What is DePIN?
According to the technology analysis company Messari, DePIN is one of the fastest-growing industries today, with a current valuation of nearly $2.2 trillion. By 2028, the market value of DePIN-related projects is expected to exceed $3.5 trillion. So what exactly is DePIN?
DePIN stands for “Decentralized physical infrastructure networks.” In simple terms, DePIN is a concept that uses token rewards as incentives to encourage people to participate in and build real-world physical infrastructure.
For example, the decentralized wireless service Helium Mobile has launched its own telecommunications service and opened it to the public to purchase hotspots for installation indoors or outdoors, ensuring internet connection wherever the customer goes. As hotspot providers, individuals can earn token rewards when their network is used. As more and more people own hotspots, the network coverage expands, creating a win-win situation.
DePIN expands the scope of Web3 applications. In addition to digital assets and decentralized finance, it enables cloud and storage networks, wireless networks, sensor networks, energy networks, and other industries to become more decentralized. This creates alternative solutions that are more resilient, cost-effective, and community-driven compared to current centralized systems.
Carlos Lei Santos, CEO of wireless network company Uplink, believes that due to the increasing need for wireless hardware connections, the next multi-billion dollar giants are likely to come from the DePIN industry.
According to data from Messari and DePIN.Ninjia, as of 2023, there are approximately 650 projects in the DePIN ecosystem, with 250 projects in the computing field and 200 projects in artificial intelligence. This indicates that DePIN has started to make its mark in AI and data storage technology.
What are the advantages of DePIN?
As more devices require connectivity, existing infrastructure is no longer efficient enough to meet the demand. This situation has driven the industry’s need for decentralized connectivity solutions, which will be crucial for industry development in the coming years.
Advantage 1: Cost-effectiveness
DePIN offers a more cost-effective option than traditional infrastructure, as it significantly reduces the costs of project construction, maintenance, and personnel.
Advantage 2: Speed
Additionally, DePIN allows for faster hardware connectivity, providing different companies with the flexibility to meet changing market demands and gain a competitive edge.
Advantage 3: Decentralization
Furthermore, DePIN networks consist of thousands of nodes rather than a centralized structure, making them more resistant to attacks and technical issues.
Despite the many benefits of DePIN, there are still challenges to overcome. One major challenge is the volatility of token prices. If token prices plummet and become worthless, contributors are likely to leave, leading to a potential collapse of the entire network.
Which projects are worth paying attention to?
Many DePIN projects have been around for quite some time before the term gained popularity.
Filecoin – Your personal portable hard drive everywhere
For example, the peer-to-peer file storage infrastructure Filecoin has been around since 2014 and is currently the largest DePIN project by market capitalization. Contributors can provide their idle storage space on their computers to those in need in exchange for tokens.
Helium Network – WiFi wherever you go
Helium Network is a decentralized global WiFi hotspot network with over 980,000 hotspot providers.
As mentioned earlier, anyone can turn their home WiFi into a hotspot provider and earn $HNT tokens. The more people use the hotspot, the more tokens can be earned.
Regardless, with the advancement of decentralized technology, more innovative companies are bound to enter the traditional wireless connectivity market. As the DePIN industry matures and develops, these innovative solutions will drive global economic and social digitization.
References: cointelegraph, forbes