Anyone Can Become a Base Station! A Simple Explanation of “DePIN”
As 5G networks become more mainstream, some users have complained about their phones frequently failing to find a 5G signal and reverting to 4G, resulting in wasted money and battery power. The limited coverage of 5G base stations is primarily due to the fact that the construction of these base stations is mainly concentrated in the hands of specific telecom operators, which limits the speed of construction.
But what if everyone could join in building the network base stations and users would pay you for it? Would the speed increase significantly? This is exactly what the recent hot Web3 track “DePIN” aims to achieve.
DePIN, short for “Decentralized physical infrastructure networks,” encourages people to participate in building real-world physical infrastructure by using token rewards as incentives.
Take the decentralized wireless telecommunications service Helium Mobile as an example. In addition to launching its own telecommunications service, Helium allows the public to purchase hotspots for installation indoors or outdoors, providing network connectivity wherever the telecommunications service customer goes.
As a hotspot network provider, you can also earn token rewards when others connect to your network. As more and more people own hotspots, the network coverage expands.
DePIN extends the spirit of decentralization to tangible infrastructure, and many experts believe that DePIN has a higher chance of entering people’s lives and is a great way to break free from the traditional system.
According to Messari, an analysis and research company, DePIN can be divided into two main types: Physical Resource Networks (PRN) and Digital Resource Networks (DRN).
Type 1: Physical Resource Networks (PRN)
Incentivize participants to provide geographically limited goods and services in the real world using hardware based on location, such as GPS devices. This includes local energy, geospatial data, and local wireless networks.
Type 2: Digital Resource Networks (DRN)
Incentivize participants to provide digital resources that are not limited by geographical location, such as computing power and storage space.
The operation of DePIN can be broken down into four key components: physical network infrastructure, off-chain computation system, blockchain framework, and token reward system.
Key Component 1: Physical Network Infrastructure
These are the tangible components or elements that make up the network, including all the physical assets required for the network to function properly, such as servers and transportation systems.
Key Component 2: Off-chain Computation System
This system tracks the activities or contributions of participants in the real world and converts them into data to integrate with the incentive system on the blockchain.
Key Component 3: Blockchain Framework
This is a transparent and tamper-proof distributed ledger that uses smart contracts to manage network transactions. It records the workload and reward distribution of each contributor, as well as transaction records between the demand and contribution sides.
Key Component 4: Token Reward System
The token reward system incentivizes contributions to the infrastructure and promotes the early development of the project. It is a key factor in encouraging people to “start participating.”
DePIN can be applied in various areas, including cloud and storage networks, wireless networks, sensor networks, and energy networks.
However, DePIN also faces some challenges. It is vulnerable to hacking attacks due to its blockchain-based system, which can potentially compromise the funds circulating on the blockchain. The volatility of token prices can also be a challenge, as a decrease in price may lead to contributors leaving the network. Additionally, as a nascent technology, DePIN may struggle to compete with established centralized enterprises.
Although DePIN is still in its early stages of development, according to a report by Messari, the number of DePIN projects is expected to exceed 650 by 2023, with a total market value of over $20 billion. It is a track worth keeping an eye on.
Sources:
Techopedia, Crypto.news, CoinTelegraph
Edited by: Gao Jingyuan