: The project has something other than investment attributes, such as consumption attributes. There is a cool ring or watch with some meme displays or some other fun things on it. I think it is very easy to roll out with this kind of consumption attribute.

Brother Kai:

The economic model design is awkward. In the economic model, we need to consider two lines running in opposite directions. That is to say, one is the actual application scenario of distribution and the two lines of token narrative and market value management. It can be designed into this mode, but it has not been completely solved, it is just a suggestion. Director Zhao of Jude: 3C has a great advantage. It is not like before that there must be a vertical channel to sell. If you sell 3C products, you can sell them through traditional channels, and even sell them in some 3C stores. Open more sales channels, let more people participate in the sales process, cooperate with KOLs in the form of bringing goods, and sell mobile phones and other products. Golden Finance: Please summarize in one sentence what benefits will the implementation of DePIN technology bring to the Web3 industry and Mass Adoption? Romeo: DePIN is something that C-end users have the opportunity to own and experience, and it also allows web3 to increase market penetration faster. In the long run, it is indeed possible to combine with RWA to generate better returns on the liquidity of some assets.

Brother Kai:

The combination of DePIN with AI and RWA is the integration of global industrial scenarios and finance. We believe that it will drive more incremental users, new users, and more actual payment transaction scenarios. We believe that it will be similar to the effect of Bitcoin spot ETF, which may bring a new wave of bull market.

Director Zhao of Jude:

Any DePIN project that reduces the cost of acquiring customers makes sense. When doing DePIN, don’t pretend to be profound, be more practical, and go down to earth to introduce daily behaviors into crtpto. 3C may bring a lot of interesting things in the future.