Why DePIN could solve some of tech's biggest problems

The Decentralized Physical Infrastructure Network (DePIN) has become an important part of the blockchain industry, providing solutions that could disrupt traditional infrastructure models in terms of data storage, computing power, and connectivity.

According to a recent report by Messari, DePIN has a market cap of $20 billion, and the momentum behind it cannot be ignored.

The DePIN project (which is built on the blockchain and incentivizes a decentralized network of contributors) has also received investment from top venture capital firms, including Andreessen Horowitz, Pantera Capital, and Binance Labs.

The DePIN project has made great progress in recruiting contributors to support its decentralized network. For example, IoTeX has more than 100,000 devices connected to its network. Akash Network, which focuses on decentralized cloud computing, has more than 50,000 contributors providing computing resources for its platform.

The potential for DePIN to transform markets like the Internet of Things (IoT) is huge. According to McKinsey, the IoT market is expected to reach $500 billion in the next few years, and DePIN seems equally poised for growth.

Tom Trowbridge, co-founder and CEO of Fluence Labs, told Decrypt, "DePIN's use cases are straightforward and easy to understand, including road mapping, telecommunications, location services, and data storage. DePIN projects are now generating revenue, and many have signed contracts with large enterprises, which helps validate its value."

One ​​of the most compelling aspects of DePIN is its potential for sustainability.

Traditional data centers and cloud computing infrastructure are "notorious" for their huge energy consumption and carbon footprint. In contrast, DePIN projects typically leverage existing hardware without the need to build new facilities.

Raullen Chai, CEO of IoTeX, said, "DePIN is already driving a greener future, thanks to the use of existing computing resources, reducing the need for power-hungry data centers."

Recent funding rounds, such as IoTeX's $50 million raise in April, indicate strong investor interest in the sector.

However, the path to widespread adoption is not without obstacles. Old tech giants such as Google, Microsoft, and Amazon dominate the cloud computing market, which is an insurmountable obstacle for decentralized upstarts.

Clément Fermaud, head of marketing at Twentysix Cloud, highlighted some of these challenges, “It is often challenging to approach established companies and ask them to migrate their entire stack to relatively new technology that is only a few years old.”

In addition to competing for market share, DePIN faces its own challenges, such as scaling complex protocols, volatility in the Crypto market, and funding constraints.

Technical barriers also remain, especially when scaling these networks. Qevan Guo, CTO of IoTeX, noted, “Moving big data across nodes is costly and inefficient, creating performance bottlenecks in distributed systems.”

Despite these challenges, many in the industry remain optimistic about DePIN’s long-term potential.

With the right incentives, well-designed DePINs can put power in the hands of individuals rather than large corporations, enabling users around the world to make meaningful contributions and be rewarded.

Luca Franchi, CEO of environmental monitoring network Ambient, sees a wider impact: “They are a manifestation of Web3 maturity, leveraging decentralized solutions to solve industrial-scale challenges with the participation of everyday actors.”

DePIN’s integration with other emerging technologies could further accelerate its growth. Blockcast CEO Omar Ramadan envisions combining DePIN with innovations in areas such as content delivery networks (CDNs and multicast technology) to “revolutionize last-mile connectivity.”

As the DePIN ecosystem continues to grow, collaboration and interoperability will be critical.

“The scalability challenges lie primarily in the software that orchestrates computing resources and facilitates critical functions like failover,” noted Fluence Labs’ Trowbridge. “While these obstacles are complex, they are controllable.” Failover refers to the use of redundant or backup computers to complete a process when the primary system becomes inactive.

Trowbridge added, “It will take several years for DePIN to develop enough to begin to replace traditional cloud computing in a meaningful way. Even if decentralized computing expands significantly in the next few years, it is unlikely that centralized cloud providers will need to respond in a way that could jeopardize their current profit margins.”